Sponsored Content’s Got a Cost Problem

Publishers are rushing out “sponsored content” ad units in the hopes of escaping the clutches of the commoditized display ad market.

Yet there are some problems, beyond questions of whether such units blur the line between editorial and advertising. They add up to costs. Right now, publishers are pricing too high, and the process for running sponsored content is too convoluted, adding in even more costs. Add those together, compare to the dirt-cheap pricing throughout most of online advertising, and sponsored content is at risk of being just not worth the effort, even if it is more effective (not to mention sexy) than old-fashioned banner ads.

“It’s expensive,” said Adam Broitman, vp of global digital marketing at Mastercard. “I can’t say it’s not worth it. There’s added value in the credibility of being in the center column, as opposed to having a banner on the right or left.” And yet the question remains just how much more it’s worth.

According to Ron Faris, CMO of Virgin Mobile, the shiny-new-object aspect to these programs leads to some pretty high costs, particularly when you start to look at them through the prism of CPMs. In that case, costs can hit $25, he said, which is hard to justify when most online ad opportunities are significantly cheaper.

In addition to cost, sponsored content is harder to implement than the standard banner ad. Both brands and publishers are used to the template for process and workflow for banner ad creative. There are fewer checks to go through, meaning you most likely already have the creative, maybe tweak it a little to fit the dimensions for a particular publisher, get an approval and off you go.

With sponsored content, since it’s custom, the template for process and workflow is tedious. It depends on the publisher you’re working with, of course. But unless you have a formal engine for content distribution, which most brands do not, then sponsored content is more difficult because it involves more people on the brand, publisher and agency side. All the different layers make it a challenge to navigate each company.

According to Faris, when you are dealing with the brand team and its agency, their thoughts on “good content” may not be aligned. The media team has one view, the brand team has another, and when you throw in those on the publisher team, then everyone’s at odds. The constant need for alignment also makes it more difficult to get the content out.

“A custom content piece has a lot more stakeholders, more approvals and that extends the time of getting through the process,” Faris said. “But because it’s custom, it’s more precious in that regard. You have to have a stomach for it. It does get easier though each time you do it because you begin to set up a process for it. At Virgin Mobile, sponsored content is preferred to the banner because it’s a more authentic and rich voice.”

Image via Shutterstock 


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