Image source: Facebook.

When you put all of your eggs in one basket, bad things can happen quickly. That's the scenario many digital publishers are facing, as Facebook (NASDAQ:FB) has sent less and less traffic their way. A recent survey from SimpleReach published by DigiDay found that referral traffic from Facebook to top publishers fell 32% from January to October of this year. The more reliant the publisher is on Facebook, the more it suffered; the top 10 saw a drop of 42.7%.

Facebook is in the driver's seat when it comes to web traffic, as 1 billion users come to visit its site or app every day. It controls where that traffic flows, and increasingly, it's working to keep that traffic on its own site instead of sending it away to digital publications. At face value, the results of the SimpleReach survey bode well for Facebook investors, but let's take a look at why referral traffic may have fallen.

Traffic jam in the News Feed
Facebook denies that it's not sending as much traffic to publishers as it used to, pointing out that these surveys don't see the full picture. Indeed, the SimpleReach survey only looked at the top 30 publishers receiving traffic from Facebook. An earlier survey from SimilarWeb found similar results, but it only looked at the top 50 publishers (and only looked at desktop traffic).

Facebook says that traffic to the top 1,000 publishers has remained steady over the past 10 months, and total referral traffic has steadily grown over the last two years. After adding 195 million net monthly active users over the last year (14.4% growth), referral traffic should be increasing naturally. There's reason to believe Facebook is being accurate with its claims.

But big publishers that jumped on the Facebook referral traffic gravy train early are mostly seeing a decline in traffic that can't be denied. The problem is there's a huge volume of content being pushed out by every publisher on Facebook. Facebook now has more than 45 million small and medium-sized businesses operating Pages on its website. Many of them are publishers that post every article they put out. Users only have so much room in their News Feeds for content posted from Pages.

But what about videos?
Facebook's push into videos has undeniably had a major impact on the composition of many users' News Feeds. Facebook saw video views per day climb from 1 billion at the end of last year to 8 billion this quarter. Numerous surveys have found videos are the easiest way to reach a Page's audience, as Facebook's EdgeRank algorithm pushes native videos higher in the News Feed.

Publishers like Buzzfeed and Business Insider have jumped on board with Facebook video and have seen positive results. While videos don't send traffic directly to a publisher, publishers can include native advertising in videos, and the increased reach builds brand awareness.

Facebook will say that videos provide a better user experience than links for a couple of reasons. First of all, they load quickly, and Facebook has made load times even faster with autoplay. Second, video provides a more robust form of communication, so users can get a story faster.

Cue Instant Articles
Facebook has a solution to help publishers that prefer the written word to compete with the value presented by videos. Instant Articles, as the name implies, load instantly and also provide a better reading experience than mobile browsers with more interesting ways to present content like images and video.

Facebook has already courted several dozen publishers for Instant Articles, offering the ability to keep 100% of the ad revenue from inventory sold by the publishers as well as use their own analytics tools. But it's understandable why some publishers are hesitant to jump in with Facebook's new platform. They've already been burned by changes to Facebook's News Feed; they might wonder why this new product will be any different.

Still, publishers might not have much of a choice. Facebook commands the attention of 1 billion daily visitors, and if publishers don't start using Instant Articles, they risk getting even less traffic. Facebook investors should be smiling, as Facebook clearly holds the upper hand over publishers, which will make it easy to extract money from them if and when it wants.