Why are leading digital news providers embracing native advertising?

Native advertising is a priority for leading digital news providers – this was a striking finding from the research conducted for my recent book, Innovators In Digital News. Striking and surprising, since sponsored content is risky. It punctures the Chinese wall between editorial and commercial activities, and if done clumsily can damage credibility with audiences.

Journalists are sceptical – there’s a high degree of cognitive dissonance between sponsored content and a commitment to journalism. So if sponsored content is dangerous territory for purveyors of quality news, why does it feel like everyone is embracing native now?

Native advertising 101

The reasons are straightforward. First, returns from other forms of digital advertising – online display, banners, pop ups, etc. – are insufficient to sustain serious content creation in the long term.

The so-called ‘analogue pounds to digital pennies’ phenomenon means that alternative revenue sources need to be found to support digital journalism (and native is just one of the new income sources the companies profiled in this book are pursuing).

Further reducing revenues is the fact that audiences don’t like banners and pop-ups and are installing ad-blocking software to them from their screens.

Lastly, none of these forms work particularly well on mobile platforms, the digital news consumption context of the future. As BuzzFeed’s Jonah Peretti points out, banners do not work on mobile, but viral ads do, which is one of the reasons BuzzFeed is profitable. And the more consumption shifts to social and mobile, the more BuzzFeed will thrive.

Where does this leave ad agencies?

Native puts advertisers (or brand partners as they seem now to be called) closer to the role of content creators. But the role change (advertisers into media organisation or publisher) does not always work. It’s a challenge for the brands (and for the ad agencies). Here’s a quote from an interviewee:

Most of the brands that we work with are moving away from spots or traditional advertising and they want to move more into sponsorships, production partnerships, they want to go direct, they don’t want to go through agencies any more.

The media industry has form in native

While the term ‘native advertising’ is fashionable now, sponsored content is a well established phenomenon, and doesn’t correlate automatically with trickery and poor quality.

The soap opera started life as sponsored content. More recently, Felix Baumgartner’s freefall from the ‘edge of space’ in 2014, which had the largest number of concurrent live streams in YouTube’s history to date (8 million), was a piece of high value, high investment sponsored content – from Red Bull.

The September issue of Vogue is renown for the high number of ad pages it carries (631 pages in 2014). These are clearly advertising, but also clearly of value to audiences. They function not as a deterrent, but indeed as an inducement to purchase.

High returns, but high costs also

All the digital news companies I analysed for this book have made native a strategic priority. They have also put Rolls Royce arrangements in place – dedicated stand alone content units with specialist staff – both to generate income and to prevent conflicts between editorial and sponsored content.

Thus the New York Times’ has created the T Brand Studio, staffed by designers, technologists, content strategists and social media experts. The Guardian Lab is a branded content agency with a staff of over 133 including designers, video producers, writers and strategies.

A tenet of Vice’s approach to marketing is that responses improve the less the content is littered with overt commercial messages. It has established Virtue, an ad agency that devises content strategies and campaigns as well as AdVICE, an ad network that activates native content through the Vice sites and on social media.

Critical issues for native advertising

Apart from the fact that they all see native as the future, what are the key takeaways from the cases in Innovators in Digital News? There seem to be three:

  • In the field of native, transparency is all – native has to be really clearly labelled as such. If not, audiences can feel cheated and both media company and advertiser can be damaged (as The Atlantic’s historic misstep, an advertorial for the Church of Scientology in 2013, showed).
  • Native and editorial content generation should ideally be run as separate operations. At minimum there need to be robust walls between commercial and editorial operations. These areas need to communicate and at times collaborate, but suggestions that stories are being tailored (or even pulled) in the interests of advertisers will damage editorial credibility.
  • The quality of the sponsored content needs to be high and match the style of the ‘host’ content. And while you muse on this, check out ‘Which David Bowie are you’ – BuzzFeed sponsored content for Spotify.

Lucy Küng’s new book, Innovators in Digital News was published by The Reuters Institute for the Study of Journalism and I. B. Taurus on 23 July 2015.