Are Desperate Publishers Selling Their Souls With Native Advertising?

In an era when advertisers can reach millions of highly targeted potential customers directly through online ad networks, Facebook, and other means, the very notion of media–collections of people as proxies for the actual audiences–seems increasingly antiquated. The situation is nothing new, of course, but the solutions remain elusive for publishers. Indeed, one of the most prominent of the proposed solutions, so-called native advertising that seeks to match the format of marketing messages to the editorial content, continues to generate huge controversy.

That was apparent once again today at a conference at the sprawling Advertising Week in New York City, this one focused on the future of display advertising, those ubiquitous banners that litter nearly every website. Veteran marketing maven Wenda Harris Millard, president and COO of media consultant MediaLink, argued in favor of native advertising, while longtime media critic, MediaPost columnist, and NPR’s On the Media host Bob Garfield repeated his longstanding critique of the ads. They were interviewed by Joe Mandese, editor-in-chief of conference organizer MediaPost.

And the controversy is becoming more relevant all the time, since Millard noted that 75% of publishers are running native ads, and 41% of brands are currently using them. But those numbers, Garfield argued, are simply evidence that “we have all lost integrity and trust. It’s a Faustian bargain. It’s a bad deal. It’s an ongoing heartbreak.” As more and more publishers get into the native business, he said, the promises of disclosure are sounding increasingly hollow–even the New York Times.

The nub of the matter, Millard argued, is transparency. Vanity Fair is very clear when it runs a form of sponsored content, for instance. If it’s transparent, she said, you’re not violating that trust. What’s more, she added, it is a matter of life and death for publications. “We messed up the subscription situation 30 years ago–we’ve devalued the content. That’s a crime in and of itself. So a cyclical business like advertising is the sole support. As long as you’re not trying to fool the reader, I see it as a way to survive.”

Garfield, however, thinks there’s really very little transparency in native advertising–small logos that don’t demarcate editorial from sponsored content. “It becomes like the warning label on cigarettes that nobody has read since 1964,” he said. It should be different fonts, styles, color–and a clear label specifically with the word advertising. “Sponsored content” is literally meaningless because every word in a publication is actually sponsored content, he added. “Why is the transparency so opaque? Because people don’t click on advertising but they do click on what they consider editorial content. If people are clicking on something, they think it’s editorial, full stop. Publishers have shown they will sell their souls.”

OK, this being Forbes, one of the pioneers and leading practitioners of native advertising online, I’m glad that Millard herself mentioned Forbes‘ own Brand Voice–sponsored posts that, whatever else you may think of them, are at least labeled as brand posts. Garfield allowed that Forbes is “more transparent than most. But often I do a search for articles on a subject I’m investigating, and I see a story that’s been in Forbes, I click on it, and I see, holy shit, this is an ad. The transparency disappears once the content gets into a search engine or aggregator. So the concerns don’t end just with the Brand Voice logo.”

Mandese wondered if native ads are simply symptomatic of bigger issues in the media industry, such as the abundance of content and the fact that the traditional business model of print doesn’t work well online. True enough, Millard said, but she thinks the current media environment is more stimulating than it has been in decades. The biggest issue, she said, is the complete lack of creativity in online advertising because of the exclusive focus on efficiency. “But that efficiency should free up resources to spend to create better or higher-quality information,” she said. “Freeing up smart people from grunt work should be a good thing.”

Another good thing about that efficiency, Garfield added: “You don’t have to take an algorithm to a golf game, so that element of corruption is less.” Fortunately, they didn’t wade into the morass of online ad fraud, which involves plenty of corruption of its own.

The biggest issue goes well beyond native advertising, Garfield said. Online ad technology has lessened the power of brands, because people now know much more about the companies. “Now that algorithms can aggregate exactly the audience advertisers want, and reach them anywhere, why do marketers really need this proxy that is Vanity Fair or Golf World?” he asked. “That’s the existential threat. Digital technology essentially undermines the reason to have premium content and therefore premium advertising in the first place.”

Ever the optimist, and despite her famous putdown of ad tech as commoditizing ads into “pork bellies” when she headed ad sales at Yahoo, Millard thinks the situation is not that zero-sum. “We can have all the quality content we want from journalists and we can have all the content we want from brands,” she said. OK, Garfield said, but where’s the money going to come for all that journalistic content? Simple, replied Millard: advertising! She said that despite the rise of automated, so-called programmatic advertising, ad prices at the likes of Conde Nast, Time, and Hearst are rising. “Let the machine sell the ads and we can do something great for the machines to sell,” Millard said. “This isn’t disrupting media, this is media. It’s just taking a different form.”

And if there’s still huge downside to come for struggling publishers, the flipside is that it’s a great time for advertisers. “They can aggregate individual relationships at scale. That’s Valhalla,” Garfield said, who couldn’t help but end on that downside: “It’s just going to obsolete advertising eventually. It was a fantastic 300 years for independent media and it has been crucial for democracy, but its survival is not guaranteed.”

http://www.forbes.com/sites/roberthof/2014/09/30/are-desperate-publishers-selling-their-souls-with-native-advertising/