164. How To Ru(i)n A Business: When Content Meets Native Advertising

04 takeaways from this video:

00:00:43 Most media outlets rely on corporate advertising to stay afloat, and are therefore locked in a constant battle for editorial independence. This is especially problematic where, when it comes to media in “free and independent societies,” the editoral and business functions should not overlap.

But with print journalism following its readers online, it has struggled to maintain a viable business model because, online, consumers neither like paying for content nor being subjected to banner advertising.

00:03:07 Native advertising, as explained by Ken Auletta, a contributor to The New Yorker, is “advertising camouflage.” Typical native advertising includes small disclaimers such as ‘Sponsored Content,” logos in and alongside the content, and body copy that reads like an advertisement.

[EDITOR’S NOTE: Native advertising is considered different from the use of “off the record” statements in public relations. Recall in my interview with Executive Director Daphné Claude that you can usually identify ‘off the record’ statements in articles because they’re sourced by “according to a source familiar with the subject.”

‘Off the record’ can also be one way of negotiating with a journalist: “Look, my clients worked on a particular transaction you’re writing an article about. If you mention my client in the article, I’ll give you accurate information about the deal.” For example ‘Company X did action Y and was advised by MY CLIENT.’]

So while the free press should keep its editoral and business functions separate, native advertising is so lucrative, and consumers so adament about not paying for it, that it can be hard for media outlets to not at least incorporate it in their business model.

“100% of Buzzfeed’s revenue comes through branded content. We work with 76 of the top 100 brands.” – Jonah Peretti, CEO of Buzzfeed

00:05:30 Native advertising is lucrative to the point where other, more reputable outlets such as Time Inc. and The Atlantic have created entire teams dedicated to native advertising. “As long as its clearly marked and the consumer knows the difference,” defends Joseph A Ripp, CEO of Time Inc., “I don’t see any problem with it at all.”

[EDITOR’S NOTE: In The Wall Street Journal’s article Clock Is Ticking for Time Inc.’s CEO on July 27, 2015, reporter Jeffrey Trachtenberg explains that Time Inc.’s 2014 revenue fell by 11% from 2010, and unless the company finds new sources of revenue and content distribution, Time Inc. can expect a slow and steady death.

Also, in 2013 The Atlantic published an article sponsored by the Church of Scientology. This content was removed, however not before a screen capture was made and posted on Gawker.com]

Less than half (41%) of the general news audience are able to distinguish native advertising and sponsored content from editorial content.

(Source: Interactive Advertising Bureau. July 22, 2014. Paragraph 5, last sentence.)

00:07:41 Some native advertising is relatively harmless and isn’t necessarily in conflict with the content it sponsors, such as a legitimately researched New York Times piece on Women Inmates: Why the Male Model Doesn’t Work which was paid for by Netflix’s series Orange is the new Black.

But corporate sponsored content won’t always be as objective, such as the article in the New York Times on How Our Energy Needs Are Changing, sponsored by Chevron.

The dilemma is that there cannot be a ‘free and independent press’ unless consumers are willing to pay for it to be.