What Facebook Instant Articles Means for Ad Economics

Facebook Instant Articles is back in the news this week. After a bit of a sleepy start, Facebook is expanding the list of participating publishers and increasing the number of users who have access to Instant Articles content. Lots of people are going to start consuming content directly in the Facebook app rather than through embedded webpages. And that has some big implications for ad economics.

As a point of reference, consider three consecutive ads delivered to me in the Facebook app:

These ads paint a picture of who I am — a small business owner working in the tech space. Targeted advertising at work.

Next, I tapped on a Business Insider article that was posted in my Newsfeed. This loaded an embedded webpage within Facebook’s app. Refreshing this same page a few times, I saw the following ads:

A Spanish language car promotion, a cooking ingredient ad, and an offer for a trip to the Catskills? Who do these advertisers think I am? The answer is that they have no idea who I am because Safari (the embedded browser in all iOS applications) rejects third party cookies. Ads served in Facebook’s native app can be targeted based on my device ID, but ads served in Safari don’t support any user targeting. Inside Facebook Newsfeed, advertisers know who I am and can employ highly targeted campaign tactics. But within embedded webpages, audience targeting goes out the window.

The result of this targeting disparity is that advertisers are willing to pay much higher rates for in-app inventory than mobile web inventory. Facebook knows this and so do publishers. Facebook Instant Articles brings in-app economics to mobile content consumption, unlocking audience targeting capabilities for advertisers and boosting yield for publishers. Sure, faster article load times, lower bounce rates, and greater sharing activity are nice. But the real value of Facebook Instant Articles is ad economics.

Facebook isn’t the only platform looking to provide in-app hosted content and monetization tools to publishers. Snapchat, Twitter, and even Google are rumored to be building content distribution platforms to help publishers migrate away from the mobile web. Apple’s plan to starve the web of cookies just might be working.