Many publishers have been hesitant to jump on board with Facebook's (NASDAQ:FB) Instant Articles. Ceding too much control over how their content is presented could have a negative impact on their business, even if it results in additional views from readers. Some publishers are already seeing a negative impact on their revenue per article because of the advertising restrictions Facebook has put in place.
As a result, Facebook is considering new advertising options for Instant Articles, according to The Wall Street Journal. Meanwhile, publishers may consider Accelerated Mobile Pages, or AMP, from Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google as an alternative to Instant Articles. Both options have restrictions, but Facebook seems more willing to work for publishers than Google is.
The biggest complaint from publishers is that Facebook's limitations on the number of ads they can show per article are too strict. Facebook currently allows just one ad per 500 words. Publishers are used to fitting in three to four ads for an article of that length on their mobile websites.
Articles published using Google's AMP are able to show a lot more ads, but the ads are restricted to those on Google's own advertising platforms. It's worth noting that the publishing format is open source, so a publisher could have someone integrate its preferred own ad platforms into the code, but Google's not going to do that for the publisher.
Google is pushing AMP as a way to fight back against the proprietary formats from Facebook and other technology companies that push its advertising out. The Washington Post, for example, uses some Google ads on its mobile website, but it uses Facebook's ads on its Instant Articles. With Washington Post publishing all of its articles as Instant Articles, Google is losing out on significant revenue from Facebook referral traffic.
Facebook also restricts the type of ads publishers can use in their Instant Articles. They're currently limited to static banner ads, sized 320x250 pixels. They can't use video ads, or ads that take up the whole screen as they scroll into view, reducing their ability to convert. Facebook is reportedly considering animated ads to increase the value of ad inventory on Instant Articles.
Additionally, Facebook doesn't allow publishers to charge a special rate for placement in Instant Articles over a regular mobile website. This restriction may make it difficult for publishers to maximize the value of the format.
Facebook will work with publishers
From the start, Facebook has shown a willingness to work with publishers to make Instant Articles appealing. It lets publishers use their own third-party analytics tools, they keep 100% of ad inventory they fill, and they can publish as much or as little as they want to the new format. Additionally, there's the idea that publishing Instant Articles will result in more views after seeing how Facebook tweaked the News Feed to favor native videos.
Facebook will continue to work with publishers to ensure that Instant Articles provide good value, for a couple of reasons. Instant Articles are an improvement on Facebook's existing user experience, where articles can take up to 10 seconds to load on mobile. The difference will keep users engaged longer and keep them coming back to Facebook more often.
Second, they represent a revenue opportunity for Facebook. The company takes a cut of the ad revenue they help publishers fill and can start generating revenue from the articles that all of its users are linking to, basically extending its reach in the digital advertising market. Some big publishers, like the Washington Post, are already posting hundreds of articles every day with Facebook's ads. Google generated almost $14 billion in revenue from its Network Members' websites last year.
That reach will take money right out of the pockets of Google, hence the company's response with AMP. But Google seems less willing to go out of its way to work with publishers, instead providing them a code base to build on. The strategy could work, but it's much more passive compared with Facebook's involvement with Instant Articles.
Winning the big publishers may require some changes from Facebook, but the huge revenue opportunity presented may be worth some sacrifices. Smaller publishers will likely join Instant Articles as Facebook opens up to more websites, especially if Facebook favors Instant Articles over normal links like it does with native videos. While AMP represents another option for big publishers with their own software development teams, smaller publishers will likely favor the ease of Instant Articles. That doesn't bode well for Google.
Adam Levy has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Facebook. Try any of our Foolish newsletter services free for 30 days. 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.