Associated Press Is the Latest News Organization to Try Sponsored Content

Growing Acceptance of New Ad Model

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The Associated Press is planning to introduce sponsored articles into the stream of news stories on its mobile apps and hosted websites. The rollout is expected in early 2014, with potential sponsorship deals centered around major events the AP is planning to cover, such as the Super Bowl, the Winter Olympics and the Academy Awards.

The AP plans to include sponsored posts among news headlines like these on its mobile app
The AP plans to include sponsored posts among news headlines like these on its mobile app

Several potential advertisers have been in talks with the AP, according to Jim Kennedy, senior VP-digital strategy and products at the AP, who declined to identify them.

The move to sponsored content is part of a broader effort to open a new line of revenue at the AP, where just 2% of total revenue comes from advertising, including mobile banner ads and units across a handful of websites populated with AP content. Another 13% of comes from services the AP offers media outlets. And 85% comes from licensing content to subscribers such as TV stations, newspapers and websites, where the AP is not hopeful about expanding income.

"Licensing our content is a flat to declining business around the world," Mr. Kennedy said. "It will only grow about 1% a year, so it's incumbent upon us to find new revenue sources."

Last year, the AP collected $622.2 million in revenue, a slight dip from the previous year's $627.6 million. Mr. Kennedy said the decline stems partly from the AP's move to reduce its rates for newspapers, some of which had ended their contracts with the AP amid the recession.

"The big hit to the revenue was the drop in the newspaper segment," Mr. Kennedy said. "Newspapers are just paying a lot less."

The sponsored posts in the mobile app will be marked as advertisements. Although the exact demarcation is still being worked out, the AP plans to err on the conservative side, according to Mr. Kennedy. "We don't want to jeopardize our reputation," he said.

The organization is also making a pitch to help advertisers create sponsored articles using third-party sources like Contently as well as some of the AP's existing photo and video resources, though not the journalists who produce news stories.

The app has been downloaded 12.5 million times since its introduction in 2008 and has 2.8 million monthly unique users, according to the AP.

The AP's move toward sponsored content is another sign of the growing emphasis on the tactic among publishers. "Native" ads designed to more or less mimic the content of the site where they appear are no longer at all novel for digital-only companies, and variations on the approach are increasingly common at media organizations as conservative as the The Washington Post -- and perhaps soon, the New York Times and Wall Street Journal.

But with so many publishers dining on sponsored content, cashing in on the practice could prove difficult for the AP, which is late to the native-advertising game. Ken Detlet, VP-digital advertising strategy and sales at the AP, said that the Associated Press is appealing to brands because of its reputation.

The AP's ad efforts began in earnest in the late '90s, when it started creating websites for its member newspapers around a specific topic. Mr. Kennedy said the effort was small, but it positioned the AP for its next foray into ad sales in 2008, when it rolled out its mobile app. The AP experimented with a different form of native advertising earlier this year when it began sending sponsored tweets.

"We're new to the advertising space at a time when it's changing," Mr. Kennedy said.

Mr. Detlet, who is part of a 20-person team dedicated to digital strategy and advertising, offered little detail on how the sponsored content will be priced for mobile, where publishers are getting booming traffic but low ad rates. "We'll be testing the waters," he said.

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