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April 23, 2015 | features

This article originally featured in the March/April edition of NZ Marketing

History is littered with examples of short-term gain leading to long-term pain, whether it’s the use of mercury to cure syphilis, thalidomide as a remedy for morning sickness, or investments in sub-prime assets. Some wonder if the cheap thrill of clicks and the growing popularity of native advertising could be placed in a similar category, but tell that to the brands, publishers and agencies who seem to be taking to it like Brendan McCullum to a half tracker.  

Bob Garfield, the host of NPR’s On the Media, is one of the most vocal native advertising naysayers and calls it “the latest gimmick for infusing a dying old industry (and a sickly new one) with desperately needed cash”; prominent US political commentator and erstwhile blogger Andrew Sullivan said “journalism had surrendered” and legacy media companies seemed happy to sell the integrity they had built up over decades; satirist John Oliver, whose withering and very funny attack on native advertising clocked up millions of views, explained it by saying “ads are baked into content like chocolate chips into a cookie. Except it’s more like raisins into a cookie because no-one fucking wants them there”; and some journalistic purists see the commercial tentacles stretching into editorial as a threat to the democratic function of the media. 

This came to the fore recently in the UK after The Telegraph’s chief political commentator Peter Oborne quit the paper because he believed it had gone soft on the HSBC, one of its bigger advertisers. He said the lack of coverage of the bank’s dodgy activities was a fraud on readers. And Matt Bale, co-founder and director of MBM Media, says native advertising, if not done properly and transparently, could be seen in the same light. 

"Native advertising is good for publishers. They understand their audience. So they can create content that they know will resonate with them. That’s a better conversation to have than how many clicks you can get." Ben Young

Matt Bale

Mind the curiosity gap

Bale says consumers have become conditioned to not click on banner ads—and, with ad-blocking software, many have found a way to avoid them completely—so, as ads start to camouflage themselves in the content streams of sites and as some publishers and platforms seek clicks at any cost, he believes there’s a possibility they might eventually become wary of clicking on content as well. 

“Content is an interesting space for brands and audiences alike and native is a delivery mechanism for it. But I do worry about the rush for people to think of short term gaming and hoodwinking people. In the long term, jeopardising reader trust is not in anyone’s best interests. No-one wins.” 

That’s not entirely true, however. Someone has to be winning with native advertising gaining so much steam. Bale says there are probably marketing managers or publishers who can “put up a great graph showing all the traffic they drove”. Or a media agency saying ‘look how great our cost per click is’. Or a sponsored link platform that‘s making heaps of cash. But he says very few of them would be showing the massive bounce rates or the long term impact on the brand or the publisher of tricking people into clicking on an ad.  

False economies?

Those who rail against the dilution of journalism are often accused of being naïve idealists who dream of going back to a mythical better time where there was no commercial interference. Here’s how NPR’s Bob Garfield explains it. 

The proponents say: 

  1. “Experts at brands can often offer interesting, valuable content every bit as illuminating as that produced by independent journalists.
  2.  Ordinary online display advertising doesn’t work, because nobody ever clicks on it, or even much notices it.
  3.  The news media are in an existential crisis. The digital revolution has destroyed their business model and desperately need new revenue streams. Just as there are no atheists in foxholes, there are no picky eaters in a famine.”

The opponents say: 

  1.  “If brands are so confident about the quality of their ‘content,’ why don’t they proudly slap their name on it instead of camouflaging it to look like third-party mediated editorial?
  2.  There is no justification for misleading readers, least of all ad efficacy. At stake is the trust earned by the publication over its entire lifespan. If that precious resource is mined and sold … it will inevitably be depleted, leaving only a scarred wasteland.
  3.  Under the most optimistic scenario, the money so unchastely earned will be far too little to save anyone.”

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Trick or treat? 

Whether you believe native advertising is right or wrong, it’s happening. New Zealand data is hard to come by, but, according to a recent study by the Association of National Advertisers (ANA) in the US, 58 percent said their company used native advertising during the past year and budgets increased for 55 percent of respondents. This year, 63 percent of respondents expected to increase budgets allocated to native advertising. But it’s still a tiny fraction of overall spend, and despite the increases, native accounted for five percent or less of the total marketing budget for 68 percent of respondents.

While native advertising is now closely associated with digital and social media, companies have long understood the benefit of crafting ads that look like editorial. Back in the 1890s, they were often known as reading notices and the long copy ad was introduced for a very good reason; brands helped fund radio and TV shows in the 1920s and 1930s; Merriam Webster added advertorial to its list of approved words in 1946; and even TV ads are often described as being mini-shows with a commercial message attached. This is the argument the proponents make about the acceptability of native advertising. It has been this way since Adam was an ad salesman. There is no black or white. Only grey. 

These days there are sponsored Tweets and Facebook posts; brands integrating themselves into the content of TV shows; relevant ads popping up on Google’s search results; ads that look like an email in your inbox; suggested apps for your smartphone; and activations like Tui Catch-a-Million, a marketing campaign so engaging it came to be seen as a valuable part of the experience (fashion magazines have long claimed the ads are an enjoyable part of the experience for readers because they’re relevant to the content). All of those things are cut from a similar cloth of contextual relevance, but OMD’s managing partner Andrew Reinholds wouldn’t go so far to call them native advertising. He believes native ad units, whether in-feed ads like those offered by Sharethrough that are designed look like an editorial post, or sponsored links through platforms like Taboola or Outbrain (often titled something like ‘from around the web’ and located at the bottom of a webpage), are at the more basic end of the branded content continuum and can often be “the first step towards giving up the security blanket of an advertising unit”. 

Healing the banner blind 

So why are some media owners willing to risk the most important thing they have—independence and trust—for a few extra clicks or a bit more advertising revenue? 

“Media owners are saying the banner model in particular as a way of making revenue is very one-dimensional,” he says. “And I would say that it probably has a limited shelf life. If you look at falling response rates, it’s not really working from a media perspective, creatives generally struggle with it, and consumers don’t like it. Lots of consumers have ad-blocking software. So there are a few dimensions to it.” 

"Ads are baked into content like chocolate chips into a cookie. Except it’s more like raisins into a cookie because no-one fucking wants them there." John Oliver

Much has been written about the ‘you’re five times more likely to get eaten by a shark/survive in a plane crash/complete Navy seal training/get a message from real Nigerian prince’ than click on a banner ad. As a result, he says native now accounts for almost 20 percent of publisher revenues in sophisticated markets like the US and native ad units are proving to be between 35-50 percent more effective in terms of clickthrough rates than a standard banner campaign, although, as he points out, “banners couldn’t be working a whole lot worse, so you have to keep that in perspective” (Bale believes there’s too much emphasis placed on clicking and the pathways to conversion show there’s no doubt that simply seeing a banner ad does have an impact). 

Bale says the democratisation of information has allowed brands to create their own, often high-quality content, and media owners with big audiences have decided they want a slice of the action. Or, as Fairfax puts it in its description of its mobile native offer: “What’s the use in having exceptional content if no one knows about it? It’s a bit like not turning the lights on on your Christmas tree at night, so no one can enjoy the gorgeous decorations adorning it.” 

Best of the bunch

Among the many flimsy posts loosely tied into a brand’s marketing goals, there are some examples of the triple win: paid-for content that’s good for the consumer, good for the brand and good for the publisher. Here’s a few of the best.

Buzzfeed has a reputation for plentiful cat content. So it put that expertise to good use with its ‘Dear Kitten’ videos for Friskies, which showed an older cat welcoming a younger cat into the house. More than
20 million views later … 

Leading up to the 45th anniversary of the moon landing, Thrillist produced a series of articles for GE that highlighted the company’s role in the 1969 moon mission. It had 6,000 engineers and other workers involved on the historic event. And it also made the rubber in the moon-landing astronauts’ boots, as well as part of their helmets, so the culmination of the campaign was a limited edition, GE-produced moon sneaker. The 100 pairs sold out in seven minutes and a black market quickly developed. 

Tax is boring. So The Onion wrote a story about tax that everyone could relate to: ‘Woman going to take quick break after filling in name, address on tax form’. Extra points for the disclaimer from fictitious ‘emeritus publisher’ T. Herman Zwiebel: “I hereby approve this commercial endeavor as fit for publication in the Onion newspaper. May the ox of journalism always be yoked to the cart of commerce.” 

The New York Times’ T Brand Studio produced an in-depth feature for Netflix about women in prisons to promote the new season of its show Orange is the New Black. It wasn’t a hard sell. Netflix was simply basking in the reflected glow of an interesting story. 

Another example of good basking from Netflix, Wired created an impressive website all about the changing nature of TV.  

In the customary gif-heavy style, Buzzfeed asked punters to find out what their tolerance for cockroaches was by getting them to respond to a host of horrible pictures. But, never fear, Mortein’s new bug spray was there (at the bottom of the post).

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Quality control 

There’s no doubt that technology plays a crucial role in reaching consumers online, optimising campaigns and analysing results. But while Reinholds has been involved in a number of sophisticated content-led campaigns like those for Tourism Australia, he finds it slightly ironic that as the business models of the big media companies are being challenged by an excess of mostly free content, many brands believe that making more of it is a good idea. 

“I personally get worried when people use the C word because we’re looking to make sure when we are that it’s adding some value to someone. Otherwise we’re just clogging up newsfeeds … The quality of the content is crucial, otherwise people just ignore it. If you distribute something, you can get it in front of eyeballs, but if it doesn’t add value, they’re not going to watch it. And they’re certainly not going to pass it around or talk about it.” 

He says a huge range of clients are showing interest in learning more about native advertising and he believes it will “accelerate the desire to move away from an advertising message and start to invest more into content”. But the challenge is how to design content that is of value and “still gets the brand messages across.” As Seth Godin said in a recent interview, one way for companies to do it is to hire editors, not brand managers. 

“I think what kills brands who try to be interesting is to have meetings where they’re not saying to senior management, ‘How can we be more interesting?’ Instead, they’re saying, ‘How can we play this more safely?’ That’s not what happens when you want to make a hit TV show or a website that people care about.” 

The challenge for publishers, however, is scaling. The digital media world is going programmatic, with one execution often running across multiple sites. And that can also work for native. But the best native ad campaigns (see sidebar page 22) are generally bespoke to the brand, contextually relevant and labour intensive. So they’re tough to resource, and tough to sell. 

Ben Young

Measuring up

After the content is created, and then distributed by whatever means, it also needs to be measured. And this has proven to be one of the major issues with native advertising. It’s so fresh that no-one really knows whether it should be based on branding or performance metrics. And marketers are nervous because they’re not sure if it stacks up against other media options from an ROI point of view. 

The ANA survey showed that there was no single ‘most important’ measure and said the industry “needs a deeper relevant set of metrics that provide greater insight for native advertising effectiveness”. Ben Young, a co-founder of Young & Shand, is aiming to fill that gap and is currently in New York selling Nudge, a measurement tool that focuses on “quality metrics” for native advertising content. 

“Not all clicks are created equal is our philosophy. Ultimately, brands are producing the content to try and change perceptions, or so people learn something about them. So marketers should be tracking post-click to see if anything has changed.” 

"In the long term, jeopardising reader trust is not in anyone’s best interests. No-one wins." Matt Bale

Young says it finds that when brands run native campaigns they’re not getting consistent reports from publishers. So part of Nudge’s job is to measure the effectiveness of all the publishers, and then redirect spend to the best performers. 

Like any piece of marketing, he says each execution might have a different purpose, so “you have to be careful not to put too many demands on one piece of content”. And, unlike a big TV ad, he says native advertising is often part of a broader campaign and is a “good option for extending an idea”. 

“Brands want to measure the reach. But the second part is more important: did you change their minds? … I think [native advertising] is good for publishers. They understand their audience. So they can create content that they know will resonate with them. That’s a better conversation to have than how many clicks you can get.” 

Seeking clarity

Provenance is important. More than ever, consumers want to know what they’re buying. And the same is true of information. To deduce its quality or trustworthiness, it’s important to know if it has an agenda or a bias (come in North Korea) and many feel there is an element of trickery woven into native advertising; that it is an illusion, rather than innovation, that slowly nibbles away on integrity.  

Everyone spoken to for this piece agreed that branded content and native advertising can be of value to brands, publishers and readers. But they also agreed that it needs to be clearly labelled as paid-for content (two-thirds of respondents in the ANA survey agreed that native advertising needs clear disclosure that it is indeed advertising and 13 percent felt that such disclosure was not needed). 

Colin Peacock, host of Radio New Zealand’s Mediawatch programme, says media owners shouldn’t be condemned for running native advertising, especially if it’s in a separate section or if there’s a clear declaration of why it’s appearing. But while most media owners are at pains to point out they are being transparent, as Garfield argues, if that was truly the case they would simply label it ‘advertising’. Instead, they use “weasel words” like ‘sponsored content’ and ‘publishing partner’, or make the background a different colour and expect the audience to know the difference, as Stuff does on mobile with the vague term ‘promoted content’ attached. 

Young says a recent study showed that the disclosure has to be put in the content, not just around it, for the reader to understand that it’s paid for. And context can sometimes get lost between print and online. Peacock points to a content partnership between the NZ Herald with ASB and Auckland Council as part of celebrations around Auckland’s 175th anniversary. In the paper, it advertised a $10,000 giveaway, included two pages of financial advice from ASB staff and ran a story about how “Auckland’s oldest bank survived against the odds”. That story was labelled as being part of a content partnership, which is a fairly vague description in itself, but online there was only a 175th anniversary logo to show that it was paid-for. 

“That’s a problem. I guess you’d call it clumsy,” says Peacock. “And you’re left thinking ‘what am I reading?’ … Readers do question the ethics if they feel ambushed by it … It just needs to be clear that it’s being written about because money changed hands.” 

Colin Peacock

Fringe benefits

ASB also worked with the Herald on a video content campaign called The Ambitionaries, which featured interviews with successful New Zealand business people and linked into its business banking campaign around ambition. This wasn’t very clearly labelled, but, on the other side of the coin, it’s a brand helping to fund the creation of some interesting content. Peacock points to another interesting example of this, the TV-focused website The Spinoff, which launched with Lightbox as exclusive sponsor. 

“That writing, which is often more interesting than what you’ll read about TV in the papers, is really good,” he says. “But there’s also a lot about Breaking Bad and Better Call Saul [which screen on Lightbox]. Clearly that’s part of the arrangement, but it’s pretty hard to work out what it is.” 

In the past, Bale says editors were the policemen. But if the publications aren’t going to enforce the rules around labelling, he believes someone else is going to have to. And that’s why the Federal Trade Commission in the US is looking to step in and create guidelines so consumers aren’t misled (in New Zealand, the ASA has stepped in to provide guidelines around paid-for social media endorsements).

Bale hasn’t seen too much duplicity with the inhouse native operations. He says it’s more common with the clickbait seen in sponsored link platforms, although, as he points out, you can often see where a link resolves, so, in effect it is disclosing it. Some feel these platforms are a race to the bottom. But, according to the BBC, “400 million of us click on Taboola’s links every month, and the business, which was only founded in 2007, now enjoys revenues of US$250m a year.” And that’s part of the problem: the industry seems totally addicted to the number of clicks, rather than the quality of them. 

“I don’t have a problem with the language of sponsored links,” says Bale. “You just can’t allow people to hoodwink around content. The content has to have a benefit … We’re pretty clear that we don’t do linkbaiting and we’re clear about where the content is going … Native does work. We’ve done stuff for [dating site] Findsomeone, for example, but it was upfront and it was around how to recognise who’s into you. That’s content those users are interested in. It’s a win-win for everyone there.”

Andrew Reinholds

Separation anxiety

In newsrooms around the world, editorial and advertising have long been like oil and water. And both sides were—and often still are—contemptuous and ignorant of each other’s role in the business. Profit is a great lubricant for any business, and immense popularity is a great way for media owners to protect editorial integrity. But we now live in times of media plenty. Traditional players have more competition and less revenue, so it’s not surprising that concessions have been made, standards have become harder to hold onto and the ‘you scratch my back, I’ll scratch yours’ attitude towards advertisers has become more pervasive. 

So can publishers have their cake and eat it too? The New York Times’ T Brand Studio is separate from the editorial department and it’s going for quality over quantity, producing around three very clearly labelled paid-for projects per month on behalf of brands such as Netflix, Goldman Sachs, Google and The Weinstein Company. The Wall St Journal’s WSJ Custom Studios and The Guardian Labs are taking a similar approach. And, like many legacy publishers, NZME has launched a separate branded content unit called Brand Insight that features on the right hand column of the nzherald.co.nz homepage. 

It is made clear that the content in that section is paid for (the content is either written by NZME journalists or, more regularly, provided by paying brands such as Vodafone, Samsung, Auckland University and Sky). But Bale believes it’s going to be tough to balance the two given it’s a brand that trades on its premium audience and high levels of reader trust. This came into focus recently with its tough editorial coverage of the Sky City convention centre story compared to the paid-for content written by Sky City. As The Atlantic’s ill-advised native ad campaign promoting the Church of Scientology showed, the advertisers that media owners implicitly endorse by giving them space do impact on the perception of integrity (perhaps as evidence of a secret shame, or an understanding that the angry online mob will take those involved in the muddying of the journalistic waters to task, none of the posts are able to be commented on).  

“What does this approach do to the brand long term? I don’t know the answer, but it does feel you’re undermining the trust if you’re having a hard line in the news and allowing counter views and press releases to run alongside that,” says Bale.  

While there are some fantastic examples of quality paid-for content from around the world, Peacock wonders how many readers will get any value out of Sky City’s communications director explaining its new ad campaign—and how those articles would change anyone’s mind about the company. But brands want reach for their campaigns. They also often want to be in control of the message. And they want to benefit from being in editorial environments. So it certainly ticks boxes for clients. 

When Peacock interviewed Jane Hastings, NZME’s chief executive, she was adamant the front pages of the paper would remain completely free of commercial influence (although concessions have been made over false covers for advertisers, something that may have been deemed sacrilegious in the past). But that is certainly not the case with a host of newer publishers like Buzzfeed, The Huffington Post, Vice, Vox and others that tend to eschew banner advertising and are attempting to sprinkle their magic dust on brands by crafting ads that look like editorial—whether in the form of posts, lists, quizzes, videos or activations. While Buzzfeed is often seen as a foil to traditional media, a purveyor of sugary media snacks as opposed to ‘proper’ news, the site has retained one of the core tenets of news by incorporating a strict separation between church and state. As Australian editor Simon Crerar said: “We’re built on traditional lines and our office reflects this. Our editorial staff sits on the one side, and then creatives for the business are on the other side ... I can understand that people have business models, but I just wonder when people go up and defend it … from a journalist and ethics point of view there’s more rigour if I’m not also writing about brands.”

Such a principled stance seems to run counter to the regular incursion of advertising in its editorial environment. But this approach raked in around US$120 million last year. And some local brands have started to experiment, with OMD using the site to promote Sky Movies, NZ Post’s The Hobbit stamp and NZTA’s Tinnyvision Snapchat campaign.  

Modern times

As is often the way, these new players are regularly dismissed as inconsequential, inane or, in some cases, immoral. But, as David Skok wrote for Nieman Lab, “the aggregators of today will be the original reporters of tomorrow … Their search for new audiences will push them into original content production.” It’s disruption theory in action and it’s entirely predictable. He points out that Henry Luce’s Time started as an aggregator before becoming a major media force in the years following. Many others are following that path by first finding an audience, commercialising it, hiring ‘proper’ journalists with that money, moving from cheap to upmarket and often going on to dominate some of the traditional players when it comes to audience size (as an example, Buzzfeed now has more than three times the online audience of The New York Times). 

As the book Dangerous Estate wrote, the daily press “would never have come into existence as a force in public and social life if it had not been for the need of men of commerce to advertise. Only through the growth of advertising did the press achieve independence.” And the same is true today. It’s just that native advertising is increasingly greasing those wheels. Nostalgic media types seem to think of the past as a time of purity; a simple dichotomy between good and evil. But since when have commercial interests ever been pure? Since when has advertising not misled and manipulated? And since when have media owners not tried to play on our emotions? Native advertising could be seen as a modern manifestation of that heady brew. 

While NZME’s editorial director Paul Lewis didn’t have time to be interviewed for this story, in a speech last year he said he was open to using sponsored content in the editorial section of the paper if it was good enough. More broadly, some pundits don’t think it will be too long before a piece of brand-funded content wins an Oscar, and the head of Maker Studios, the largest content network on YouTube, believes the term ‘branded content’ will soon be exchanged for ‘content’. For many, it doesn’t seem to matter where the content comes from, it just needs to be good. 

And that’s often the quid pro quo: a ‘brought to you by’ in exchange for something you want to spend time with. As Howard Luck Gossage’s classic quote goes: “The real fact of the matter is that nobody reads ads. People read what interests them, and sometimes it’s an ad.” So it probably pays to remember that one man’s sad indictment on humanity is another man’s shareable list of cat gifs.

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