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Issue for November 2010

The Ethics of Digital Magazine Advertising

Posted on Tuesday, November 16, 2010 at 2:08 PM

Should the digital revolution bring a reassessment of the ad/edit divide?

By Meredith L. Dias

Advertising and editorial. Historically, the two have gone together like, to quote a dear friend, "bologna and whipped cream." The advertising department builds relationships with sponsors while the editors focus on the content. And never the twain shall meet.

Until now.

Digital Advertising Innovations

Digital publishing platforms have presented publishers with new and constantly evolving ways to connect readers and advertisers. Ads can be dynamic. They can be disruptive. They can be interactive. They can be annoying. The available technology can be dizzying, enough to disorient even the most ethical publishers -- and, sometimes, send them reeling into morally ambiguous territory.

Don't think it can't happen. It already has.

The Rules of Engagement

In April 2009, ASME responded to the digital publishing boom by publishing its "Best Practices for Digital Media." The list of standards is fairly short, and the overriding message is clear: ASME applies the same ethical standards to digital as it does print. The second item reads, "All online pages should clearly distinguish between editorial and advertising or sponsored content. If any content comes from a source other than the editors, it should be clearly labeled."

There are other items, all of which foster advertorial transparency, "so users can see that the content is credible and free of commercial influence." In the name of privacy, ASME also requires that publications offer readers the option of opting out of information collection.

Ethical Issues

The publishing crisis has led some print publishers to drink from poisoned wells. Over the last several years, readers of several major magazines have seen an invasion of advertising in their editorial content -- and not just inside the magazine. A few publishers have openly challenged ASME guidelines by featuring controversial advertising on their covers. In 2007, XXL's editor-in-chief appeared in an ad on the back cover of his magazine. The cover of ESPN's April 6, 2009, issue was half-editorial, half-advertorial.

Digital provides even more opportunities to mesh advertising with editorial. Ads can flash across an editorial page. Content can be hotlinked to sponsor sites. In a magazine, delineation between ad and editorial is generally clear-cut (though, in recent years, some print magazines have experimented with product placement and ad overlap in editorial content).

However, says Susan Currie Sivek of MediaShift, publishers need to keep their readers in mind. When advertising takes the form of "online games, advertiser participation in Web discussion forums, sponsored tweets and Facebook posts, and ads in mobile applications and the iPhone editions of their publications," it is possible that "readers' experience with these new advertising approaches may not have caught up just yet to the magazines' innovations." In other words, readers may not readily discern between sponsored and editorial content. To complicate matters, says Sivek, "clear standards for distinguishing between ad and editorial haven't yet been established for digital magazines."

The Debate

Most editors wish to safeguard their content from undue advertorial influence. After all, breaches in the ad/edit divide infringe upon their autonomy and compromise their credibility. In an April 2, 2010, article for AdvertisingAge.com, ASME chief executive Sid Holt says, "'I think most editors would agree that these kinds of ads -- ads that intentionally disrupt the reader experience -- are not very good for the reader's relationship with the magazine, and since the editor is responsible for that relationship, the editor should have some say -- a lot of say -- the final say -- about whether the magazine should take ads like these."

Not so fast, say some other industry professionals. Emerging from the recent publishing and economic crises, many magazines are pursuing unconventional modes of advertising to recoup some of their losses. Sometimes, this means enhancing content with advertorial elements. This is, under current industry guidelines, unethical. It breaches that cherished ad/edit divide and can mean expulsion from ASME and its National Magazine Awards.

"Arguably," says Susan Currie Sivek, "if readers find value in the entertainment or information offered by these interactive ads, and the ads have been clearly designated as such then the magazine experience might in fact be enhanced by ads." But this new digital advertising environment offers "unscrupulous publishers a chance to lead trusting readers to unlabeled sponsor links by way of editorial content." Therein lies the problem. Practices like this violate ASME's best digital practices, but as a November 2008 Advertising Age headline suggests, "as ASME fortifies [the] ad/edit divide, some mags flout it."

Protecting Editorial Integrity

So how should editors respond when the advertising department invades? Should ASME reconsider its digital guidelines in response to recent developments in digital publishing technology? And can true advertorial transparency exist in the digital world, where advertising content can take countless forms, some of which are not readily discernible to readers?

There are compelling arguments on both sides. Some argue that the decriminalization of ad/edit overlap could mean higher wages and more job security for editors, whose industry has been in a state of constant upheaval for several years now. But are the job security and potential windfall worth it? No, say other industry insiders, who suggest that compromises in editorial integrity could actually damage the magazine's pull with the very advertisers who sustain them.

It comes down to this: If you are willing to take a bite of a bologna and whipped cream sandwich for a quick buck, be prepared for the ensuing stomachache. Even if industry evolution transforms advertising and editorial into peanut-butter-and-jelly partners, the taste will, for many, always be a bit off.

Meredith Dias is senior research editor of STRAT and Editors Only.

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Posted in Advertising (RSS), Online (RSS)

Watch Out for Big-Sounding Percentages

Posted on Tuesday, November 16, 2010 at 2:08 PM

Digital Hype Watch: Misleading numbers often have percent signs.

"Some have referred to the current marketplace as the 'golden age' of online advertising..." So proclaimed a recent Foliomag.com article. It went on, "That's the story at Hearst's Popular Mechanics." The story cited the publication's online advertising as being up 46 percent over last year! It was pointed out that online outpaced print, which was only up 25 percent.

Flying in the face of that buildup is that "print represents 89 percent of the magazine's total revenue." The reader is left to do the math that online constitutes only 11 percent of all revenue. But then again, it may be less. If print is 89 percent of "the magazine's total revenue," what about circulation and list revenue? If there's some of that, it means that online revenue would be less than 11 percent.

Confusingly, the story also states that "most advertisers take an integrated approach of using both print and online advertising." Even accepting the 11 percent online revenue postulation, it means there's a 9 to 1 ratio of ad spending, print to online. Some golden age! What's more, when we calculated out the stated online growth increment, the numbers suggest that it will take at least 15 years before online will even equal print, much less surpass it.

Now, we don't know how factual any of those numbers and resultant calculations might be. But, regardless, they seem to have very little meaning for publishers who are now planning their own online strategies. There is no doubt that online advertising is growing and that publishers need to position themselves accordingly. But the "print is dead" and "tomorrow everything will be digital" predictions found in many quarters deserve some scrutiny. Otherwise, publishers could be led astray as they make important decisions regarding their ascent into multichannel publishing.

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Posted in News (RSS), Online (RSS)

Recently Tweeted

Posted on Tuesday, November 16, 2010 at 2:07 PM

Magazine industry uses Google to gang up on Apple. http://read.bi/arVwIO

NYT: U.S. News & World Report to end print publication in favor of an online-only presence. http://nyti.ms/901GNh

Newsweek gets another new owner ... as its business strategy gets curiouser and curiouser. http://bit.ly/9qjFtK

Follow us on Twitter: @STRATnewsletter.

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Breaking News: Newsweek Sold Again

Posted on Monday, November 15, 2010 at 8:20 PM

Ownership of Newsweek changes hands for the second time in three months.

By William Dunkerley

Newsweek, just sold last August, has another new owner. Now it's owned by The Newsweek Daily Beast Company, a joint venture created by Newsweek and The Daily Beast (an online news website). Sidney Harman who bought Newsweek in August is a 50 percent owner of the new company. IAC/InterActiveCorp, owner of such websites as Match.com, Excite.com, Reference.com, and founder of TheDailyBeast.com, owns the other 50 percent. Interestingly, IAC's chairman and CEO, Barry Diller, is a board member of the Washington Post Company, the outfit that sold Newsweek to Harman a few months back.

STRAT analyzed the factors of Newsweek's business strategies in our July issue. We found them flawed, but there didn't seem to be a compelling business reason for the sale. Then in our August issue, we reported on the sale to Harman, a publishing novice. We wondered what could have motivated the purchase of the money-hemorrhaging news magazine.

Now, we're left wondering what's behind joining forces with a news website. Newsweek already has a news website (Alexa rank: 1911). But reported plans are to junk Newsweek.com in favor of keeping TheDailyBeast.com (Alexa rank: 2121).

Did Harman buy Newsweek and cleverly flip the property for a nice profit? There have been no media reports of any money changing hands going into the joint venture.

Was Harman merely an intermediary for the acquisition of Newsweek by Diller who himself was afraid to ask for it? Who knows.

Are the principals assembling a print and online news organization to support a 2012-oriented political agenda? Who knows on that count, too.

Some speculate that the wisdom of the joint venture lies in efficiencies of a combined operation. Reports indicate that Newsweek is leading up to a $20 million loss for this year, $10 million for The Daily Beast. It's hard to picture wiping that away with "efficiencies." Our analysis indicates that Newsweek's losses are a result of flawed business strategies. The Daily Beast, on the other hand, is still in a start-up mode (launched in 2008). Thus, its losses are not necessarily a result of any dysfunction at all. It simply may not have had enough time to achieve profitability.

The ostensible objective of the new venture was expressed by its CEO, Stephen Colvin: "Consumers and advertisers value media distributed across multiple platforms. The merger of The Daily Beast and Newsweek audiences creates a powerful global media property for the digital age."

That seems like a sensible statement. But…

Launching a major news-oriented website like The Daily Beast was a considerable undertaking. At just 2 years into it, the job is far from done and it is too early to know if sustainable success will be achieved.

The turnaround of a major print publication like Newsweek, with a legacy of failure, too, is a monumental task with an uncertain future.

And, the merger of two organizations is yet another challenging undertaking unto itself. Merging usually creates unnecessary duplication that has to be dealt with -- a need to accommodate 2 different business cultures through carefully orchestrated process, not by decree; a refocusing of business objectives and a concomitant adjustment of work routines; and dealing with staff resistance to change.

Organizational mergers are indeed challenging enough all by themselves. But when you're dealing with a major website still in the throes of startup and a failed print publication that has yet to display a viable turnaround strategy, and try to merge the two, you have just multiplied the risks involved by an enormous factor.

There are a number of experienced and talented people involved in the Newsweek Daily Beast venture. Maybe they have a good plan and will succeed. Maybe the undertaking is just an expression of bristling egocentricity. Or, maybe there's a hidden political agenda. Time will tell. But, if they are able to produce the "powerful global media property for the digital age" of Colvin's vision, it will indeed be a noteworthy accomplishment, one that will stand as an exemplary model for the industry.

William Dunkerley is principal of William Dunkerley Publishing Consultants, www.publishinghelp.com.

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Posted in News (RSS), Online (RSS), Print (RSS)

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