Since the Digital Bubble Burst

Advertising used to be simple: print, TV, and radio. But ever since the digital bubble burst, the industry has had to adjust, and budgets have been redistributed to assemble digital campaigns, app launches, and, most recently, virtual reality experiences.

But perhaps even more quickly than advertisers are infiltrating new digital avenues through which to directly sell people their product, customers are becoming increasingly more discerning. Social media sites like Facebook and Twitter have modified their algorithms to minimize the visibility awarded to traditional paid advertising, and, according to Business2Community, in 2016, almost 200 million users have installed ad blockers that cost publishers an estimated $41.4 billion in lost revenue. And in addition to the pop-ups, which most users don’t even see, savvy Internet operators have adapted “banner blindness,” or automatically tune out the traditional online banner units that have been industry standard for years. Solve Media reports that Internet users are “more likely to survive a plane crash than they are to click on a banner ad.”

Accordingly, advertisers have had to reassess their online presence to combat this epidemic. One solution: sponsored content. The American Press Institute defines sponsored content, or native advertising as “content that takes the same form and qualities of a publisher’s original content. It usually serves useful or entertaining information as a way of influencing the perception of the sponsor brand.” Not only are startup digital publishers like BuzzFeed and Vice modeling their advertising budgets around this new strategy, but older brands like The New York Times, Forbes, and The Wall Street Journal are also working with advertisers to produce native collaborations.

These partnerships are mutually beneficial: advertisers are able to reach curated and quality audiences while publishers who have been struggling to remain otherwise viable can offer the services of eminent editorial teams. To promote the premiere of the since Golden Globe nominated series Narcos in 2015, Netflix paid the Wall Street Journal to produce original reporting and multimedia graphics on the cocaine industry. The feature aligned with the interests of WSJ’s existing audience, effectively promoted Narcos, and brought attention to an international drug crisis. Similarly, Air New Zealand partnered with the stars of The Hobbit to produce The Most Epic Safety Video Ever Made. The video, which lasts for four minutes, takes the typically unexciting topic of airplane safety and draws in viewers’ interest with movie stars and breathtaking views that promote travel to New Zealand. The piece’s unassuming title and seamless integration of The Hobbit, air safety, and travel in New Zealand has attracted almost 16 million viewers since is publication in October 2014, and its accompanying hashtag, #airnzhobbit, has since enabled cross channel promotion.

While increasingly effective, cross-platform sponsored campaigns are expensive. Most companies don’t have the staff, resources, or budgeting available to produce content that is up to their publishers’ standards. In turn, major publishers with the existing resources have built out arms of their companies to address this new demand. After years of losing ad dollars to smaller startups who could offer clients lower prices and more digital flexibility, the publishing industry’s powerhouses are re-allotting their resources to take over the sponsored content sector. Brands including WSJ Custom Studios, 23 Stories by Condé Nast, Hearst Custom Content, and The New York Times T Brand Studio are all making efforts to roll out offerings to advertisers that boast the cross-divisional resources of their companies. Helmed by editorial staff, each of these new departments ensures that all content is high quality and on-brand.

And while many publishers have committed to this effort, the industry has yet to fully embrace the sponsored content model. For many, it’s not cost effective, but for most, the issue is editorial integrity. The Federal Trade Commission has yet to regulate international standards for notifying readers that a video or article is paid for by a third party advertiser; in some cases, particularly when the provider has a character limit, “#ad” is sufficient. Some publishers worry that this lack of transparency will turn off readers once they realize a post has been underwritten, and don’t want to jeopardize readers’ loyalty.

The New York Times claims, however, that readers spend the same amount of time on sponsored articles that they do on traditional news pieces. This means that either readers are unaware that they’re digesting sponsored content or they simply don’t care who is paying for it. If a 19-year-old girl is watching a makeup tutorial video on Refinery29, does she care if Maybelline paid for its production? Does a traveling foodie care that NYC Restaurant Week sponsored NY Magazine’s 2016 recommendations? As the media world hurries to standardize and regulate the guidelines for sponsored content, in the interim, Internet users are hungry for content and advertisers are happy to supply it.