Sponsored content is here to stay

Some journalists might not like it very much and it can occasionally lead to problems, but it’s a revenue source that can’t be denied. Readers like it, too.

Mention the phrase “sponsored content,” “sponsored journalism,” “branded content,” or “native advertising,” and I guarantee you’ll get a reaction all over the map from journalists, advertisers, and readers. (Heck, no one can even agree on what to call it.)

The increased blurring of lines between advertising, news, and editorial is the latest digital dogfight to take hold of the world’s most popular sites—from homegrown online media darlings like BuzzFeed, The Huffington Post, and Mashable to traditional publishers such as The New York Times, The Wall Street Journal, and Forbes.

With a cascade of media attention, sponsored content has become both hero and headache for the publishing industry. Either way, here’s why it’s not going away anytime soon.

A match made in publishing heaven

Sponsored content is estimated to be a $1.54B industry in 2013 alone. For lots of professional journalists, it represents a complete sell-out—faux news cloaked in a fish wrapper and the antithesis of true reporting. But for publishers desperate for revenue streams, having witnessed their ad budgets and paid subscriptions steadily shrinking, it’s a lifesaver.

For readers constantly and hungrily scanning for eye-catching content, they are ready-made bait for sponsored content. Getting a whiff that a story is “brought to you by” a given brand might leave them feeling initially duped—but still entertained or educated—no matter who wrote or paid for it.

Even A-listers are on the bandwagon

The ethics of using sponsored content may not be an issue for digital mainstays like Gawker or Slate, who regularly splatter these articles across their sites. It’s more the traditional journalism outlets like The Washington Post and literary giants such as The New Yorker that have been a bigger surprise to pull up a chair at this table.

It’s also an increased risk for these revered publications to delicately navigate around the unspoken agreement they have with readers to be a reliable and trustworthy source for high-quality content.

As the brass at The Atlantic found out, these publications can also end up being the poster child for what can go wrong with sponsored content, such as its Scientology article debacle. (I would argue that readers should have been suspicious that The Atlantic would ever run something positive about Scientology, but that’s for another story).

Although the editors apologized for their error in judgment, the damage was done, and it will be difficult to restore credibility (amplified by an avalanche of bad press). That said, many of these respected publications are expected to continue their sponsored content strategies in the long term.

History repeats itself

The fuzziness between ads and true editorial content has reached such epic proportions that it took center stage at an FTC meeting last week with agencies, publishers, brands, and consumer advocates discussing potential guidelines to ensure readers know they are looking at a paid marketing, not a “real article.” The FTC determined that sponsored content has to be “obvious.”

If you look at the FTC history around guidelines for promotional material, though, there have always been huge holes in the rules, giving advertisers wide latitude: from the oldest magazines with a full-page advertisement for a miracle hair growth product that looks suspiciously like editorial content, to brand-sponsored “advertorials” and white papers inserted stealthily into magazines.

Companies have been marketing their products in alternative editorial formats for centuries; the difference is that now content is not only sharing fonts and page space, they are even combining editorial staff in some cases. (I wonder how long before the oxymoronic title “brand journalist” hits the mainstream?)

Truth or (no) consequences

Though sponsored content is still very young in the history of online publishing, it has already become a consistent revenue source for a plethora of A-list digital publications, and it is clearly here to stay. Regardless of whether FTC guidelines are developed to keep advertising and editorial two inches apart and the word “Paid” is bigger and bolder, I question if these types of changes will ultimately matter long term.

The advertising industry is littered with marketers playing it fast and loose, with more of a “Don’t Ask, Don’t Tell” policy until someone complains loudly enough to the FTC. Online publishers themselves have no financial incentive to change that equation either. Plus, results are pouring in from sponsored content: Readers are increasingly clicking on this new digital cocktail of real news, promoted articles, and contributed content.

Ladies and gentlemen, we have a hit.

What next?

In the struggling world of online publishing, some would argue that sponsored content is saving what little remains of true online journalism (though many reporters would argue the opposite).

What we should be more concerned about is not how much reporting is being replaced by sponsored content, but the scariest question of all: Will readers even notice, much less care?

Janice Cuban is principal at Livewire Communications.

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