The blurred lines of native advertising

Digital news outlets migrate toward sponsored content models, raising new conflict-of-interest fears

The Guardian and The New York Times both rolled out new branded content schemes in 2014 to increase digital revenues.

The Guardian newspaper announced last month that it was starting an online division offering clients “bold and compelling new ways to tell their stories and engage with influential Guardian audiences.”

Normally, a global media company ramping up its digital content would have barely registered a peep of attention, but the statement launched the paper’s new “branded content and innovation agency,” a partnership with the company Unilever.

The Guardian’s new division is part of a growing trend of news sites embracing a revenue model called native advertising.

At its basic level, native advertising, which is also known as sponsored or branded content, is advertising paid for by outside companies in an online news outlet that takes the appearance of editorial content produced by that outlet.

But the Guardian's announcement, and the trend it represents, worries many, who fear a permanent conflict of interest with traditional journalistic norms.

Andrew Sullivan, one of a number of journalists who responded critically to the announcement, called the move a public relations campaign “disguised as journalism, in order to promote Unilever’s image as a green company.”

Major media sites that now use native advertising include the New York Times, The Atlantic, BuzzFeed, Time, The Washington Post, Harper’s, Gawker and the Guardian.

Take one example of native advertising from a recent article in Quartz, an Atlantic Media Company.

The article, “Generating social impact and a financial return, is indistinguishable in the layout and style of a normal Quartz news article except for three artfully integrated markers showing that the article is a paid advertisement from Wall Street firm Goldman Sachs.

The aesthetic of native advertising runs the gamut, from ads that are more difficult to spot as branded content, to sponsored copy that’s as obvious as traditional banner advertising.

Why native ads?

Traditional news media sources have struggled to replace a decline in print with digital sales. The Digital News Report for 2013 put out by the Reuters Institute for the Study of Journalism found that while digital revenue had risen in the past year, it remains very low, with only 12 percent of Americans and 9 percent of Brits saying they’ve paid for digital news in the past year.

“The data indicate improving prospects for digital news payments, but news providers will need to be realistic about financial expectations. The digital world will not yield income at the levels of the 1990s, but revenues and profits do exist,” said Robert J. Picard, director of research at the Reuters Institute.

Many publishers see native advertising as a way to overcome years of declining revenue.

In a December 2013 letter announcing the decision to use native advertising in the New York Times, Arthur Sulzberger Jr., the paper’s publisher, explained that native advertising was necessary to “restore digital advertising revenue to growth” for the company.

Meanwhile, many companies and advertisers consider sponsored content a more effective way to generate attention from online consumers than traditional banner page advertisements.

“Banner advertising is not working on a whole host of levels," Jay Lauf of Quartz said on the Diane Rehm Show. "Performance isn't there for the marketers, and …  the pricing structure is so low that publishers can't really make a living on pure banner advertising."

That partly explains why 75 percent of publishers offer online native advertising, according to a July 2013 study by the Online Publishers Association and Radar Research.

What price will be paid?

But for some media observers, the financial success and ubiquity of native advertising comes at the price of advertiser transparency — what might have been clear advertising in the past might now be disguised in the modern garb of content branding.

“The result (of native advertising) is not merely deceiving to readers, it bespeaks a conspiracy of deception among publishers, advertisers and their agencies,” said Bob Garfield, co-host of “On the Media,” in a February Guardian op-ed.

“Doesn't the reader have the right to know whose interests are being served by the content?” Garfield asked rhetorically in a December speech at a forum hosted by the Federal Trade Commission (FTC).

Bill Grueskin, a professor at Columbia Journalism School, told Al Jazeera: “There certainly are pitfalls that news organizations need to be aware of when running native ads. The most important, of course, is to clearly delineate what content is coming from journalists vs. what’s coming from the advertiser (or its agents).” 

Grueskin argued that clarity is paramount with “clear design, clear roles in the newsroom, clear standards about where the advertisers’ content begins and ends."

Blurred lines and consumers

Still, the difference between editorial and advertising is sometimes difficult to delineate. 

News outlets now often rely on in-house employees to produce content for outside companies footing the bill, a difference from traditional advertising where an outside firm is producing both the content and the money.

For instance, in its roll-out in January, the New York Times announced that employees from its advertising division and paid freelancers would write content for Dell, which was the company’s first major native advertising partnership.

In the Guardian’s announcement of its sponsored content agency in February, the paper said that the partnership with Unilever meant the creation of a 133 person in-house team but that it would tap into the Guardian’s “top class editorial, creativity and digital innovation” to help Unilever and other brands “tell their story.”

This evolving digital advertising landscape has attracted the attention of the U.S. government, which is worried about what this changing environment means for digital news consumers.

The FTC — the federal body that regulates, among other things, advertisements from a consumer protection point of view — convened a symposium with a workshop entitled “Blurred Lines: Advertising or Content” in December 2013, bringing together leaders in journalism and advertising.

For traditional advertising, the FTC has a longstanding statute on the books, known as Section 5. According to clause of the FTC Act, "unfair or deceptive acts or practices in or affecting commerce are hereby declared unlawful."

While the regulatory body has yet to fully develop its policy on native advertising, the forum suggested the government is attempting to increase its consumer protection purview over the practice.

“While native advertising may certainly bring some benefits to consumers, it has to be done lawfully,” said FTC chair Edith Ramirez at the workshop. “By presenting ads that resemble editorial content, an advertiser risks implying, deceptively, that the information comes from a non-biased source.”

With the rise of social media, companies have an increasing number of ways to reach out to consumers, and some media experts say it has given advertisers leverage when it comes to dealing with today's newsrooms.

In the past, a city's paper had a near monopoly on local advertising, but now companies don't need to rely on traditional advertising in newspapers.

“There’s a new balance of power," Rosen said. "It’s clear advertisers have more power relative to the newsrooms, because there are so many more ways to reach people."

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