February 5, 2014

When The New York Times offered the first native ad on its website Jan. 8, reviews were mixed. Some thought the Times offered too much of a good thing with a half-dozen disclaimers that the story-like piece was advertising. Others opined that despite all the labels, the Times was stepping down the road to perdition hosting paid content from computer giant Dell.

I’d say each side has a point, but the bigger question is whether the Times way, like its approach to a digital paywall three years ago, will set the pattern for the newspaper industry’s belated foray into the hot native format.

In a brief phone interview, Caroline Little, president of the Newspaper Association of America, agreed with my assessment that newspaper organizations are eagerly exploring the possibilities but have barely started yet with native ads and other forms of sponsored content. And the hard breaking news of the typical website will pose a particular challenge to creating sponsored ad messages that fit right in.

Several weeks after the launch, it has become a lot clearer what the Dell campaign is all about. It is not a single ad placement but a whole series of loosely related articles that touch on how the company defines itself and the services it offers.

Also the messages link out to New York Times news stories the company likes.

Check this entry from last week.

You may first notice the excess of caution in labeling/transparency.

• The top of the page says “paid for and posted by Dell.”

• In case you missed that there is a prominent blue bar immediately below with the Dell logo.

• Next to writer Michael Keller’s byline is another small Dell logo.

• In the right hand rail, there are short summaries of three “More paid posts from Dell.”

• A mid-story interstitial links to three New York Times archive pieces “selected by Dell.”

• At the bottom of the post are two additional summaries titled “More posts from Dell’s Tech Page One.”

• The URL for the ad begins with “paid post.”

• Finally, in small type at the very bottom is this declaimer:

This page was produced by the Advertising Department of The New York Times in collaboration with Dell. The news and editorial staffs of The New York Times had no role in its preparation.

So I think we’ve got it — this story about whether government can be more entrepreneurial — and everything else on the page — was paid for by Dell.

What is native about the ad is a little more subtle. Though the typeface is slightly smaller and different from that used in a typical news story, they are very close to the same. So it looks like a New York Times story.

A short bio of author Michael Keller shows he has published in respected venues and pretty much fits the profile of a freelancer that Times might employ. I was also amused to see that the post follows some quirks of New York Times style, including calling California Congressman Michael Honda “Mr. Honda” on second references. (Who can forget the apocryphal story that the Times once called singer Meat Loaf “Mr. Loaf”?)

Also The New York Times redesign of its website coincides with the introduction of the native advertising program. So the Times can align the look (and content management) of the placements much as have digital startups like BuzzFeed or digital magazine successes like Forbes or Atlantic’s Quartz.

Like Forbes, Quartz and BuzzFeed, the Times has its own in-house “content studio,” which actually produces the native ad posts.

As was the case with the Times metered paywall and digital-print bundled subscriptions, few newspaper organizations will have the resources to do all that by themselves. But if the rollout is smooth and the growth curve is strong, those who have been waiting and seeing may well mimic the Times’ pattern — relying on vendors for many of the details.

As the native ad story unfolds, I would suggest keeping three considerations in mind:

• Native ads fit into a currently popular style of public relations, advanced by the Edelman firm and others, that classifies three types of media presence — earned, owned and bought. “Earned” in PR parlance is pitching a story idea and getting one or many outlets to cover it. “Owned” is story-like content on a company’s own site (Pepsi’s coverage of entertainment is a leading example). And “bought” is purchased digital space on a site, designed so the message is likely to be read. In a successful campaign, the three categories align and amplify each other.

Dell, which has its own newsroom and managing editor, Stephanie Losee, is a hawk on clear labeling, as is the Times. The American Press Institute’s white paper on sponsored content and native ads, published in November, includes this exchange with Losee:

Q: Have you encountered any challenges or issues you didn’t expect? If so, what are they? What could news organizations do to fix the problem?

A. I’ve never encountered a problem. I’ve only watched other companies or publications encounter problems — usually when they use sponsored content to put something over on audiences. Transparency is vital.

• Not every potential native advertiser is a Dell and not every outlet will be as starchy about labeling as the Times. But lest they lapse, the Federal Trade Commission has given notice that it is watching and ready to pounce on deception.

The FTC concluded its daylong workshop in early December with officials saying they still had lots of questions. The agency hasn’t been heard from on the topic since. My guess is that the FTC will flag some individual cases of misleading practice long before issuing any kind of general directive on labeling native ads.

For its part, NAA is also taking a cautious approach to the transparency issue. In a report on the workshop, Legislative Counsel Sophia Cope wrote:

NAA will engage with the commission to discourage agency actions that would unduly burden newspapers as they explore this new source of advertising revenue….NAA will continue to share guidance for increased transparency as it emerges across the advertising and publishing industries.

Which is to say that the industry group does not yet have guidelines for labeling as do the Interactive Advertising Bureau and  American Society of Magazine Editors. While advertorials and special advertising sections have been around for decades, digital presentation of such messages is uncharted territory.

• Native advertising will be an attractive opportunity but not easy to pull off for newspapers. It is not so clear that Dell and other such brand advertisers will want metro and smaller papers as a showcase for their messages (which would need to be adapted in look and tone if so).

Nor is it clear that local or regional advertisers will have elaborately structured PR/messaging campaigns like Dell’s.

Some organizations — notably The Wall Street Journal and Dallas Morning News — are already in a version of the sponsored content business, selling their own archived stories to brands for use on “owned” sites.  The Chicago Tribune and Los Angeles Times offer a version of sponsored content under the label “brand publishing.”

So look for 2014 to be a year the industry is moving to try to find its share of the action. But as in other digital opportunities, this may prove a race against time as competing native ad venues are already up and running and ready for more of the premium-priced placements.

Related: Understanding opportunities and challenges in sponsored content (Replay chat) | Sulzberger: ‘Our readers will always know that they are looking at a message from an advertiser’ | Federal Trade Commission will put native advertising under the microscope Wednesday

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Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years. His commentary on…
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