Native Ads Compete With News for Audiences’ Attention — And Get It

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I was fascinated by a finding of the new Tow-Knight Center for Entrepreneurial Journalism study on how community and other news publications are tipping their revenue funnel toward native advertising. What caught my eye had nothing to do with dollars. It was all about how sponsored content could connect with readers as much as “news.” And sometimes maybe more.

Editors are proud guardians of the news they publish. They see it as a public service. But as they’ve had to adjust to producing news with fewer reporters and other staff, it is a thinner soup. But it’s not just an issue of resources – it’s the gap between audiences and editors in what’s considered news.

The Tow-Knight study on native ads, directed by Michele McLellan, creator of Michele’s List which ranks local news sites, commendably dives right into this issue.

Listen to Todd Handy, VP Advertising Strategy and Products at Deseret Digital. The company’s Salt Lake Deseret News, carried a campaign called “Ask a Chef” and “Ask a Dietician,” which was sponsored by a local grocery chain and lasted for over a year.

“A few months after we began the campaign, one week the advertiser didn’t run their article, and we actually had users e-mail us asking why ‘Ask a Chef’ hadn’t run that day,” said Handy. “So, effectively, we had users asking why we hadn’t advertised to them that day. The content had become popular on its own and wasn’t seen as advertising.”

Promotion, even veiled, is not enough. The Tow-Knight study quotes Steve Rubel, Chief Content Strategist at the global marketing firm Edelman: “The content has to be an equal draw [with editorial content] or be so compelling it stands out.”

One of the 14 publishers of native advertising examined in the Tow study is the New York Times. The study quotes Sebastian Tomich, SVP advertising & innovation at the Times: “It comes down to quality, user experience and quality.”

But even when standards are high, they aren’t always achieved, I’ve seen. The Times has been carrying this paid feature in a prominent place on its homepage for more than a month: “Thinking of Switching Cities: What to Look For Before You Move.” The package, sponsored by the National Association of Realtors, ranks 39 cities in categories that include schools, walkability and transportation.

One of the cities is Charleston, SC. I clicked on one public school in the package that I know well – Memminger Elementary. It is given an F, with no explanatory backup citation. Memminger, a predominantly black, high-poverty school, does indeed have major academic problems. But I know, first hand, it is tackling those problems, primarily through its new and academically demanding International Baccalaureate program. In the pre-kindergarten, 2- and 3-year-olds are learning to read. I see it happening.

I’m not saying Memminger deserves a top grade. It still has to prove itself. But an F, with no explanation why, is not enough – not for the New York Times or the National Association of Realtors.

If the Times didn’t catch this failure to meet its own putative standards of quality, what does this say about other publications that don’t have all the resources of the Times’ sponsored-content department, which includes a staff of “more than three dozen,” according to the Tow-Knight study?

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On the subject of revenue, the Tow-Knight study found that for most of the 14 news publications, native advertising amounted to 5% of their revenue or less. But the publisher and founder of one of the news groups surveyed, Scott Brodbeck of Local News Now serving communities in Washington, DC, and suburban Northern Virginia, told me: “Our revenue split is maybe 60% display and 40% sponsored content. I don’t think display is going to grow much as revenue source at this point, but there are some things that display does that native does not, so I don’t think it’s going away any time soon.” Local News Now charges from $50 to $800 for sponsored content, depending on type and placement.

Carll Tucker, founder and CEO of the Daily Voice group in suburban New York, Connecticut and Northern Jersey – which was not part of the Tow study – told me: “Content Partnerships constitute more than 50% of our revenues. Display (programmatic and direct) pays the bills; CPs make us a business.”

Tom GrubisichTom Grubisich (@TomGrubisich) writes “The New News” column for Street Fight. He is editorial director of hyperlocal news network Local America, and is also working on a book about the history, present, and future of Charleston, S.C.