Mobile app growth driving the decline in web ad revenue and traffic

Online publishers are facing a difficult time of uncertainty within the industry at the moment as they realise that an internet of mobile apps and social platforms is here. This shift in the industry has left many publishers with loss of revenues, declining website traffic and in some cases the need to make layoffs. The audience have driven this shift as people prefer to check their social feeds and apps instead of visiting website home pages. Visits to websites become obsolete, therefore making it harder to justify buying ads for fragmented audiences. This saw 85% of every dollar spent in online advertising go to Google or Facebook in Q1 2016, said Brian Nowak, an analyst at Morgan Stanley. These claims are also supported by Mark Zuckerberg's ten-year plan which stressed the importance of apps and Facebook's plans to keep users on the platform instead of following links out. 

Online publishers have faced numerous financial challenges in recent years, including automated advertising and ad-blocking tools. But now, there is a realization that something more profound has happened: The transition from an Internet of websites to an Internet of mobile apps and social platforms, and Facebook in particular, is no longer coming — it is here.

It is a systemic change that is leaving many publishers unsure of how they will make money.

“With each turn of the screw, people began to realize, viscerally, that this is what it feels like to not be in control of your destiny,” said Scott Rosenberg, a co-founder of Salon who left the company in 2007.

Audiences drove the change, preferring to refresh their social feeds and apps instead of visiting website home pages. As social networks grew, visits to websites in some ways became unnecessary detours, leading to the weakened traffic numbers for news sites. Sales staffs at media companies struggled to explain to clients why they should buy ads for a fragmented audience rather than go to robust social networks instead.

Advertisers adjusted spending accordingly. In the first quarter of 2016, 85 cents of every new dollar spent in online advertising will go to Google or Facebook, said Brian Nowak, a Morgan Stanley analyst.

The power shift was made clear last week as the Facebook chief executive Mark Zuckerberg took the stage for the company’s annual developer conference. He stood in front of a diagram outlining an audacious 10-year expansion plan, which included several features to help keep people inside Facebook’s world instead of following links out.