News organisations have struggled with platforms for a long time. They don’t know how to find a fair working relationship because it’s hard to quantify the benefits for each side. What is the unit of value to ground the negotiation?
Facebook, Google, Twitter and all the rest are always selling the idea that they drive a lot of traffic to publishers’ websites and, therefore, publishers can’t afford not to work with them. If that’s the starting point then there’s a very important question to ask:
How much is that traffic worth? And how do you know?
This has been a particularly slippery question when it comes to Facebook, but it doesn’t have to be.
Kaleida chief technology officer Graham Tackley decided it was time to find some answers. What he found confirmed his suspicions that organic shares on Facebook are a reasonable proxy for real website traffic.
The sample data here is pretty small, but it’s enough to get started. It includes one day of data from a publisher we work with who will remain anonymous. We have total page views and referral data for hundreds of articles published in early April 2017 by Publisher X.
In this chart you can see a band of dots suggesting a correlation between organic sharing and Facebook referral traffic. The Pearson correlation coefficient is 0.86.
To put that in context, a perfect correlation is 1.0, meaning every point is an exact one-to-one relationship between the x and the y axis. A correlation of 0.0 means there is no relationship, that the figures are all totally random. So, a correlation of 0.86 is actually pretty strong, good enough to confirm the idea that Facebook sharing patterns are a reasonable proxy for Facebook referral traffic patterns on a website.
The correlation between organic sharing and total website traffic is much lower at 0.65. Facebook is not the sole source of traffic, of course. But neither is Google, which scores 0.89. Google scores higher overall because Google provides a more even spread of traffic to publishers’ websites, driving people to homepages and the like, in addition to articles.
Interestingly, while Google traffic may be more reliable and evenly spread, Facebook pushed more referrals to article pages for Publisher X than Google did.
So, if there’s a strong correlation between sharing and traffic then we can work out how much value Facebook adds to the bottom line. Crucially, we can trust that the number will convert into real income, unlike some of the things Facebook wants publishers to do.
What is a 'share' on Facebook worth?
This data can help us paint that picture. First, let’s improve the precision of the answer by focusing on the higher value data.
We know, for example, that most articles get very few shares, less than 100. Let’s throw those out of this sample, because those shares aren’t really helping either the publisher or Facebook. Equally, the 90th percentile have gone viral or they got a huge boost in some unpredictable way. Facebook can’t guarantee those will happen. According to Kurt Gessler of Chicago Tribune, the algorithm may not surface a third of all brand page posts anyhow. So, let’s throw those out, too.
That leaves us with articles that have earned between 80 and 10,000 organic shares. Publisher X here had 1.1M Facebook referrals for that sample from over 240K shares.
So, in this case, one share on Facebook counts for about 4.5 page views.
If we use a generous average eCPM of $10 to make the math easier, then it’s reasonable to say Facebook referrals have driven about $10k worth of advertising revenue opportunity that day for Publisher X.
Revenue divided by transactions = unit value. So, how much is a share on Facebook worth?
An organic share on Facebook is worth about $0.04 to the publisher
If that was a typical day for this publisher and all the other assumptions are in the right ballpark then Facebook referrals probably drive between 3 per cent and 5 per cent of total digital revenues for Publisher X.
It’s true that being present on a platform has value to it far beyond referral traffic. It’s also true that publishers could be wiser about their publishing strategies which would improve that figure.
But to accept the sales pitch from the platforms without also knowing where the tangible value lies and how much is on the table is a mistake nobody should make. Strategic value is really important, but given the internal cost of many publishers’ Facebook initiatives, including Publisher X, it’s likely that much of the strategic value in partnering is being lost. And as digital ad revenue market share moves away from news organisations, this trade off feels less and less compelling.
Now that we know sharing and referral traffic have a significant and reliable relationship those discussions should feel different. Negotiating that partnership should start with a number: $0.04.
Facebook share value will vary per publisher based on total referrals, shares and CPM. If you have any questions about the process or if you want to find out what your organisation's data tells you, contact email@example.com or firstname.lastname@example.org.
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