The business of media

The New York Times columnist David Carr’s piece Sunday was about the business of media, specifically the increasing blur between journalism and paid content across many major news outlets.

What is the most disconcerting is an allegation by Joe McCambley, founder of digital design firm The Wonderfactory, that some public relations firms are being allowed to post directly to news organizations sites:

Now the new rage is “native advertising,” which is to say advertising wearing the uniform of journalism, mimicking the storytelling aesthetic of the host site. Buzzfeed, Forbes, The Atlantic and, more recently, The New Yorker, have all developed a version of native advertising, also known as sponsored content; if you are on Buzzfeed, World of Warcraft might have a sponsored post on, say, 10 reasons your virtual friends are better than your real ones.

It is usually labeled advertising (sometimes clearly, sometimes not), but if the content is appealing, marketers can gain attention and engagement beyond what they might get for say, oh, a banner ad.

Mr. McCambley is wary. He says he thinks native advertising can provide value to both reader and advertiser when properly executed, but he worries that much of the current crop of these ads is doing damage to the contract between consumer and media organizations.

It’s a tough call – either pull in the revenue or watch your traditional media outlet fall apart as readers decamp. Publishers have few choices for earning money, especially since subscriptions continue to fall and companies pay less and less for online ads.

But Carr isn’t the only one worried about the rise of paid content. The Federal Trade Commission plans to look into the area, according to The Hill:

The Federal Trade Commission will examine the growing field of “sponsored content” in digital media, the organization announced Monday.

The agency will hold a workshop in December on the ads, which look similar to stories posted on news and social websites and have become increasingly common as media look for new ways to make money.

The FTC, which has the authority to bring charges against companies that deceive consumers, now has nonbinding guidelines on the use of the sponsored content ads. The workshop could be a first step toward expanding or strengthening them.

“Increasingly, advertisements that more closely resemble the content in which they are embedded are replacing banner advertisements — graphical images that typically are rectangular in shape — on publishers’ websites and mobile applications,” the FTC said Monday.

Carr goes on to outline some of the same issues the FTC plans to raise:

Publishers might build a revenue ledge through innovation of the advertising format, but the confusion that makes it work often diminishes the host publication’s credibility.

Of course, some publishers have already gone flying off the edge, most notoriously The Atlantic, which in January allowed Scientology to create a post that was of a piece with the rest of the editorial content on its site, even if it was differently labeled. They got clobbered, in part because handing the keys to the car to a controversial religion with a reputation for going after journalists was dumb.

Forbes is one of the best know names to have fully embraced the concept and has come under some criticism for the choices, Carr writes:

Lewis Dvorkin is the chief product officer of Forbes and a veteran of both traditional and digital media publications, having worked at The New York Times, Newsweek, The Wall Street Journal and AOL.

“I believe that people gravitate toward content they trust and over the last three years, according to comScore, our audience has grown from 12 million unique users to 25 million,” he said. “We have very high standards and we spend a lot of time vetting our contributors and making sure that our marketers put real effort into what they put on the site, and understand the importance of coming up with accurate, useful information.”

Forbes’s BrandVoice allows advertisers to produce editorial products that reflect their best efforts to engage audiences. The content is clearly labeled advertising, but has the familiar headline, art and text configuration of an editorial work.

As a result, things can get pretty complicated pretty quickly. In addition to staff posts, the site has a roster of 1,200 contributors — consultants, academics, journalists and others — who are compensated according to the audience they attract. And then there are the posts from the marketers, with a current roster of 15 active brands.

That’s enough to make your head spin just reading it. No wonder it’s hard for readers to determine the motivation or bias behind stories. But according to Carr’s column, they don’t seem to mind:

Malcolm Forbes might not recognize this version of his magazine, but it has been a hit: revenue from BrandVoice has doubled in the last year. Right now, Forbes can charge a premium for being a well-known brand that is an early adopter of a very sexy strategy, but the execution could dilute the power of that brand over time.

Mr. Dvorkin is quick to point out that the magazine is fresh off two prestigious Loeb awards, with magazine newsstand sales up 17 percent in the first half of the year. He suggests that the cornucopia of content is enabling, not preventing, his staff from producing sticky, credible work.

It seems to be working for Forbes, but that’s not to say that the model is one that can and should be repeated at other news outlets. It’s a constant struggle for many media outlets to make money and it will be interesting to see if the FTC steps in to regulate it in the future.