Why are leading digital news providers embracing native advertising?

Jul 31, 2015

The Reuters Institute for the Study of Journalism has published a new book. "Innovators in Digital News" is the title and it's written by Lucy Küng, a Research Fellow at the Reuters Institute for the Study of Journalism and the University of Oxford.

It sounds like an interesting book. The author has interviewed executives from such prominent media organisations as The Guardian, The New York Times, Quartz, BuzzFeed and Vice to find how they navigate the world of digital news. One aspect, the book examines, is native advertising. More accurately: Why are leading digital news providers embracing native advertising?

The author Lucy Küng has written an article on The Media Briefing where she provides a brief answer to this question and other observations about the interplay between digital news organizations and native advertising.

Let's take a look on five of them:

1. News organizations need revenue - native advertising can provide it

Not a stunning discovery, but another reminder why media outlets are so keen on making native advertising work. It's a source of revenue and a very welcome one, we may add. The author writes:

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).

2. Native advertising is a better fit for mobile than other advertising formats

Digital news consumption is moving towards mobile platforms and native advertising works as a response to this development. Lucy Küng explains:

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.

3. Native advertising is nothing new

The concept of sponsored content wasn't invented today. Or yesterday for that matter. It's kind of old actually and historically not always as dangerous as made out to be.

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.

4. News organizations are establishing their own sponsored content bureaus

Media outlets are selling more than a share of their platforms. Content creation is a popular stream of revenue.

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.

 5. Transparency and in-house separation are critical issues for native advertising

We completely agree.

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.

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