News advertising could be a cost-effective and socially responsible investment for advertisers in an overlooked market.
Eric Cox / Reuters
The news industry has long faced a particular financial dilemma.
Much of news organizations' money has traditionally come from advertising, but a lot of the biggest news isn't the kind of thing that advertisers want their ads to appear alongside.
The idea is that placing ads next to coverage of polarizing topics such as war, politics, and crime might negatively affect brand perceptions, whereas placing them next to so-called safe subjects like entertainment and sports will not.
A new report, "The Future of News: Ad Adjacency Study," challenges this conventional wisdom and indicates the focus on brand safety in news advertising might be misguided.
"Too much emphasis has been put on regulating the environment or discriminating against certain environments that are very important for the development of news," said Mark Penn, the CEO and chairman of the marketing agency Stagwell.
For its study, Stagwell partnered with media publishers including Axel Springer and its brands Business Insider and Politico, The New York Times, The Wall Street Journal, and The Washington Post to conduct a study of 50,000 American adults on the effects of ad adjacency for news articles dealing with "unsafe" subjects.
The study used a range top-of-mind topics for the American public, as indicated by a monthly Harvard/Harris Poll survey, including crime, inflation, conflict in the Middle East, and political stories about Donald Trump and Joe Biden.
The sample also included "safe" topics like entertainment and sports, for comparison. Real stories from the publisher partners were shown to participants with 10 actual advertisements from well-known companies across a range of products (with the publishers' names removed as a control).
Those surveyed were asked to indicate how likely they would be to purchase from the selected brands and how favorably they viewed the companies, along with several other questions about their opinions on the brands' reputations.
The research found that the type of story shown with the ad did not appear to affect purchase intent and favorability toward the brand.
"There are some minor differences across, but nothing that I would consider significant enough to do what I think many advertisers are doing, which is to stay away from letting their ads appear in important news stories," Penn told BI.
The Stagwell Group
Penn said one of the most surprising findings was that news had a minimal effect on the perception of brands by Gen Z participants and mothers, two desirable demographics for ad targeting that are thought to be more sensitive to content.
The 2024 presidential election still might be a topic marketers will want to consider carefully, however. Republicans in the survey had reflected lower favorability and purchase intent for brands that advertised on stories related to Biden than other groups by a difference of 1%-10%. A similar, though less dramatic difference was reflected on stories about Trump viewed by Democrats.
But Penn said the findings are not indicative of a major concern for brand safety, even around the election. "If there really was a brand-safety thing," he explained, "you'd see 20- or 30-point differences, not 2- or 3-point differences."
The report also sought to measure how large an audience advertisers might be missing out on by advertising alongside only certain topics. It estimated that 11% of people read only the kind of news stories traditionally considered "unsafe" for advertisers.
The report has encouraging potential for advertisers. Ad rates run much higher on sports and entertainment stories, and so if it is indeed the case that hard news doesn't actually hurt brands, then advertisements on news would be a cost-effective addition to a portfolio.
At a time when journalism is facing numerous financial and institutional challenges, Stagwell argues that its report's findings show that advertisers can consider supporting news as a social good without affecting their reputation. "Advertisers are looking to be socially responsible," Penn said. "Brand safety — or at least when it comes to news advertising — really doesn't promote desirable social goals because it defunds the ability to report news."
Maggie Milnamow, the chief revenue officer at Business Insider and the senior vice president of Axel Springer, was also encouraged by the study's findings. "Stagwell's new research demonstrates that partners can confidently and safely place advertisements alongside news coverage," she said. "In fact, it shows that it's a smart investment with clear positive returns."
Penn told BI he was hopeful the report would help create a more productive relationship between media publishers and advertisers. "Instead of talking about brand safety," he said, "they should be talking about how we have to support unbiased news, and that it's really important to support quality journalism on difficult topics."
