Edelman's Sponsored Content Report

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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

Transcript of Edelman's Sponsored Content Report

SC Report Vol1

SPONSORED CONTENT: A BROADER RELATIONSHIP WITH THE U.S. NEWS MEDIA

The first in a series of special reports bySteve Rubel, chief content strategist

July 2013 - Volume 12013 Daniel J. Edelman, Inc.

EXECUTIVE SUMMARYIn 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, its 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 thats 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 clients social media content and links to its two million followers. This was The APs first foray into sponsored content.

The firm partnered with The Washington Post and Slate to amplify The National Dairy Councils 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. Edelmans day. To do so, the industry must continue to ensure that it meets the news medias high expectations as well as the publics.

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

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 professions next wave of growth.

Edelman Sponsored Content Report | July 2013 - 3

WHY NOW: A STORM OF DISRUPTIONSponsored 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. ABCs 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 ErodeThe 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 NormsThe 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

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 ContentFinally, 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 Digitals 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 BenchmarksNorth America: Content Marketing Institute/MarketingProfs

EMERGING FORMATS: A MIX OF OLD AND NEW IDEASBased 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 marketers social or owned channels. Wire services like The AP and Reuters are particularly adaptable here. Theyre 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 SyndicationThe 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 advoca