Edelman’s report on sponsored content in the U.S. news media from a PR point of view. The research is culled from more than 30 briefings the firm conducted in the field with senior U.S. news media executives and ad-tech startups. In future field research Edelman will examine the diverse approaches, opportunities and challenges that exist across other key geographies on a global level.
Read more on Richard Edelman’s blog: http://edl.mn/15znyg0
2. EXECUTIVE SUMMARY
In the 1950s a young Daniel J. Edelman had an important insight: bring a compelling story to journalists and it can earn credible
editorial coverage. This simple idea gave birth to the first media tour. Today it is a staple of virtually every PR campaign and a key
way businesses form strong working relationships with the press.
Flash forward to 2013. Mr. Edelman's eponymous PR firm is now also entering into a broader relationship with the U.S. news
media. This time, though, it’s teaming up with the advertising arm of publishers on sponsored content partnerships (sometimes
called “paid content” or “native advertising.”)
Due to a confluence of disruptions to the classic advertising and subscription revenue streams, many publishers are now open to
turning content that’s created or curated by corporations into a new form of advertising. To be clear, these paid, rather than
earned contributed articles, information graphics, videos and more are not editorial. Further, no sponsored content program
could ever supplant credible coverage by an independent, free press.
Yet, these ads do closely resemble the adjacent journalistic content. Additionally, they are often slotted in the news section -
once-sacred ground. Therefore sponsored content, with care, can amplify earned or owned messages in a prominent way.
For example:
‣Edelman recently worked with The Associated Press on a
Twitter program where the wire service syndicated a client’s
social media content and links to its two million followers.
This was The AP’s first foray into sponsored content.
‣The firm partnered with The Washington Post and Slate to
amplify The National Dairy Council’s owned media assets
and publish custom editorial content on behalf of dairy
farmers.
‣It also recently helped set up two partnerships for The
Boston Consulting Group - one with the Financial Times and
another with TED. These spotlighted new bespoke
sponsored content tied to the company's 50th anniversary.
The primary job for PR remains building and maintaining trusted relationships with journalists - just as it did in Daniel J. Edelman’s
day. To do so, the industry must continue to ensure that it meets the news media’s high expectations as well as the public’s.
The aforementioned examples illustrate an opportunity for PR professionals to now add a new dimension to their long
relationship with the news media. This opportunity is centered in advertising and it combines paid and owned programming
across a spectrum of publishers.
That said, there are major ethical hurdles to address too if sponsored content is to provide any value for the news media,
marketers and, above all, the public.
Edelman Sponsored Content Report | July 2013 - 2
National Dairy Council sponsored content on Slate.com
3. This report covers sponsored content from a PR point of view. The research is culled from more than 30 briefings the firm
conducted in the field with senior U.S. news media executives and ad-tech startups. This list includes traditional players like The
AP, The Chicago Tribune, The Economist, Meredith, NBC News, Reuters, Rodale, Slate, Time Inc. and The Washington Post. It
also encompasses digital-native upstarts like Business Insider, BuzzFeed, Mashable, Politico and The Next Web. (Search
engines, social networks and entertainment holdings were not included.)
The paper, the first in a series, is divided into four sections:
‣ An analysis of why the U.S. news media is now embracing sponsored content
‣ An account of the emerging formats
‣ An initial summary of the key trends and questions
‣ An ethical way forward, including a framework of ideals that will guide Edelman in the U.S.
Edelman hopes that this series of reports inspires the PR industry to embrace a broader relationship with the press. This is a
significant new opportunity that can potentially drive the profession’s next wave of growth.
Edelman Sponsored Content Report | July 2013 - 3
4. WHY NOW:
A STORM OF DISRUPTION
Sponsored content isn't a new idea.
Magazines and newspapers have been running advertorials and special advertiser sections in print for decades. Everyone surely
has seen a TV infomercial. And the practice is quite common in entertainment. ABC’s “Jimmy Kimmel Live,” for example,
regularly runs comedy bits that overtly integrate sponsors like American Airlines.
What is new is how the U.S. news media is now rapidly embracing this model on its digital platforms.
Three major disruptive forces are now converging and acting to move sponsored content - a potentially large source of revenue
- into the foreground for many publishers.
Classic Revenue Streams Erode
The first disruption is the rapid erosion of advertising and subscription revenue.
On the advertising side, over the last year prices have been sharply declining. There are at least three contributing factors:
‣ (1) The glut of supply (inventory) is outpacing marketer and audience demand (traffic)
‣ (2) Banners, which already were suffering from low click-through rates, are no longer as tenable as news consumption shifts
more to mobile devices
‣ (3) Digital ad exchanges (also called programmatic buying platforms) are now in widespread use by publishers and
advertisers. This has unlocked a wave of efficiency as advertising inventory is now traded in real time
Meanwhile, most consumers remain unwilling to pay for news. This means that subscription fees remain off the table as a viable
means to offset advertising revenue declines.
There are cost issues as well. The press must continue to invest in new technologies to keep up with the way people want to
consume news. There is also growing competition for attention from new, digitally savvy players.
Feeds Create New Norms
The second big disruption is the rise of the feed as a way to display information. The chronological format, which Twitter and
Facebook pioneered, is now an equally popular way to consume news. It has arguably changed audience attitudes towards the
permeability between advertising and editorial (e.g. the so-called church-state wall).
With the rise of social networking, people are now accustomed to seeing different kinds of content juxtaposed in one continuous
feed. This means serious news articles by Pulitzer-Prize-winning journalists sit next to funny photos from friends and advertiser
content.
Edelman Sponsored Content Report | July 2013 - 4
5. On search engines and social networks, the public generally accepts that advertising is part of the value exchange for
maintaining a free service. Promoted social media content sits above organic content on Twitter and Facebook. And relevant
Google keyword ads appear next to or above search results.
This model clearly works. Now news executives feel they can replicate it by carefully co-mingling editorial and clearly labeled
sponsored content in a similar fashion. At least, that is their hope.
Brands Double Down on Content
Finally, the third major disruption is that marketers now are able to tell
their own story in their own way on their websites, mobile apps and
social channels. Every company can indeed be a media company. The
growing interest in creative/brand newsrooms and real-time marketing
punctuates this trend. Budgets are moving in lockstep as content
strategy moves to the fore. (For more on this topic, see this recent
report by Edelman Digital’s Monte Lutz.)
That said, however, even the best corporate/branded content faces
the same challenge that professionals have - finding an audience. No
one is immune to the laws of supply and demand. There is still too
much content and not enough time. This means scale is an issue.
The good news is that marketers and news executives are united in
their war against fragmented attention spans. And this, in part, is what
may enable sponsored content to thrive.
Edelman Sponsored Content Report | July 2013 - 5
2013 B2C Content Marketing Benchmarks–North
America: Content Marketing Institute/MarketingProfs
6. EMERGING FORMATS:
A MIX OF OLD AND NEW IDEAS
Based on extensive research in the field, Edelman sees three common approaches to sponsored content in the U.S. news
media. Other markets require further discovery. All borrow from tried-and-true analog equivalents.
These are only the first three formats to emerge. Others will surely follow as sponsored content becomes more widespread in the
press, the ethical dilemmas are solved and publishers begin to differentiate their offerings.
In some cases, the approach reflects a classic publisher behavior. The FT sells content units in adjacencies to editorial. Ads
continue to sit in the right-side rail.
More broadly, many publishers are now willing to carefully experiment. Sometimes they will create bespoke content for
advertisers that can also be redistributed through a marketer’s social or owned channels. Wire services like The AP and Reuters
are particularly adaptable here. They’re interested in streaming their unaltered content onto corporate websites, provided it has
proper attribution. Such an approach can provide a more balanced view that the public has come to demand.
Paid Syndication
The first and most common format is paid syndication. Here sponsored posts, articles, videos, slideshows and information
graphics from corporations appear within the news section. These intersperse pure editorial content and are labeled accordingly.
Some are similar to print advertorials. But
not all sponsored content, however,
necessarily advocates a position. Some
are simply feature stories.
AOL, Slate, NBC News, The Atlantic,
Gawker Media and others commonly run
paid-syndicated posts from major
corporations like Toyota, Cadillac and
Boeing.
Meanwhile, a host of ad-tech startups are
trying to automate the transactional side
of this process. Sharethrough launched a
self-serve platform that can move a piece
of content from a PR professional’s desk
into the mobile feed on news sites like
People.com and Forbes.com. Outbrain
has a similar product that sprinkles
sponsored links to a company’s earned or
owned media in the footer of related
news articles.
Edelman Sponsored Content Report | July 2013 - 6
Sponsored content on NBC’s Today.com is clearly labeled.
7. The long-term viability of this format, however, is still an unknown. The words “sponsored post” could equate with “don't read.”
And there are occasionally times it spurs reader ire. Such was the situation earlier this year when The Atlantic ran an article by
The Church of Scientology that its audience deemed too self-serving.
Still, paid syndication is the cheapest model and the easiest to execute. In some cases, like at Business Insider, it starts as little
as $5,000 for a single sponsored post. So this level of commitment can certainly inspire experimentation in PR.
Further, if the quality of paid syndication continues to improve, it could be just as viable in the U.S. news media as it is on social
networks and search engines. Paid search advertising was, at first, controversial too. Today it is a multi-billion dollar business.
Paid Integration
Paid integration closely resembles TV product placement; here the marketer is weaved into a narrative, sometimes overtly.
This is the modus operandi at BuzzFeed. Many of its formulaic, yet infectiously popular list posts are essentially created around a
sponsor's ideals. A brand’s messages are weaved in. This lighter touch aids the content’s overall share-ability.
However, BuzzFeed is not alone. One major publisher said it is willing to integrate advertisers into its popular list posts, making a
sponsor a “No. 11” on a list of 10. Likewise, the Digiday Content Studio runs co-created articles that are independently reported,
labeled as sponsored but mention the advertiser in a subtle way, like as an attributed source.
Most of these activations typically require $50,000 or more. There are also some more cost effective options.
Paid Co-Creation
Perhaps the most promising format in use is paid co-creation. It’s potentially a win for the reader, the marketer and the publisher.
Here an advertiser funds the development and staffing of a new site or section or even an app that currently doesn't exist. The
sponsor guides the direction but does not necessarily have day-to-day oversight for the editorial content. It is similar to a brand
naming a baseball or football stadium. Forbes.com, Rodale and, most notably, Meredith all take this approach.
This system is in use widely perhaps because it is ethically safer.
The digital natives are playing here as well. Mashable's BrandSpeak, for example, teams marketers and its in-house content
specialists together to develop a short series of feature articles that relate to the brand’s values or themes. Mashable has an
assistant “campaigns editor” on staff to create such series.
Paid co-creation typically runs $100,000 to a million dollars or more.
Edelman Sponsored Content Report | July 2013 - 7
8. KEY QUESTIONS AND TRENDS
While sponsored content is in many ways more evolutionary than revolutionary, it is still seen as disruptive. As it becomes more
widespread in the U.S. press, it will raise more questions than it answers.
Here are five to watch:
‣ (1) Will Government Get Involved? - It's likely that the U.S. government will get involved if it feels consumers are being
deceived and that self-regulation is not working well. The Federal Trade Commission has in recent years adopted a more
aggressive stance in warning marketers about similar formats on social networks and search engines. It's likely it will extend
these guidelines to cover sponsored content in the press.
‣ (2) Will Audiences Reject Sponsored Content? - The early consensus in the news media is that if the content is good,
then audiences will read it. So far, quality remains an issue for all involved. Some publishers are struggling to keep their
editorial rank and file pleased with sponsored content because there is an understandable concern that it may erode
confidence in the brand. However, with few other strong monetization options, the press has a lot of reasons to make it work.
‣ (3) Will Google Spoil the Party? - Search engines
remain the primary traffic driver to most news
websites. Naturally, the publishers bend over
backwards to ensure they follow Google's rules.
Recently Google warned publishers to institute a code
change that reduces the SEO of sponsored posts. If
Google, oddly enough like government, feels
consumers are being deceived, it will act and
publishers may turn away from some of the formats,
like paid syndication.
‣ (4) Will it All Be Automated? - It is possible that the
whole buying and selling process will be automated in
some ways. That is what ad-tech start-ups like Sharethrough, Nativo, Outbrain and OneSpot hope. They are trying to make
sponsored content more scalable. Just how much automation in news can work is unknown. It tends to be bespoke.
‣ (5) Will the Press Take Control? - This may be the biggest question of all. Some sponsored content programs will be very
successful. Others will, for sure, suffer from low quality. Many large publishers, including Meredith, Rodale, The Atlantic, The
Chicago Tribune and even The Onion, already have studios that work directly with advertisers to create content for them. If
quality remains an issue, then the press may become a one-stop shop for content and distribution.
Sponsored content raises lots of questions. But there are also some noteworthy trends that are favorable for the PR industry.
Publishers See PR as a Strategic Partner
Time and again news executives have told Edelman that the PR skill set could translate well in navigating the complexities of
sponsored content. These include its journalistic sensibility, speed, agility and the bespoke nature of the business. One publisher
expressed concern in ensuring the quality of sponsored content is strong enough to align the interests of readers, journalists and
advertisers as it is placed near pure editorial content.
Edelman Sponsored Content Report | July 2013 - 8
Google issued a warning earlier this year on sponsored content.
9. Big Ideas Are Required
News websites that trade in big ideas like the business press and political sites, are leading the charge into sponsored content.
This trend theoretically aligns with disciplines like corporate reputation, health care PR and public affairs. Further, it plays into the
PR industry's expertise in creating rich thought leadership and executive positioning programs.
Consumer magazines and TV news sites too are increasingly adopting sponsored content in a similar way. Therefore, it is
possible that the best way forward in the consumer sector is to champion an idea or a social purpose.
Additionally, sports and entertainment remain very viable verticals where brands can test the sponsored content waters.
Digital Natives Set the Tone
Sponsored content wasn't invented by social networks. However, the sector’s rapid embrace of this business model drove its
close cousins - digital-native media outlets like Gawker and AOL - to follow the same road in a big way.
BuzzFeed has been particularly aggressive here in adopting the format as its sole means of monetization. And its approach has
been hailed with splashy media coverage. Mashable and Business Insider too have received many accolades for pushing the
boundaries of what’s possible here.
This creates a domino effect. It encourages more traditional players to follow in their footsteps, innovate on their own and further
validate sponsored content as a viable business model.
Edelman Sponsored Content Report | July 2013 - 9
10. SPONSORED CONTENT:
AN ETHICAL FRAMEWORK
Edelman believes that sponsored content on major news sites is best grounded in an informational approach that invites public
discourse. This is new territory. It requires an ethical framework that reiterates the need for good judgment and common sense.
The interests of business and the press must be aligned with those of the public’s.
To respect and improve the public conversation, Edelman will champion the following ideals when guiding the development and
execution of sponsored content programs in the U.S. news media. This ethical framework tackles the critical issues of disclosure,
quality and process. The firm will create a similar way forward in other key global markets and is inviting clients and the industry
to join in and shape this dialogue as well.
Disclosure
(1) Edelman will disclose that editorial-style “sponsored content” in the news section on major news sites like The Huffington
Post, The Washington Post and Forbes.com is in fact sponsored. This should be accomplished by using a clear and acceptable
vocabulary. The firm will strive to work with publishers that are equally dedicated to clearly delineating what content is paid for vs.
what's editorial in every channel.
(2) For each piece of sponsored content Edelman produces for news sites, the firm will advocate including the opportunity for the
audience to substantively participate in the conversation. This is consistent with the firm’s conviction that clients should actively
and meaningfully participate in a connected world to increase trust, deepen relationships, change behaviors and foster and
sustain economic success.
Quality
(3) Sponsored content programs will be
primarily utilized to amplify that which is
owned and/or earned media - not to
replace it. Paid amplification joins search
and visual content in the center of the
Edelman Media Cloverleaf model as an
accelerator of transmedia storytelling.
(4) Journalism is no longer a publish-once-
and-done exercise. In a fluid medium,
news stories can now be constantly
updated and sometimes expanded to
reflect new information. All sponsored
content Edelman produces for news sites/
apps will seek to follow such conventions.
Edelman Sponsored Content Report | July 2013 - 10
Edelman Media Cloverleaf
11. Process
(5) Edelman will maintain a firm non-conditionality policy. It will not engage in quid pro quo discussions that intertwine that which
is paid for and that which is earned. These are separate processes and discussions. Further, it continues to maintain a strict
policy that it does not engage in so-called pay-for-play schemes where compensation influences earned journalistic content.
(6) The firm will separate its day-to-day earned media work with journalists from the paid work in structuring news media
partnerships. The latter will be handled by a separate team of media buyers the firm is hiring in the U.S. Those who actively
cultivate day-to-day editorial relationships in an effort to secure third-party earned coverage will not be engaged in paid
negotiations with the publishing side of news media companies for sponsored content - and vice versa. This mirrors the so-called
church-state divide in the press.
The firm hopes that this initial framework will initiate an ongoing, rich and public dialogue about the ethics of sponsored content
and new norms. Further, these will be adapted to reflect any new industry conventions that may emerge.
(Note that these pertain only to the firm’s sponsored dealings with the U.S. press - e.g. journalistic enterprises. Edelman follows
industry guidelines to govern other types of paid partnerships.)
Edelman Sponsored Content Report | July 2013 - 11
12. CONCLUSION
Unless the U.S. news media finds a new way to monetize, it appears that sponsored content is here to stay and may become
more prominent. Each outlet’s embrace of it is predicated on need. The more intact a publisher’s business model remains, the
less likely it will need to find a new one. However, the model is still evolving and there are many unknowns.
For example, the global picture is more nuanced. In future field research Edelman will examine the diverse approaches,
opportunities and challenges that exist across other key geographies.
For now, the opportunity in the U.S. for the PR industry to expand its relationship with the press could be significant. The
profession’s work with journalists remains the core. The rise of sponsored content as a new advertising format tilts toward PR’s
inherent strengths and this creates new opportunities.
That said, the ethical challenges are formidable and must be addressed at the same time. The framework put forward in this
document is just the beginning of a potentially long dialogue and process. None of these new opportunities should jeopardize the
many decades of trust the profession has earned with journalists.
The PR industry can play a key role in the development of this new advertising format. Experimentation should be encouraged.
And just as the social media revolution expanded the profession’s remit, so may sponsored content - but perhaps in a much
more profound and accelerated way.
. . .
About the Author
Steve Rubel is chief content strategist for Edelman, the world's largest public relations firm.
In this role Rubel is responsible for evolving the firm's thinking and strategy around disruptions in the broader media landscape
and for piloting innovative client-media partnerships that blend paid, owned and earned strategies. He serves as a strategic
advisor to the firm's senior leadership as well as its clients.
Rubel was among the early PR pioneers in social media and today is one of Edelman's most visible industry thought leaders. He
has written a monthly column for Advertising Age since 2006. Further, he was one of the first marketers to join the LinkedIn
Influencer content network. He is followed by over 80,000 people on Twitter.
He can be reached at steve.rubel@edelman.com.
Edelman Sponsored Content Report | July 2013 - 12