‘A press cannot be free and independent if no one is willing to pay for it.’— John Oliver
Many people use the terms “content marketing,” “sponsored content” and “native advertising” interchangeably.
For readers like you, they have one thing in common. They look like news, but they’re ads. They’re a bit like the old “advertising supplements” we used to see in magazines. While they looked like articles, they were clearly marked as ads. But online, the difference can be more subtle.
For sponsors, such advertising is a way around ad-blocking software, which marketers view as slightly less terrifying than the Grim Reaper. Some 200 million people have AdBlock installed, for example. Other studies show that people are more likely to survive a plane crash than click on a banner ad.
News publishers and aggregators view ads that look like content as the solution to the crisis in the news industry. Newspapers’ and magazines’ bottom lines have shrunk since the late 90s, as their content moved to the internet. Because people don’t click banners, online ad rates have always been, and still are, much lower. In fact, the New York Times said in October it plans to scrap banner ads altogether. It released its own format called Flex Frame, which makes ads look more native. That’s because advertising-as-content pays the bills.
“A hundred percent of our revenue comes from branded content, so we have a lot of partners who are marketers and major brands; we work with 76 of the top 100 brands now.”
—Buzzfeed CEO Jonah Peretti
People are about twice as likely to click on sponsored content as they are a static, full-screen ad. Mobile news aggregator Flipboard took advantage of that higher click-through rate with the recent launch of Storyboard, which makes ads that look like content.
Business Insider says native advertising already accounts for 56% of all ad revenue. By 2020, it expects that figure to rise to 74%.
This new form of advertising is not yet heavily regulated, but the US Federal Trade Commission (FTC) is watching. Mary Engle, its Associate Director for Advertising Practices, said as much to advertisers at a recent seminar:
“Engle discussed the FTC’s expectation that all native advertising be accompanied by prominent disclosures. Engle also stressed that all brands should make a ‘good-faith effort’ at achieving regulatory compliance.”
—Holland & Knight LLP
Reputable media outlets already do this, by identifying branded or native content for what it is, however subtly.
As debate swirls over regulation of the new cash cow, the ad industry attempts to self-govern. Australia’s ad agency governing body is working on new rules. They may advise advertisers and publishers to clearly mark native advertising as “sponsored,” and list the name of the sponsor.
In a 2014 segment on “Last Week Tonight,” comedian John Oliver blamed the rise in new ad formats on the public’s reluctance to pay subscriptions for news:
“This is all at least partially our fault. A press cannot be free and independent if no one is willing to pay for it. And it seems nobody is going to.”
Until that changes, you have only one choice: Read the fine print. Spot the sponsor. Look for links to primary sources. Read several articles on a topic. And learn to recognize product endorsements.