Unsolved challenges of sponsored content

Even the best experts we gathered for our summit acknowledged some areas where knowledge is missing.

Reader impact: For one, it’s difficult to know what readers’ tolerance for and reaction to sponsored content is. For all the talk on many sides about whether credibility is affected, no one knows for sure. More research is needed.

Is it just publishers? Edelman’s Steve Rubel said he thinks this trend is mostly driven by publishers’ fervent desire for new revenue, but whether brands and consumers will fully embrace it is less certain.

Pricing: No one seems to know what sponsored content should cost. Different packages and types of products varied widely in cost, some up to tens of thousands of dollars for a single post. The variation in products and newness of the trend has left pricing very unsettled.

Scale: Some think sponsored content can’t scale up to a point where a single piece of content could run across many sites via a shared marketplace. Others think the market will inevitably reach large-scale efficiencies. There was no agreement at our summit.

From our perspective, it seems that for publishers the current environment of scarcity is better than seeking large scale.

There’s always more money in larger-scale activities, but for whom? Scale leads to commoditization, where the middlemen and tech companies win, just like they did with display ads. Protecting the value of your unique audience and standards keeps native advertising truly “native.”

Moving forward

Looking ahead, we expect to see more news publishers attempt versions of sponsored content. Innovative leaders run at what is growing, and sponsored content is certainly a growing and promising new revenue stream. In an otherwise challenging business environment for news media, experimenting with a new thing that’s working is hard to resist.

This is not simple, however. The “native” nature of native advertising requires each publisher to think through a unique strategy appropriate to their audience and their values. Publishers also have to invest money in hiring new staff, or vendors that specialize in sponsored content production.

The best advice for publishers is to proceed thoughtfully — with careful consideration for your credibility and with a close ear to your advertisers’ needs and your audience’s feedback. This means setting high standards and being willing to say “no” in some cases. And it means constantly re-evaluating what’s working and what is not.