Platforms Are Pivoting to Video. Publishers, Again, Follow Suit

Beginning in the summer of 2020, social media platforms including Facebook, Instagram and YouTube—as well as Pinterest, Twitter and even Amazon—began launching and promoting vertical video products in a sweeping response to the ascendant popularity of TikTok. While consumer adoption of the format has skyrocketed, the pivot has prompted publishers, particularly those that rely heavily on social platforms for traffic and revenue, to retool their commercial and editorial strategies, according to interviews with media executives. But vertical video also lacks both a CPM product and a robust market for its inventory, meaning publishers have leaned on branded content and limited revenue shares to monetize the format. The resulting gap between user adoption and monetization has left publishers investing in vertical video on the premise that the returns will materialize as the space matures. The transition has proven painful for some. In its November earnings report, BuzzFeed Inc. said that Facebook accounted for the majority of the 32% year-over-year dip in time its audience spent on its properties, and chief executive Jonah Peretti directly cited the rise in vertical video as part of its rationale to lay off 12% of its staff earlier this month. “It does feel a little bit like the 2015 pivot,” said Jess Probus, the senior vice president of BuzzFeed editorial, “but only in that the audience moves first, and the monetization is slower.” 4 Charts Reveal How Facebook Traffic to Publishers Has Changed To avoid further hits to their bottom lines, publishers have scrambled to accommodate the sea change in consumption patterns, shifting the composition of their output to produce more vertical video, repackaging existing long-form video and launching new tools and services to turn engagement into revenue. “Our business is to pivot,” said Cory Haik, the chief operating officer at Vice Media, “because brands come to us to reach audiences and audiences move.” Making new content and trying to monetize on platform To capitalize on the rise of vertical video, publishers have increased their output of the format. BuzzFeed Inc., for instance, produced over 5,000 editorial videos across Instagram Reels, YouTube Shorts and TikTok in the third quarter—more than double its volume from the same period a year prior, according to chief financial officer Felicia DellaFortuna. Views of the content grew 60% compared to the second quarter. At Vice Media, the rise of vertical video has dovetailed with an internal shift, begun in 2019, to swap text content for video, according to Haik. Refinery29, for instance, now generates 75% less written material than it did three years ago. For both companies, given the maturity of their video operations, the shift to vertical video has required fewer infrastructural changes than the infamous pivot to video of 2015. The relative similarity of the vertical video products has also enabled publishers to adopt a “create once, distributive everywhere” mentality, according to Probus. To streamline its production process, Vice Media developed an internal app, called Story Studio, in fall 2020. The tool lets staff, as well as freelancers, create vertical video in the Vice style and is now responsible for the creation of roughly 5,000 assets per month, according to Haik. Overall, Vice Media grew revenue from vertical video and social media 40% year over year, according to the privately held publisher, and it plans to release a version of Story Studio for external use in 2023. As the Platforms Stumble, Some Publishers See Increased Ad Spend On top of new video, publishers have also seen traction in repackaging archival footage, exposing younger audiences to the same series that hooked viewers a decade ago—at next to no cost. But despite these gains, translating engagement from vertical video into meaningful on-platform revenue remains a challenge. The platforms’ revenue-sharing tools—both for publishers and creators—are too new to yield meaningful returns, especially compared to traditional YouTube videos and Facebook Watch. YouTube plans to introduce a revenue share on its Shorts format early next year, which will entitle publishers to 45% of the generated revenue—a smaller cut than the 55% available for traditional video. TikTok unveiled a revenue share in May, but it is only open to accounts with more than 100,000 followers whose videos are among the platforms' most viewed and selected by TikTok. The company is still in the early stages of the program, according to a TikTok spokesperson. Meta announced in October that it planned to offer a revenue share for its short-form product Facebook Reels, with creators and publishers taking home 55%. And Instagram has promised to reward creators out of a fund for Reels viewerships, though creators have complained payouts are inconsistent. There is no liquidity in the market for vertical video. Jeremy Gan, the senior vice president of revenue operations and data strategy at the Daily Mail In the absence of substantial, reliable revenue shares, publishers have embraced brand partnerships as their primary means of monetizing on-platform vertical video. Gallery Media Group, which houses the editorial titles PureWow and One37PM, treats the roughly 20 handles it owns and operates on the platform, including @moms, @cocktails and @recipes, as equivalent to standalone properties, said chief revenue officer Chris Anthony. The strategy positions GMG to monetize its on-platform reach by treating the handles as creators, which lets it sell branded content through its content-marketing service, called the Gallery Partnership Program, and a new creative management service, called TikTok Organic Content. According to Anthony, in its first year of operations, GPP netted an eight-figure revenue. Monetizing on owned and operated properties Brand deals can be life-changing for creators with small teams, but for publishers with larger expenses to cover, they may not be enough to make a difference. “TikTok is our best performing channel in terms of user engagement, views and subscribers,” said Jeremy Gan, the senior vice president of revenue operations and data strategy at the Daily Mail. “If you think about monetization, it’s probably the worst. How do you bridge that gap?” As a solution, the Daily Mail and other publishers are working to integrate vertical video directly into their websites and apps, which helps insulate them from the fickleness of platforms and provides them more control over their audience, data and monetization capabilities, Gan said. It’s a chicken and egg problem.Geoff Litwer, vice president of programmatic and display media at performance agency Tinuiti This summer, Vice Media retooled the website of its title i-D to build vertical video directly into its architecture, and it has similar redesigns slated for its other properties next year, according to Haik. Other publishers, such as The Washington Post, have also embedded vertical video into their websites and apps. But this strategy comes with its own challenges. There is currently no standard process for bidding programmatically on vertical video inventory across the open web, nor is there a difference in CPMs, sources said. “There is no liquidity in the market for vertical video,” Gan said. TikTok Eyes Performance Budgets With New Pay-if-You-Engage Tool Publishers could offer existing video ad formats, like pre-roll, static and interstitial, but the user experience when pairing horizontal ads against vertical videos is clunky, Gan said. There is also no clear way to tag vertical video in the bidstream either, he added. “When you try to extrapolate in a biddable environment, it gets very messy,” Gan said. Compounding the issue, programmatic buyers are not investing significant sums in the channel, said Geoff Litwer, vice president of programmatic and display media at performance agency Tinuiti. While buyers understand the value of full-screen videos, and clients have found success in placing vertical video ad creative made for social on publishers’ websites in banner slots, there is currently not enough demand to justify bidding against publishers’ vertical video content, according to Litwer. “It’s a chicken and egg problem,” Litwer said. “It’s hard to think vertical video is the panacea for publishers.”

Strategy

Platforms Are Pivoting to Video. Publishers, Again, Follow Suit

To combat slumping social traffic and revenue, publishers have retooled their vertical video strategies

Mark Stenberg

Catherine Perloff

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Mark Stenberg

Catherine Perloff