Content Ads Online Boost Revenue. But Are They Harming the Brands Of the Sites Carrying Them?

Technology can blind marketers to the inherent conflicts between revenue generation and building brands for the longer term. JL

Sapna Maheshwari and John Herrman report in the New York Times:

Publishers are wondering about the effect so-called content ads may be having on their brands and readers. When you’re not maniacally obsessed with monetizing every single pixel, (and) if your readers’ trust and loyalty is No. 1 as the thing you care about most, you can’t have that on your page.

You see them everywhere, and maybe, sometimes, you click: those rows of links under web articles, often augmented with eye-catching photos and curiosity-stoking headlines about the latest health tips, celebrity news or ways to escape financial stress.

Usually grouped together under a label like “Promoted Stories” or “Around the Web,” these links are often advertisements dressed up to look like stories people might want to read. They have long provided much-needed revenue for publishers and given a wide range of advertisers a relatively affordable way to reach large and often premium audiences.

But now, some publishers are wondering about the effect these so-called content ads may be having on their brands and readers. This month, these ads stopped appearing on Slate. And The New Yorker, which restricted placement of such ads to its humor articles, recently removed them from its website altogether.

Among the reasons: The links can lead to questionable websites, run by unknown entities. Sometimes the information they present is false. Recently Chandler Riggs, an actor on “The Walking Dead,” posted screenshots on Twitter of two such ads — “Young Actors Who Quietly Passed Away This Year” and “Young TV Star Found Dead” — featuring a photo of his face. At other times, the images and headlines create a jarring, even disturbing, juxtaposition. An article on Slate this year about misogyny was accompanied by a promotion for “10 Celebs Who Lost Their Hot Bodies.”

“It is not the right look if you’re trying to say you’re a high-quality, upper-tier website — if you have something like this on it — and I think it’s time for us to be honest about that,” said Keith Hernandez, Slate’s president.

These ads are “built on a premise for publishers to maximize revenue — it’s not built on a premise of finding the next great things for your readers to do,” he added.

A report in September from the nonprofit ChangeAdvertising.org found that 41 of the top 50 news sites — including The Guardian, CNN, Time and Forbes — embed widgets from so-called content-recommendation companies. Several of those that do not, including The New York Times, pay for content created with advertisers in-house to appear in the widgets to increase traffic to their own sites.

The companies Taboola and Outbrain, both founded about a decade ago in Israel, dominate the industry, followed by Revcontent and ZergNet, according to data analysis firm Datanyze. (The Times has a “From Our Advertisers” section on its home page that leads to posts created by its ad department without participation of the news and editorial staff.)

ChangeAdvertising.org analyzed the content ads on those 41 news websites and found that 61 percent came from advertisers or other prominent publishers. But 26 percent led to “clickbait” sites that were covered in more ads and lower-quality recommendation widgets featuring sexually suggestive or interruptive images. Almost all of those sites, which appear to be paying for placement, then profiting from their own ads once people visit, hid their domain registrations.

Sean Blanchfield, chief executive of PageFair, an advertising start-up, referred to the ad-filled sites as “arbitrageurs” that are “basically designed to try and get the user to click on something.”

Rob Leathern, a board member at ChangeAdvertising.org, called it “a pretty problematic state of affairs.” He said it was surprising that such pages were “one click away from these top 50 news sites.”

Readers are starting to express discontent. One recently criticized the Outbrain links next to a Slate article about preventing eating disorders — one of which was titled “6 Tips to Avoid Thanksgiving Weight Gain.” Another was shocked by a Taboola link headlined “Meet the Women Making Rape Jokes That Are Actually Funny” under a Fusion news story about an underage rape. (That example was not a paid ad from Taboola; rather, it was a Fusion article resurfaced by Taboola technology, which is another part of the company’s business.) One Twitter user asked The Guardian in April: “Don’t these @Outbrain articles kind of undermine the integrity of news outlets?”

Such is the disconnect between the content ad industry’s expressed hopes for what it wants to provide and what internet users end up seeing.

“The vision is to index the entire web and bring the best, most personalized stuff to people,” Adam Singolda, Taboola’s founder and chief executive, said in an interview. “For the most part, a lot of the value Taboola brings is to introduce you to things people may not even know about but like.” He listed examples like new TV shows, blogs and even music from Brooklyn D.J.s.

Outbrain, which also creates tools for publishers to direct readers to other parts of their own websites, says its mission is to “help people discover content that they can trust to be interesting, relevant and timely for them.”

Matt Crenshaw, vice president of product marketing at Outbrain, said, “As this space has grown up, this is becoming a very significant percentage-wise revenue source for publishers.”

“We have been told from major, major publishers that we have become their No. 1 revenue provider,” he said, declining to name specific companies.

Outbrain and Taboola both say they offer tools for publishers to remove potentially problematic content. Additionally, the companies employ teams of people who vet content before it is introduced onto their networks, though they admitted it was a challenge to police those who alter campaigns and redirect URLs after approval. And then there’s the problem of sheer scale.

Outbrain, which says it serves 200 billion recommendations a month, employs a “fairly large content editorial team that’s about 17 to 20 people,” said Eric Hadley, Outbrain’s head of marketing. (The company also said that its partnership with Slate, which began in 2010, did not end because of a poor reader experience, though it declined to elaborate.) Taboola, which claims it provides 360 billion recommendations a month, has about 100 account managers who approve new ads, as well as 10 employees dedicated to “keeping content clean,” Mr. Singolda said.

Financial details for the companies are not public, though notable deals shed some light on the industry’s size. Taboola signed a three-year deal with Gannett last year that Mr. Singolda estimated could bring inasmuch as $55 million for the publisher. Time Inc., which owns People, Fortune and other magazines, said in 2014 that its three-year partnership with Outbrain would generate more than $100 million in revenue. Outbrain says it accounts for up to 30 percent of revenue for some publishers.

“We have been consistently pleased with Outbrain as a third-party provider of content recommendations for our site visitors,” Jill Davison, a spokeswoman for Time, said in an email.

A sample of six Outbrain recommendations on The New Yorker’s website on Oct. 5 showed the confusion readers may face when looking at content ads; several were legitimate, but one led to a spamlike “clickbait” site and another led to a fake health news site created by a marketing company.

Two led to editorial stories from AARP, which promotes its website through Outbrain and embeds the widgets on its own site.

“We no longer need to go out and create relationships with each individual publisher,” said Nataki Edwards, AARP’s senior vice president for digital marketing. But she acknowledged that quality control was an issue.

“Outbrain and Taboola and others — they’ve relaxed their standards over the last few years,” Ms. Edwards said. “Our users, they think we’ve vetted all these things. We want to make sure we uphold their trust.”

Asked about the widget and about specific ads, Nicholas Thompson, the editor of NewYorker.com, said, “Outbrain only appears on our humor pages. That’s a deliberate choice.” He added that the arrangement was part of a deal between The New Yorker’s parent company, Condé Nast, and Outbrain. Within a week of the interview, The New Yorker had removed the ads from its site, though it declined to comment on its decision.

For Slate, it was worth it to stop supporting the ads, Mr. Hernandez said. The publisher’s top priority is figuring out how to turn the casual visitor into a regular reader who stops by the site eight to 24 times a week, he said.

“When you’re looking at things from that prism and you’re not maniacally obsessed with monetizing every single pixel, Outbrain is very obviously not fitting into your equation anymore,” he said. “If your readers’ trust and loyalty is No. 1 as the thing you care about most, you can’t have that on your page.”