In The Shocking World Of Paid News

At first glance, it looks like a typical news story on the Mail Online website: “Beaten and starved, 40-year-old man kept as a slave in ‘concentration camp’ conditions FINALLY sees his captors brought to justice”. From the bold headline to the punchy writing interspersed by images, the article bears all the site’s usual hallmarks.

On closer inspection, however, the article turns out to be something rather different: an advertisement. It was paid for by the UK government, as part of a campaign to raise awareness of modern slavery. But the only indication that this is a paid-for promotion is a small note above the byline of the well-known Mail Online reporter. It reads: “Sponsored by Home Office”.

Welcome to the world of sponsored content, in which advertisers pay to have their messages integrated with editorial content on a publisher’s site. It is one of the fastest-growing sources of revenue for the news industry – but also one of the most controversial.

Although the “advertorial” – an advert in a similar format to an editorial article – has existed in print for decades, it is only recently that publishers have reinvented the concept for the digital age. Sponsored content is perhaps the most contentious variety of what is known as “native advertising”, forms of marketing that look the same as the editorial content of a particular website or app and blend in seamlessly with other stories.

The New York Times and the Wall Street Journal are among the newspaper groups that this year set up special divisions to create sponsored content for advertisers including Goldman Sachs and Netflix.

In October, the New York Times surprised analysts by reporting that digital ad revenues had surged 17 per cent in the third quarter to $38m – offsetting the decline in print ad sales. The biggest driver of the growth was “paid posts” – its version of sponsored content, which it launched in January.

“We’re still in the very early days in the branded content business,” said Meredith Kopit Levien, executive vice-president of advertising at the company. But she added that the business looked very promising. By the end of the year, the New York Times will have produced paid posts for 30 brands, she said, with some of the first few customers renewing their partnerships “to carry on their story into the next phase”.

In developing these capabilities, newspapers are following a trail blazed by upstart digital publishers such as BuzzFeed, the Huffington Post and Vice Media. BuzzFeed, a news and culture site whose main source of revenue is sponsored content, has reportedly increased its sales by two-thirds this year to more than $100m. It has published posts such as “11 Reasons Why Showering Is The Best Part Of The Day” for Dove, the soap brand owned by Unilever, the consumer goods company.

Advertisers spent $800m in the US last year on sponsored content such as news stories, according to an estimate by BI Intelligence. While that sum is tiny in the context of the $170bn US advertising market, it is rising fast. BI forecasts that spending on sponsored content will grow at a compound annual growth rate of 33 per cent over the next five years to $3.4bn in 2018.

For many newspaper groups, weakened by a relentless decline in print advertising sales over the past decade, the prospect of making money from this new form of advertising is too good to resist.

“From where we’re standing, this is getting bigger and bigger,” says Tiffanie Darke, creative content director at Rupert Murdoch’s News UK, publisher of The Times and The Sun. The opportunity, she says, is to “give brands a new way to talk to their audience” by creating original forms of advertising with the same journalistic flair as the publisher’s editorial coverage.

However, many people worry that venerable news publishers are taking big risks in their rush into sponsored content. Their fear is that blurring the line between news and advertising will irritate readers – eroding trust in media brands that have spent decades building up their reputations for impartiality.

“If you mislead the consumer, it’s dangerous,” says Sir Martin Sorrell of WPP, the world’s largest advertising group. But he believes that “there’s very little risk” for those publishers that “make clear that the piece is paid for”.

The problem is that publishers label sponsored content in different ways, some of them much more obvious than others. And even when an article is clearly branded, readers often struggle to interpret exactly what terms such as “sponsored” mean.

The Guardian, for example, uses “sponsored” to label “editorially independent” content produced by its journalists “to the same standards expected in all of our journalism”. A sponsor whose branding appears on such content “may have a role in suggesting what kind of topics are covered, but the commissioning editor is not obliged to accept ideas from the sponsor”.

Complicating matters, it uses other terms – such as “brought to you by” and “advertisement feature” – to describe content that is both paid for and produced by an advertiser. For example, a recent recipe for chicken and pancetta risotto was sponsored by Unilever and the ingredients included a Knorr stock pot, one of its brands.

Contently, a content marketing agency, found in a survey of internet users that more than half of respondents had “felt deceived” by sponsored content. Worryingly for publishers, most respondents said a news site loses credibility if it runs articles sponsored by a brand.

However, another survey, by the Internet Advertising Bureau, found that readers were “highly receptive” to sponsored content “if it is relevant, authoritative and trustworthy”. It recommended that publishers control the risks by making clear disclosures to readers and by being “prepared to walk away from advertisers who aren’t relevant or trusted”.

The Atlantic learned this lesson the hard way. The US site last year published a sponsored post for the Church of Scientology, hailing a “milestone year” for the religion. The piece prompted such an uproar among readers that it was swiftly removed.

Most media executives believe they can balance the interests of their advertisers and their readers. But as brands wave more money in their direction, finding the right balance will become increasingly difficult.

To prevent commercial pressures from corrupting their journalism, news publishers have traditionally maintained a strict separation between their business teams and their journalists.

Known within the industry as the “separation of church and state”, it is widely seen as the best way to avoid the conflicts of interest that arise when a publication sells advertising to the same companies that it writes about.

But this once-sacrosanct principle is being abandoned by groups including DMGT, publisher of Mail Online, which are getting their journalists to produce sponsored content on behalf of advertisers.

Martin Clarke, Mail Online’s publisher, has argued that getting reporters to make ads is a good thing for readers, in that it allows the company to “hold our native ads to the same standard as the news content”.

Yet others question the wisdom of this strategy. If a reporter has written an advert for a brand – and profited from doing so – might that not affect how she covers the company in the future?

BuzzFeed, the upstart publisher that this year raised funds at a valuation of $850m, has made a point of having one team to produce ordinary journalism and another to produce sponsored content. Ben Smith, BuzzFeed’s editor-in-chief, wrote in a tweet last month that Mail Online’s strategy of combining the two functions exposed it to “actual corruption”.

The New York Times has adopted a similar stance to BuzzFeed, creating all of its sponsored content within a dedicated team that sits in its advertising department. The 163-year-old publisher states explicitly at the bottom of any branded content on its site that its editorial staff were not involved.

For readers, such distinctions are subtle and easy to miss. But the increasingly close embrace between church and state within some publishers has important ramifications for the future of news.

Source Credits: Robert Cookson, Digital Media Correspondent | FT

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