US Insights

How will the digital transformation of news affect advertisers?

Jane Bloomfield

Head of Sales & Marketing

Brands 01.25.2019 / 09:00

Newsjon-tyson-195064-unsplash

Seth Rogin discusses the future of news, and what it means for brands and society.

This article is an edited version of an episode of our Future Proof podcast, the marketing podcast from Saïd Business School, Oxford University, and Kantar. Listen to this episode here.

Andrew Stephen, L’Oreal Professor of Marketing at Saïd Business School (Oxford University) and Jane Bloomfield, Head of Business Development, Insights Division at Kantar, speak to Seth Rogin, CEO of Nucleus Marketing Solutions, about the future of news. Based in New York, Seth was previously chief revenue officer at Mashable, and before that VP of advertising at the New York Times. Seth is also an associate fellow at Saïd Business School.

Jane: Research we did at Kantar on Trust in News found that, amongst news audiences in general, over 39% of people are using “greater numbers of news sources than ever”. Do you think that means that the future of news is really healthy? Or does news have a bit of an image problem?

Seth: I think that shows people are hungry for news, but that consumers are not sure what sources they should trust these days. The internet has given us a wide array of options, but it hasn’t given us a good filter to understand exactly which sources are trustworthy and which aren’t. The legacy news businesses, which are probably (or were until recently) the most trusted brands in news, are suffering the most because they have the highest costs – shoe-leather, first-hand journalism costs money. However, it costs money because it is a valuable enterprise: it’s valuable to society; it’s valuable to consumers. The future of news, from a consumer demand perspective, is strong. But is the future of news as a business as strong as it is as a consumer product? Will consumers pay for that content on their own? Will advertisers continue to fund the journalism that they’ve funded for generations? Or does the entire business model need to be rethought?

Andrew: On the business side, the ad-supported business model – what do you see as the future? And at Nucleus what are you doing?  

Seth: Let’s take a step back and think about what’s brought us to this place. For generations, advertisers funded the journalism that society needed, not out of any great belief in the nobility of news – because they’re business people – but because it was the best way to access large audiences at scale and to have a good understanding of the context and the kinds of people they were reaching. It was, in essence, an early version of the current databased targeting that we see in digital media today. And then the main transformation of digital news media happened, when the major platforms sold the misperception that you can reach the same readers that news was reaching, you can have the same level of large-scale connection, you can have the same level of scale, and you could have added levels of precision and targeting at lower cost… but have the same value of connection. The part I dispute is that last part – that the value of the connection is the same. When I, as a consumer, am reading news, I trust the news that I’m choosing to read, and therefore there is an implied trust with the brands that are advertising next to that content. There’s a reason we don’t see luxury brands advertising in a non-luxury context, even to this day. Because they are the most cautious about their brand equity. And yet, over the last decade, advertisers have been sold this idea that they don’t need to support journalistic environments to get that high quality connection, because the precision is more important than the context. What I believe we will see, and what Nucleus is bringing forward, is a rebalancing of that equation. I can be very precise at reaching you with a message, but if I do it in the wrong environment or in an unexpected place, I might actually upset the level of trust you have in my brand.

What Nucleus has done is try to reset that equation by changing the marketplace. We are true disruptors in terms of how advertisers and the news industry work together. We’ve united the audiences of all the most important hometown news brands in America as one. We believe that’s a model for the world. In doing so, we’ve created one set of data as a national opportunity for brands, that rivals the scale of some of the biggest platforms, but has none of the brand risk elements, none of the chance, none of the Wild West of some of the social media and user-generated platforms. It gives real respect to both reader/consumer and to the advertiser – and the covenant of trust between them.

Jane: Do you think that advertisers today are a bit confused and frustrated?

Seth: Yes! I think being CMO these days has to be one of the scariest jobs. What was the job of CMO 15 or 20 years ago? It was to select amongst a couple of television options, a couple of outdoor and newspaper options; now, you have the entire planet at your fingertips through DSPs and other buying platforms. A CMO has to be aware of thousands of options. That’s why I think we see the rise of consultancies and data-focused buying: because it’s simply too big an ocean to boil. Being a CMO these days means you are inspiring the mission of the brand, and inspiring the performance of the brand, but also having to make deeply critical strategic choices in how [media] investments are made. CMOs don’t need more data, they need more clarity. They need to be able to glean insight from the data that they have, and know that they have trustable data rather than just more scale.

Andrew: What’s the future of brand safety in that context?

Seth: When we talk about preserving brands, we talk about more than just being “brand safe”. We talk about being “brand smart”. Wisdom is part of the fiduciary responsibility of every CMO. The idea that the brand should not just be safe – i.e. kept away from controversial content – but something more than that. It’s about choosing the right environment to enhance the brand. To bring that covenant of trust forward. We believe that trust does not end for news organisations at the newsroom door. Both the consumer and the advertiser should know that their trust in us is extends to every part of that news business. So when an advertiser is buying media on news platforms that Nucleus represents (or our competitors), they are getting an adjacency to content that is meant to civically engage, to entertain, to not drive divisions in society or encourage prejudice. The mission statement of the New York Times is to “enhance society”. I think that is key. It’s easy to say “digital technology will solve all of that”, and I truly do believe as a tech native that digital technology will enhance that process of selecting the best and wisest choices for media, but there will always be a human element. Why? Because when you invest in media, just as when you invest in a company, you are investing in the management, the staff; you are investing in their standards of execution. The smartest brands are the ones who buy not just around safety, but are using the best of technology – tools that can read using Natural Language Processing; tools that look at viewability in new ways; understanding all the elements that drive the best environment and the best execution – so that it isn’t just about precision but it’s about precision with quality. That together leads to a brand smart environment.

Jane: When we’ve looked at trust in news, we’ve seen trust in mainstream news beats online – printed news magazines and newspapers are the most trusted news source, with 72% of consumers citing them as their most trusted source of news, closely followed by TV. But just 33% of consumers view social media as a trustworthy news source. What can the online news sources do to build that trust and raise their profile?

Seth: The fact that over 30% trust social media is a horrible stat – we have a serious issue. When you think of the divisions building in society; 1 in 3 trusting news more that has been shared with them without any legitimising of source… that’s how technology has helped to drive division. By amplifying content that isn’t certified, that isn’t created by a first-hand journalist. That is one challenge.

When it comes to the digital native news organisations – some of which absolutely are deserving of our esteem and our trust – it’s really about earning trust. And I do think we need some sort of certification of understanding what’s being shared. I think we will see more awareness of that coming soon, in the industry around the world, that what we share reflects who we are as individuals but we need to know who’s generating what we’re sharing. I’ve been really excited by the work of a company called Po.et which is using blockchain technology, not in a crypto sense but in a security sense, to change the way news is transacted on social media – using blockchain to understand which journalist is creating the content and which individual is sharing, and creating an inseparable lock between them so that the reader and the sharer can be sure of the kinds of content that is being distributed. To me, that’s where technology can enhance trust. 

I’m so excited, because I believe we’ve been in a golden age of data but a stone age of insight… and now there’s an opportunity for us to really understand how our data can work to enhance society and not just drive profitability for profitability’s sake. Don’t misunderstand me, I know we are all in a business, and nobody can deposit the nobility of the news industry in the bank. But I truly believe we generate a better ROI, a better ROAS, by using the best of technology, things like blockchain and some of the NLP software… some of those platforms are going to revolutionise the way we think about brand wisdom, to make sure that brands can be smarter about where they place their campaigns. Because I believe at some point there will be a shareholder lawsuit; a shareholder who says “I can’t believe you took the money I invested in your company and you ran that on that horrible platform that has an uncontrollable amount of videos that can’t be filtered” or on a social media platform and you had no idea what sort of adjacency there would be – I think that’s the next wave of tech influence, to protect brands and to protect consumers as well.

Andrew: So what about a CMO at the other end of the spectrum – who says this is all too complicated, I need to go back to the old-fashioned way of doing it? It seems there are a lot of moving parts now. Is there a way to simplify it into a few key components?

Seth: Understanding the standards are what drives the performance of the technology. A better and deeper recognition and absorption within a marketing organisation of what their true KPIs are will drive better performance of the technology. If the only drive is for next week’s report, then we’re always going to be buying media for the short-term and using our technology for that. But as many have said before, the technology will only be as good and as smart as the people creating it. And the marketers who better understand their KPIS – to both create short-term results and also long-term brand equity – are the ones who will buy based on those KPIs and feed those into a buying platform for digital media. So that’s where the technology does bring more simplicity. Without the technology, buying in this environment would be impossible. I’d love to see a marketer – one of the ones who stands on stage as a world marketing leader – who says “We want to support quality content” actually put that as a standard into their buying platform. Because that’s where the true decisions get made.

Jane: Do you think that technology is set up to adapt and evolve? If you think about changing habits and reaching different audiences… do you think the future of news and advertising on these channels is in good hands?

Seth: The diversity of sources available shows that the bulk of journalism is in good hands. To come back to the philosophy that I created more than 20 years ago, the idea of mission-based media – meaning journalism that is objectively intended and meant to educate and drive civic engagement – that’s the kind of journalism that I want to support in my career, that I believe most journalism students want to get into. But there is a business side to it, and there is a way to cash in on misinforming and disinforming large swathes of people. The more that news becomes something that needs to be purchased, the more attractive some of the disinforming sources can be. So it is important for all of us as consumers – whether you are consuming digitally or through television or even still in print, as many millions of people still are – that we’re conscious of who creates that journalism, because there will always be someone who’s interested in misinforming and disinforming. What’s really important is that we understand who our sources are. And that puts the responsibility back on us as consumers. But there’s also a responsibility for marketers. Because I believe there are two kinds of ROI. There’s return on investment, the standard one we all learn in business school, then there’s a second one – the return on intelorance. The choice that is made on how far a brand is willing to go to make a profit. For me, the calculation on return on intolerance is going to be something that will manifest itself over the coming years, and you’re starting to see social movements to drive people away from more intolerant content. But I also think we need be wary of that – if we’re using technology to filter content, we can wind up being censorious ourselves, and that’s not something we want to do. That’s why a human element empowering the data and empowering the technology, a human element at the rudder, will always be key.

Jane: You touched on the financial predicament of news organisations – a concern for both consumers of news in terms of choice, and for advertisers as well the organisations themselves. I’d like to get your thought on the under-35s – do they provide some of the answers? In how they behave and consume news today?

Seth: One of the biggest surprises we found when we created Nucleus, which unites 220 sites that generate mission-based or objectively intended journalism around the United States, is that we actually reach more millennials than Buzzfeed and Snapchat combined. That’s not our numbers, that’s outside audience figures. It was a great discovery. We also discovered that we generate more video views than some of the most powerful and popular video platforms in the country and on earth. So that reflects that there is a hunger for the kinds of content and journalism that’s being created, and that it is being generated very much from the younger generation who is seeing what’s going on in the world.

Much of the way news has been monetised has been in the non-hard-news content that still has great credibility – whether it’s fashion reviews, movie reviews, theatre, restaurants, travel, lifestyle, cooking… all of those things where we still want to know that we trust the source, and there is an implication that a news environment is of the highest regard, in terms of finding the best thought leaders, the best writers around that content. We’re actually seeing a surge in millennial readership, so that we’re outperforming some of the most youth-based platforms, because everybody wants to know what’s going on in their world. Also, news organisations have a great monetisation opportunity, and it’s one we’re seeing at Nucleus as well, in sports. Because the news organisation in your home town is where you’re likely to turn for the recent sports scores or deeper insight, whether those be school-based team sports or all the way up to the professional and global leagues. And the advertising on sports helps to support that serious journalism on a regular basis. When I was at the New York Times, we used the funding that came in from things like luxury advertising to support coverage of wars, of very serious issues. There are very few advertisers that come to us and say, “Put us next to all of the war content.” Readers are looking to consume all sorts of content, and the less hard news content helps to fund the hardest news and the most civically important content. In doing that, we’re providing a real service to the youngest readers who are coming to us. And that means there’s a responsibility on us and our marketers to make sure that we’re customising messaging and environments that are suitable for them as well.

Andrew: It seems to have become conventional wisdom that younger people don’t want to be exposed to ads. What are you seeing in the data?

Seth: We’re not seeing the wave of ad blocking that you might expect. However, it’s always going to be a concern. And I always come back to the experience that I have when reading a great fashion magazine: if you look at Vogue, people view the advertisements as important as the journalism that’s within it. The greatest environments have figured out how to capitalise on great marketing and to drive great creative amongst their brands so that it enhances the experience.

We don’t see blocking in a huge volume today – it’s a low percentage who are blocking our ads on most of our sites – but I do think it’s something the industry has to be vigilant about. However, what we are seeing is that different kinds of ad content drive different engagement levels. Increasingly, technology can help us better understand which consumer responds to which kinds of advertising formats. For instance, if I can better identify that you respond better to a video ad than an audio ad, then I can make sure that that’s what I’m delivering to you, so that hopefully the environment and experience is going to be more welcoming to you, more enjoyable, but also it’s going to drive a better response for my advertisers and better funding for the journalism that I work every day to support.

Jane: You can sense that the global news industry is caught in a perfect storm of deficit. It’s a deficit of attention, as people consume media in different ways, a deficit of revenue as print circulation, advertising spend declines, and a deficit of trust. In your opinion, what’s the opportunity for the next five years?

Seth: I would say watch this space for technological innovation. You’re going to see a deepening of the kind of data tools that the news industry brings to market. You’re going to see more sophistication and more innovation. There’s a new wave of technology innovators who are being incubated right now to create solutions for the next generation of news producers. You will see innovation in terms of the formats as well. I believe that augmented reality will drive a new revolution in the way that people are consuming content about the environment around them. I believe that you will see a different kind of technology to help me to understand and algorithmically control the kinds of content I see, who I trust, what it is that I want to see, but also balance that with not keeping me in a bubble of only hearing the content that flatters my own opinion. These are the challenges that are up in front of the news industry today and technology can play a huge part in it; data can take a huge role as a solution as well, but in the end it will come to each of us understanding what our goals are.

News, to me, is an industry unlike any other – maybe like medicine, at best – in that it has a civic and a human value at the same time that it needs to be a business as well. And the most important thing that we can do is make sure that we are holding people accountable. The best journalism is the oxygen of democracy. That’s what we want to ensure – that the oxygen continues to flow. And the only way that can happen is if both the business side and the mission side are succeeding as one. The stakes have never been higher. 

Source: Kantar

Editor's Notes

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