New York Times Co. (NYT:US), looking to imitate the business models used by startups such as BuzzFeed Inc., is considering letting advertisers sponsor more stories on its website, two people with knowledge of the situation said.
In a series of meetings with senior sales and editorial staff last month, Chairman Arthur Sulzberger and Chief Executive Officer Mark Thompson discussed the idea of offering bigger sponsorship opportunities to advertisers, said the people, who asked not to be named because the talks were private. Outside executives such as BuzzFeed CEO Jonah Peretti were brought in to talk about creating successful “native ads,” which often take the form of sponsored stories.
The 161-year-old publisher is seeking new sources of revenue after 10 straight quarters of declining newspaper ad sales. Annual advertising revenue has been cut almost in half to $711.8 million last year from $1.27 billion in 2006, before the recession and a proliferation of mobile devices crippled the newspaper industry.
In embracing new sponsorship opportunities, the Times will make it clear when readers are seeing an ad versus a regular story, said Todd Haskell, a vice president of advertising at the New York-based company. He declined to discuss what presenters shared at the recent meetings or the reaction of Times Co. executives.
“What we’re looking at is ways you can use journalistic storytelling techniques in how you could present a narrative for our clients without misleading or confusing the reader,” Haskell said in an interview. His staff is constantly considering new ad formats, including custom, advertorial-like content for the Times website, he said.
Part of the strategy is avoiding controversial sponsors. The Atlantic magazine drew criticism earlier this year for a sponsored online post from the Church of Scientology, which carried the headline, “David Miscavige Leads Scientology to Milestone Year.” The magazine took down the post and apologized to its readers in a mea culpa that started, “We screwed up.”
Already, the New York Times is getting more aggressive with how it uses its home page -- a site that draws about 35 million visitors a month, according to ComScore Inc. (SCOR:US) A recent ad for carmaker Jaguar overlaid the entire website with a mock news article announcing the arrival of its latest sports car: “Jaguar Unleashes New Cat,” the headline read.
The text of the Jaguar story was obscured, distinguishing it from a regular article, and it disappeared after readers pushed the “close” button. An ad for the cereal Grape Nuts used a similar faux-newspaper approach on the Times home page this week.
In another expansion of its advertising boundaries, the Times said this week that it will include sponsored content in its Scoop application, a mobile guide to New York City. Citi Bike, New York’s new bicycle-sharing program, contributed a feature to the app that helps users find bike stations.
Adopting BuzzFeed’s approach to ads would be a step further.
When Peretti created BuzzFeed in 2006, he focused on generating stories that were most likely to be shared over social media. The site is a mix of list-based articles, such as “10 Funniest Cat GIFs of the Week,” and more serious coverage of politics and business.
BuzzFeed doesn’t accept traditional banner ads, which typically have little connection to the articles they appear next to. Instead, its advertisers sponsor features that readers are more likely to share with others.
Zipcar Inc., for instance, underwrote a story called “11 Annoying City Living Problems,” a feature designed to appeal to its urban demographic.
The Fox broadcast network, meanwhile, sponsored “20 Hot And Steamy Pieces Of Pizza Porn,” a list of animated graphics of pizza. The item promoted a new slate of animated shows premiering on the TV network in July. While the stories are labeled with their sponsors’ names, they don’t differ in tone or presentation from the other articles on BuzzFeed.
Peretti declined to comment on his presentation to the New York Times.
The Times’ website still depends on banner ads, which haven’t helped the company pull out of a sales slump. Online ad revenue fell 4 percent in the most recent quarter, the company said last month. Another reason for the decline is the prevalence of ad-buying trading desks, which have put pressure on prices by turning ad space into a commodity market.
“Competition is increasing in the online ad world, and it’s important for the Times to explore and innovate with new types of advertising units,” said William Bird, an analyst at Lazard Capital Markets in New York.
The Times has tested a number of online initiatives in recent years, including corporate sponsorships of special sections, such as a site devoted to New York Fashion Week.
Still, a large part of the Times’ value comes from its vaunted reputation, so it’s risky to experiment with models that blur the lines of journalism, William Grueskin, dean of academic affairs for Columbia University’s journalism school.
“I can see why an organization like the New York Times -- where the brand is so core to its value -- why they’d be wary about something like this,” he said, referring to the move toward sponsored content.
The New York Times advertising discussion follows an effort to refocus the company on its main brand. In February, the publisher announced it would sell the Boston Globe and related newspapers. The company has already sold its About.com website and its regional-newspaper business over the past year and a half. It’s also rebranding its International Herald Tribune newspaper as the International New York Times.
“If the Times gets their ad dollars back, it’ll have to be under an entirely different ad structure than they had in the past,” Grueskin said. “The broader issue at the Times is they don’t have any hedge -- the entire business is built around the Times brand. That’s everything.”
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