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Facebook Inc Recruits More Publishers for Instant Articles, Google and Twitter Fight Back

By Adam Levy – Sep 30, 2015 at 8:48AM

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Facebook is expanding Instant Articles to more users and more publishers.

One of the first Instant Articles on Facebook from National Geographic. Source: Facebook.

Since launching Instant Articles this spring, the new Facebook (META -0.25%) feature hasn't made a lot of noise. Instant Articles shift the hosting responsibilities of content to Facebook's servers, allowing media-rich articles to load in fractions of a second. It's a response to the average eight-second load time Facebook says its mobile users typically experience.

Up until now, Facebook has purposely kept the number of users seeing Instant Articles small. Just 12.5% of iPhone users were able to see Instant Articles from just nine publishers. Earlier this month, the company announced that it would expand Instant Articles to nearly two dozen more publishers and start ramping up the number of users that have access to the feature.

This indicates that Facebook saw positive results from its early tests, and it's ready to start scaling. What exactly are those positive results?

Increasing engagement
The main idea behind Instant Articles is that increasing the speed with which a piece of content loads will decrease the abandonment rate. That means more people will end up actually reading an article they clicked on, so publishers receive more engagement from readers. For Facebook, it decreases the chances a user will simply close the entire app and look for entertainment or information elsewhere -- such as its competitors Google (GOOG -1.66%) (GOOGL -1.79%) or Twitter (TWTR).

That's exactly what Facebook says is happening. Michael Reckhow, the executive overseeing the project, told Re/Code he's seeing "really good engagement." He neglected to provide anything specific, though.

The increased engagement is great for publishers, which will no longer suffer from "viewers" who never actually view the site. Facebook's terms are also favorable, allowing publishers to keep 100% of ad revenue they sell against their content. If publishers elect to let Facebook fill their ad inventory, Facebook keeps 30%. That's slightly better terms than the 32% of ad revenue Google takes from publishers using AdSense.

That also means that Facebook stands to gain ad revenue in a shift from mobile websites to Instant Articles while Google loses. Most of Facebook's early publishers are capable of filling their own ad inventories, so the early impact will be minimal. As Instant Articles scales to smaller publishers, however, Facebook could take a chunk of Google's estimated $1.5 billion mobile display ad business.

Publishers going all in
Facebook says the nine publishers it launched Instant Articles with are producing "hundreds" of articles daily. New partner Washington Post says it will publish every single one of its articles in the new format.

Indeed, the increased engagement is a pretty good carrot to dangle in front of publishers weighing the merits of Instant Articles. It means more people click through to read, which means more ad view and more shares, which means more readers, and so on.

There's also an imposing stick for publishers that opt to host ad-supported content on their own sites. With the launch of the new iOS, iPhone owners can now use ad blockers. Those same ad blockers can't touch natively hosted content such as Facebook's Instant Articles, but they can touch articles Facebook loads in a browser, which is how it currently displays articles for almost everyone. That means a growing number of views publishers receive from Facebook link-outs won't produce any revenue.

Google and Twitter answer back
Google is working on its own version of Instant Articles that it plans to be open-source. Twitter has already said it's on board. Their impetus is clear: Google wants to prevent Facebook from taking share of its mobile ad revenue, and Twitter wants to prevent Facebook de-emphasizing its relevance for news consumption.

Both of those fears are well substantiated -- Facebook is already used as a source for news by 63% of its users, the rise of Instant Articles could coincide with an increase in that number as well.

Google's solution doesn't offer any immediate benefits to the company; it just maintains its position that Facebook's Instant Articles threaten. As Instant Articles increase the amount of time users spend on Facebook, the company will be able to increase its revenue per user by showing them News Feed ads as well as ads within Instant Articles while Google loses some of its mobile display ad revenue.

Adam Levy has no position in any stocks mentioned. The Motley Fool owns and recommends Facebook, Google (A shares), Google (C shares), and Twitter. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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