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May 26, 2022updated 18 Nov 2022 12:49pm

Sponsored content for publishers: Revenue saviour or reputational risk?

By Aisha Majid

With low click-through rates on display ads advertisers are constantly looking at smarter ways to get across their messages, and native advertising (or sponsored content) is a popular solution for publishers. But with the potential risks to editorial reputation, is it the answer?

Although not new, native advertising – marketing designed to mimic the look, feel and tone of the platform it’s on –  is growing significantly. It’s set to be worth £1.9bn in the UK this year – almost four times what the market was worth in 2014.

While not all the growth that WARC predicts will come from the news industry, Dr. Michelle Amazeen, a communications expert at Boston University who has researched native advertising in the US extensively, says that sponsored content is an increasingly popular way for news providers to raise revenue.

"A lot of major news organisations have even created their own in-house content studios so they're actually creating this type of content with staff that work for the news organisation", she says.

Buzzfeed and Gawker were among the earlier adopters of native advertising in news. Twelve years ago Forbes launched its BrandVoice content studio in the US. Today, The New York Times has T-Brand Studios, the Guardian runs Guardian Labs, the FT runs FT Commercial and even public service broadcaster the BBC has its StoryWorks studio to create commercial content viewable to its non-UK audiences.

But although native advertising has revenue benefits it does have its downsides. Numerous studies have shown that most people can’t differentiate content paid-for by brands when it closely resembles editorial articles on the publisher’s site.

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A 2018 study among 800 US adults by Amazeen found that fewer than one in ten were able to recognise native advertising - although recognition rates increased when sponsored content - as native advertising is sometimes called - was labelled more clearly.

"I don't think there's a good faith effort on the part of publishers [to make it clear when content is paid for]," she says.

While publishers who use native advertising such as The New York Times stress that commercial and editorial are kept separate,  Amazeen’s research suggests that sponsored content, as well as sometimes fooling readers, can affect a publication’s real journalism. Another study co-authored by Amazeen found that The New York Times, The Washington Post and The Wall Street Journal notably decreased coverage of 16 companies after a native advertisement was published.

While the study itself did not conclusively look into why this might be the case, it’s likely to do with self-censorship, she says.

"We know from anecdotal stories out there and other research that wasn’t systematic that news organisations are hesitant to antagonise their advertisers and continue to do investigative reporting or hard-hitting reporting if they have a lucrative contract with that advertiser," she says.

"There's holes now between the wall that's supposed to separate the editorial content from the sales and business content," she says.

Done clumsily, sponsored content can damage a publisher’s reputation as The Atlantic discovered. In 2013, the US publisher was forced to apologise and withdraw a full-page native advertisement from the Church of Scientology extolling the Church’s values after widespread uproar.

[Read more: Affiliate links not clearly labelled as ads at leading news publishers, NewsGuard]

Closer to home, in 2015, the Daily Telegraph’s former chief political commentator, Peter Oborne, resigned over the publication’s relationships with its commercial partners. Writing in Open Democracy he called Telegraph’s coverage of HSBC "a fraud on its readers", saying that the publisher had discouraged unfavourable coverage of the bank, a major commercial partner of The Telegraph.

And in 2018 former Labour leader Tom Watson criticised then Evening Standard editor George Osborne for allegedly signing up to multi-million pound deals with companies including Uber and Google and providing them with positive news and comment coverage. "This is cash for column inches and amounts to a corporate fake news factory on a grand scale. If even vaguely true, George Osborne’s position as a credible editor is under serious question today," tweeted Watson.

Today the Evening Standard, which depends on commercial relationships, is, according to independent journalism credibility assessment tool NewsGuard, clear about what's editorial and what is not.

Display advertising and premium branded content are equally important to the title, says Dan Locke, head of the Evening Standard’s content agency, Studio 27, which counts a team of 17 people.

Branded content and more innovative approaches to commercial messaging are, however, increasing across the entire advertising ecosystem, including at the Evening Standard, he says.

In the last 18 months, sponsored content partnerships have increased significantly in terms of contribution to the publisher’s overall P&L, he says. Digital is increasingly important with the ratio of digital to print sponsored content increasing from 40% to 55% in the last year.

While the publisher does not have benchmarks as to how much content should remain editorial, the ES according to Locke "monitors the ratio of advertising to editorial to ensure we have a healthy blend".

Although the ES’s coverage takes in politics and current affairs, its lifestyle content, says Locke, provides a key opportunity for using sponsored content.

"In this area, our Insights Team has repeatedly found that our audience will always engage with sponsored content as long as it’s relevant and authentic. For example, a travel company can absolutely write about the 10 best hotels in Dubrovnik, but should probably stay away from talking about insurance….Our readers can sniff out inauthenticity," he says.

While most commercial content at ES is produced separately from the newsroom, says Locke, editorial staff do collaborate on key commercial projects. "Transparency is key. We clearly label and identify all commercial work for the reader at all times and have no influence over any other editorial work outside of brand collaborations," he says.

On criticisms levelled against ES in the past, Locke says that no commercial agreement would ever include 'favourable' news coverage. "'We are really clear on this issue: you can’t buy our editorial and you can’t buy our readers," he says.

When it comes to what makes an appropriate disclosure for native advertising, although all kinds of labels abound on news sites, Amazeen is clear what constitutes transparency.

"You label the content as advertising or advertisement. That’s easier for people to understand," she says.

This transparency, she says, is crucially in the interests of the publisher.
"The more information that readers are given, the better," she says. Her studies suggest that the more transparent people felt the disclosure was, the less of a negative reaction they had to the advert.

"It's in the news organisations’ interests to be more transparent about what they're doing."

She adds: "There's some great content that publishers are creating. It's just hard for readers to understand that it was created by a fossil fuel company for instance, rather than an independent news organisation."

Making sure that disclosures are not lost when content is shared on social media is also important, she says. Many times those disclosures disappear when something is posted to Twitter, she finds.

"Increasingly, publishers are required to promote this content. So they encourage sharing of this information. So they post it on their social media feeds. And that competes for consumer attention. It competes with their own news," she says.

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