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It’s time for the media to embrace self-service native advertising

You may think that people have antipathy for large tech platforms like Facebook and Amazon, but it’s nothing compared to the vitriol and contempt regularly expressed toward Taboola and Outbrain. 

For the uninitiated, these companies — which are often pejoratively referred to as “chumboxes” — operate the “sponsored content” headlines that you’ll find at the bottom of legitimate news articles. They’re a type of advertising tech that’s been widely embraced by low-quality websites that specialize in clickbait content. Here’s what the chumboxes look like:

What chumbox advertising clients essentially do is engage in arbitrage — they use the chumboxes to drive massive amounts of traffic to their websites with the hope of eking out a small profit via their own programmatic display ads. In other words, they’ll pay the chumbox $1 for a click with the hope of generating $1.25 once the user lands on the article. In order to make this feasible, they resort to ridiculous and outrageous headlines that often overstate what’s actually in the article being clicked on. Hence you end up with bizarre headlines like “Michael Jordans Private Jet Is Disgusting (Photos)” and "CELEBRITIES LIVING UNHEALTHY LIFESTYLES WHO ARE STILL ALIVE AGAINST ALL ODDS"

As more and more news consumers were conned into clicking on these chumboxes, their reputation soured. “I am constantly surprised how many ‘reputable’ sites stick these bottom-feeders on their page,” a user wrote on Hacker News. “I feel like it must impact readers' perception of those sites when they are trying to be all highbrow, and then the bottom of an article is stuffed with crap that most tabloids wouldn't publish.” A Next Web headline referred to Taboola and Outbrain as “the two worst companies in the world.” Fact checking organizations warned of their tendency to spread fake news.

Now, I’m not here to defend the chumboxes or their lack of content moderation. In fact, I think they probably could have avoided a lot of reputational damage if they had simply established policies that discouraged dishonest headlines.

But what I am here to argue is that these chumboxes capitalized on a business model that should have been embraced by nearly every traditional media outlet over a decade ago: self-service native ads.

Let’s zoom out a bit. What does nearly every multi-billion dollar tech platform —including Facebook, Instagram, Twitter, Amazon, Google Search, Bing, YouTube, TikTok, and Snapchat — have in common?   

They all created the ability for everyday users to run their own ads without interacting with a single salesperson. Each of these platforms has made this process so simple that even complete newbies to the ad-buying process can have an ad up and running on, say, Facebook or Google Search within a few minutes. 

There are two reasons that this functionality has been so crucial to these companies’ success:

• Native ads are incredibly effective: Because native ads resemble user generated content, they’re not subjected to ad blindness, which means that users are more likely to actually see the ads. What’s more, most tech platforms utilize some kind of auctioning system that rewards the best-performing ads with lower-cost CPMs — which then incentivizes brands to test and run higher-quality ads.

• Self-service native ads are highly scalable: There are tens of millions of businesses around the world that are large enough to have marketing budgets but too small to hire media buying experts. If you’re, say, a plumber in Des Moines, you can start testing out Google AdWords for only a few dollars a month and then scale up as your business allows it. This low barrier to entry has created a huge longtail revenue base for most tech platforms.

Now let’s juxtapose this with the ad models embraced by the media industry. For the past 14 years or so, traditional media companies have focused on two main advertising models:

• Display advertising: These are the traditional “banner” ads that can be found floating around the editorial content. Publishers sell them both directly and through programmatic ad tech exchanges.

• Bespoke native ads: Pioneered by outlets like BuzzFeed and Vice, these tend to be high-quality editorial content created in-house on behalf of brands. Over the past decade, most major media companies have launched their own “content studios” oriented around this type of advertising.

Let’s start with discussing display advertising. In all my years of reporting on the media industry, I’ve never seen any convincing evidence that consumers pay attention to display ads. In fact, most evidence is to the contrary. “Banner blindness,” for instance, is a well-documented phenomena, and tens of millions of internet users have installed ad blockers for the express purpose of avoiding this type of marketing. Some studies even suggest that the vast majority of display ad clicks are accidental. 

“But what about the bespoke sponsored content?” you might be asking right now. “Surely that produces higher audience engagement. Haven’t you ever seen BuzzFeed’s massively successful Dear Kitten ad?” 

Well, sure, these types of ads produce better results, but they’re also incredibly expensive and time-consuming to create. They require an entire armada of salespeople, designers, producers, editors, and writers, and the time spanning between the initial sale and the actual publication can take months. I speak from experience, since I used to be a freelance writer who got hired out to create this type of content. I can remember several projects that took upwards of four months from the initial kickoff call to the article actually going live. It’s the type of work that doesn’t scale very well.

So to recap: for over a decade, the media industry has embraced two ad formats that either have low ROI or an extremely high barrier to entry. This has, in effect, alienated millions of small-to-medium-sized businesses, many of which have been more than happy to take their marketing dollars to the major tech platforms.

To illustrate this point further, I sought out to answer a simple question: could I purchase an ad on The New York Times’s website without interacting with another human being?

I started out on the advertising.nytimes.com landing page, keeping an eye out for anything resembling self-service functionality. I then went down a rabbit hole of over a dozen ad formats, clicking on link after link after link. But every rabbit hole led to the exact same outcome: a “get in touch” link that brought me to a generic contact form. 

I then tried a different tactic: I Googled “New York Times self service ads.” This took me to what looked like a promising page, but it ended up being a dead end. There was no way for me to create an account without going through a Times representative first. I couldn’t get the Grey Lady to take my money. 

Now let’s imagine a scenario that takes place in an alternate universe where the media embraced self-service ads: I’m a CEO at a SaaS tech startup and publish a piece of thought leadership content to Medium. I want my article to get a wider readership, and instead of buying a promoted post on Facebook, I go to a New York Times self service ad portal. I upload a headline, a featured image, a subheader, and my credit card info. I then set a CPM bid and a maximum budget. When I hit “publish,” my ad starts running at the bottom and side of all New York Times tech content until my budget has been exhausted.

What I just described has been doable on every major tech platform for over a decade, and yet I can’t think of a single legacy media company that offers this sort of functionality.

I find it absolutely bonkers that the media industry has spent so much time complaining that tech platforms stole their advertising revenue, and yet it hasn’t lifted a finger to copy the tech industry’s most successful ad innovation.

It didn’t always have to be this way. In fact, there was a time when it seemed like native self-service ads might become the dominant format for monetizing online content.

You’ve probably never heard of the company Blogads, but if you regularly visited popular blogs in the mid-to-late 2000s, then you definitely encountered its ads. Its main product was a sidebar ad unit that was 100% self-service; the bloggers themselves set the prices, and a brand could simply upload a photo, text, links, and credit card information, and then the ad was up and running after the blogger approved it. 

I actually profiled Blogads founder Henry Copeland a few years ago, and he explained why the product was so successful:

“I would argue we were the first native ad,” said Copeland. “When we started dealing with political campaigns, we’d get ad buyers who would say, ‘I have these banners already made up that I’m going to run on the Susquehanna Citizen Journal, can’t you run my banners?’ And I’d say nope, blogs are different, blog readers are different, you need to communicate in a more intellectual, authentic way. And it’s going to be text, it’s going to be an image. You can put multiple links in your text. All of this stuff you see today, both on Facebook ads or any content marketing ads — I won’t say they grew out of what we were doing, but they’re not any deviation from what we were doing in ‘03.”

By 2008 or so, you could spot Blogads units on just about every major blog on the internet ranging from Daily Kos to Perez Hilton. But then within a few short years, they were gone. Why? Because of the rise of programmatic advertising, with its promise of hyper targeted ads tailored to the individual user. Many of the ad tech players that launched in this era were VC-funded and had huge war chests:

Perhaps the biggest blow to Blogads was that other networks swooped in and began to pick off its largest publishing partners. In some cases this was simply because the competing network was well-funded and could offer the blogger guaranteed revenue. Blogads was a bootstrapped company, and Copeland wasn’t willing to take on that amount of risk. “It just drove me nuts, because you can give someone a guarantee when you have VC backing, because you’re basically gambling that the market is going to continue to go up,” he said. “I was never going to give someone a guarantee because I knew that if the bottom fell out I didn’t want to be holding the bag making someone a $100,000 a month promise.”

Flash forward to 2022, and we now know that the ROI of programmatic was always overhyped, and some major media companies have removed it completely from their inventory. But the damage was done: Blogads is no more, and its pioneering native ad format didn’t survive the decade.

It’s a shame, because I think the media industry might have gone in a different direction if it hadn’t become so enamored with bad ad products. It would have been able to own more of its relationships with advertisers instead of outsourcing those relationships to opaque ad tech vendors that often siphon off the majority of the revenue they bring in. 

Which brings me back to the chumbox companies like Taboola and Outbrain: sure, they lacked editorial scruples, but they created one of the only publisher ad products that actually drive clicks. Perhaps the media industry should spend less time mocking them and instead figure out what made them so successful in the first place.

What do you think?

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Let's talk about selling your content business

If you run your own media business, then it’s probably crossed your mind that one day you might want to sell it off for a tidy sum. But who actually buys media businesses, and how do you find those people?

I'm hosting a Zoom call this Thursday so we can answer that very question. For this session, we’re going to explore several key areas:

• How to prep your company for sale

• How to settle on an asking price

• How to find potential buyers

• How to negotiate

My plan is to have a few guests on this call who have actual experience selling their businesses and can answer any questions the audience has.

Details can be found over here.

Quick hits

CNBC is doubling down on its paid newsletters. It seems to be the only cable news channel giving serious thought into how to monetize its online audience. [Digiday]

What happens when all these YouTube child stars grow up? Will they ever be able to achieve a life of normalcy? [WSJ]

Yahoo is still a massive business. [Axios]

Yet another article about Semafor, but I think this one is actually worth reading, since it dives deep into its two cofounders’ origin stories to really dissect their philosophical differences with the modern day mainstream media. [CJR]

“Micropayments to access individual pieces of content are an idea that makes perfect sense on the surface. It would seemingly work for all involved, only the math doesn’t work for one important faction: publishers.” [The Rebooting]

How Matt Brown built a thriving newsletter around the business of college sports

Matt Brown didn’t set off to build his own solo newsletter business, but he fell into it after taking a buyout at Vox Media sports site SB Nation during the height of the pandemic – a period when very few media companies were hiring.

While his SB Nation beat covered all of college sports, Matt decided to niche down with his own newsletter – which was called Extra Points – to focus specifically on the business side of college athletics. This gave him the edge he needed to find a loyal audience, and he quickly scaled it up to thousands of readers.

In my interview with Matt, we talked about why he left Vox Media, how he monetized his newsletter, and what made him want to sell it to a larger media company.

To listen to this conversation, subscribe to The Business of Content wherever you get your podcasts. iTunes/ Stitcher/  Overcast/ Spotify/ Google/ YouTube/ Audible

ICYMI: How Maria Brito used Instagram to build a 7-figure art consulting business

She eventually grew her audience to over 200,000 followers across Instagram, Facebook, Twitter, and email.