Understanding the rise of sponsored content

In recent years news publishers have grappled with an uncomfortable realization: The traditional revenue streams of display advertising and reader subscriptions may not be sufficient to support them in a digital age.

Digital display ads command unimpressive rates and engagement, with clickthroughs measured in the tenths of percentage points.

Digital subscriptions have recently helped some publishers, but readers remain reluctant to pay in large numbers, and the ultimate future of that model is unclear.

For many of these publishers, growing hopes for a new revenue stream lie in a category known as “sponsored content.” It goes by many other pseudonyms — “native advertising,” “content marketing” — but the basic value proposition in most cases is the same. Publishers work with sponsors to create content that is “native” to the particular platform (in some cases looking very similar to editorial content) and is more engaging than display advertising.

Pieces of the model date back to the earliest days of TV and radio, or the long history of advertorials in newspapers and magazines. But the emerging models in some ways are also new to digital as today’s publishers sprint ahead in different directions.

To clarify and inform about the landscape, the American Press Institute convened a Thought Leader Summit with a few dozen of the people leading the way in this field — representatives of many major publishers including the Atlantic, BuzzFeed, Huffington Post, Wall Street Journal, Forbes, Washington Post, Digital First Media, Deseret Digital Media, Vox Media and others, as well as people from major brands such as Dell and Xerox and some of the best industry analysts and marketing firms.

This white paper distills their best wisdom about sponsored content’s definitions and business models, standards and processes, metrics, and the nature of its promises and challenges.