February 11, 2015 | Article | by Katie Hanusik | Advertising, Content
The Ultimate Guide to Sponsored Content
I recently came across an incredibly interesting report by Digital Relevance called The Media Buyer’s Guide to Sponsored Content. The 36-page report takes an exhaustive look at the state of sponsored content and attempts to define a model for pricing (and purchasing) these types of opportunities.
First some interesting stats:
- In 2013, brands spent on average 6.7 percent of their digital content marketing budgets on sponsored content (The Content Promotion Manifesto – also by Digital Relevance).
- More than 60 percent of publishers offered sponsored content opportunities in 2013, and an additional 16 percent planned to add these opportunities in 2014 (Hexagram and Spada, 2014).
- Native advertising spending in the U.S. is expected to increase from $1.3 billion in 2013 to $9.4 billion in 2018. Also, 40 percent of publishers expected native advertising to account for about 25 percent of their total digital revenue in 2014 (2014 Native Advertising Roundup).
- Native advertising has been found to be more effective than traditional display ads. Twenty-five percent more consumers look at native ads than display ads, and native ads generate an 18 percent higher lift in purchase intent and a 9 percent higher lift for brand affinity (BIA/Kelsey, 2013).
- However, there is some controversy with this ad format. Two-thirds of readers felt deceived upon learning that an article or video was sponsored by a brand, and 57 percent would prefer that their favorite news sites run banner ads instead of sponsored content (Contently Study, June 2014).
If the concept of sponsored content is unfamiliar to you, the Interactive Advertising Bureau (IAB) defines native advertising (of which sponsored content is an example) as, “paid ads that are so cohesive with the page content, assimilated into the design, and consistent with the platform behavior that the viewer simply feels that they belong.” Unlike advertorials, sponsored content does not actively promote a brand, product or service. Instead sponsored content is a perfect example of thought leadership that positions the author as an expert and seeks to inform or entertain the reader.
The benefits of sponsored content are clear. Publishers have a new revenue stream as traditional advertising dollars dry up, and advertisers get the benefit of a trusted environment and enhanced exposure to their highly targeted audiences. Though some publications like TechCrunch do not offer native advertising because of concerns about editorial integrity – many other reputable outlets like Forbes, The New York Times, Business Insider, The Washington Post and The Wall Street Journal do (click the links to see examples of sponsored content at each of these outlets). You’ll notice that each of these publications follows the IAB guidelines for sponsored content. The content is clearly marked as a sponsored post so that readers can easily distinguish between editorial and paid content.
The final section of the report focuses on the pricing study. The authors of the report contacted 550 publishers including small bloggers and major publishing houses and asked for the minimum sponsored content pricing. Publishers often justify their pricing using factors like word count, user time on page, if links are available, lead capture, traffic, social media or email promotion, visibility time and number of articles in the package. The report authors focused on the quantitative data points that are more easily compared, namely Domain Authority, Page Authority, AlexaReach, and Facebook, Twitter and Pinterest following. The goal was to see how these data points correlate with pricing and offer tools to enable marketers to better negotiate with publishers about sponsored content.
In a nutshell, pricing for sponsored content at blogs varied from about $100 to more than $1,500 (mean $292, median $125). For the 76 publications in the study, pricing ranged from $120 to $150,000 (mean $15,600, median $6,250).
If you’re interested in doing the math yourself, the report authors used multiple regression analysis to develop a handy (but complicated) pricing model. For the rest of you, price highly correlated with Domain Authority, number of Facebook fans and PageRank. Pricing varied widely and was further complicated by the fact that some publications bundle sponsored content with other traditional advertising elements. By way of example, GigaOm charges $2,000 for a one-off sponsored article, while Business Insider charges $5,000 for a similar program. However, CIO charges $20,000 for 3 months and 2 articles per week maximum and Forbes charges $50,000 per month for a minimum of three months with unlimited articles.
Regardless of what avenue you choose, the report ends by reminding marketers to establish metrics in advance of beginning a native advertising program. A few metrics to consider include:
- Time on webpage
- Reader engagement (social shares, comments, etc.)
- Call-to-action metrics such as click-through rate
- Conversion rate, bounce rate for those that clicked through to sponsor’s page
Be sure to check out this report if you’re considering a sponsored content program in 2015. We’d love to hear from you if you’ve got some interesting results or anecdotes to share.