Sponsored Content Widgets: Embarrassing Spam or Revenue Builder?

By Katie Jansen, Special to the Alliance

“Hottest Celebrity Gossip!” “Lose Belly Fat in 10 Days!”

We’re accustomed to seeing ads with headlines like these nearly everywhere we turn online. While some view them as a nuisance, others scroll by without even noticing the ads. But the conversation about sponsored content on news sites has taken an interesting turn. What if the “Hottest Celebrity Gossip” headline appears next to a story the newspaper is running about a famous actress suing her stalker? Or if “Lose Belly Fat in 10 Days” appears right under a piece on the rise of eating disorders? Do the ads then become something offensive, tarnishing the outlet’s credibility? Or is this “sponsored content” a harmless source of revenue?

ChangeAdvertising.org, a nonprofit that formed to help people understand “how websites and advertising companies are using their attention,” recently conducted a study of this third-party sponsored content. After examining the top 50 news sites, the group found that 82 percent of the sites were using this sponsored content. Of these, 36 percent were using Outbrain as a generator for the third-party content, and 56 percent were using Taboola.

In the study, Slate was one of the 16 sites using Outbrain, with five suggested content ads displayed across the bottom of the story.

But a month after the study was released, Slate made the decision to stop using these ads completely. Keith Hernandez, Slate’s president, told the New York Times that the ads’ content didn’t match Slate’s image of a high-quality website.

Aside from content problems, ChangeAdvertising.org also has qualms with the way this content is labeled – often, labels say something like “recommended for you” or “you may also like,” which may lead the reader to believe he or she is clicking on another story within the site rather than content from an advertiser.

But even once the user clicks, he or she may not be taken to a legitimate advertiser. ChangeAdvertising.org’s study found 26 percent of the links examined led to clickbait, and about 4 percent to fake news blogs.

But according to Outbrain’s website, it has high standards for the type of content it suggests and wants to “help people discover content that they can trust to be interesting, relevant and timely for them.”

Publishers using sponsored content widgets have been impressed by  the revenue they receive. In figures quoted in the past, Outbrain executives have said that the company shares about half of its revenue with the publishers.

Although marketers typically pay only about 15 to 30 cents each time an ad is clicked on, this adds up quickly – as of 2014, Outbrain was making 180 billion recommendations per month, according to Fortune. In an era when the media is struggling to monetize their content, this can be attractive to publishers. .

This is the issue CEO Yaron Galai was trying to address when he started Outbrain, he told Fortune. He wanted to help find a sustainable business model for digital content.

But not all publishers see Outbrain – or other content recommendation companies such as Taboola, Revcontent and Content.ad – as a sustainable solution.

“We see our website as another way for readers to engage our journalism and not as a way to generate clicks,” said Neal Robbins, publisher of Raleigh-based statewide newspaper North State Journal. “We know that digital subscriptions are the future and digital ad revenue is a limited revenue source. We also believe that ad blockers will continue to tamp down potential ad revenue from sources like these.”

Robbins made a conscious decision to not use content widgets on the paper’s site because, “North State Journal is built on delivering stories that other newspapers either can’t cover or won’t cover,” he said. “Cluttering our site with content ads that show up on half the news sites in the state would undermine our key market differentiator.”

But as publishers continue to use content widgets, readers are beginning to complain about the clutter and the quality of content that is recommended to them.

While there are content filters and the ability to block specific keywords or categories, often crude or offensive content seeps through, creating a potentially embarrassing juxtaposition of content presented to readers.

So what changes can be made to strike a balance? Can the content recommendation companies make a shift to improve the quality of recommended content, thereby keeping publishers’ reputations intact while retaining a revenue stream that has become an important lifeline?

ChangeAdvertising.org has recommendations for this. They suggest that content ads ought to have standard labeling across all websites so users know what they’re clicking on if they choose to click. The nonprofit also wants to see an option for users to provide feedback and block unfavorable advertisers from advertising to them.

Only time will tell whether content providers and publishers will adopt more stringent policies for what kinds of sponsored content can appear. But the recent efforts of a few publishers to distance themselves from these sponsored ads may be the precursor of an advertising revolution that’s yet to come.


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