Publishers are Removing Recommendation Widgets – With Minimal Revenue Impact

Many publishers run content recommendation widgets (CRWs) on their sites. According to SimilarTech – a company that tracks technology services, 3,715 of the 100,000 largest sites used the two most popular content-recommendation engines: Taboola and Outbrain.1

Publishers have historically favored CRWs, as they have benefitted from sizable revenues and guarantees in the past several years. Outbrain has estimated that it supplies as much as 30 percent of some publishers’ revenue, according to The New York Times.2

The revenues may have been attractive, but they came with drawbacks: A majority of readers show discontent toward CRWs.

A recent Arkadium study examining consumers’ opinions of CRW showed that 79 percent of respondents either “somewhat dislike” or “strongly disapprove” of sites using CRWs. Forty percent of respondents believe the publisher is the one to blame for the negative experience. Thirty percent blamed the resulting site of the “recommended” content, and 24 percent blamed the widget’s creator. 3

Additionally, 40 percent of those surveyed believe CRWs look “spammy,” indicating the widgets can also taint readers’ trust in content on the publisher’s site.4 Slate’s President, Keith Hernandez, says, “If your readers’ trust and loyalty is No.1 as the thing you care about most, you can’t have [CRWs] on your page.”.5

In addition to harming relationships with readers, the widgets might also push away potential premium advertisers.

According to Andrew Sandoval, director of biddable media for the Media Kitchen, advertisers will begin to evaluate sites based on more than just their content – including factors such as their ads or user comments. Ad clients seeking premium placements, he said, will lean toward publishers that don’t use CRWs.6

In an industry that values readers’ experience, publishers can no longer rely on CRWs to generate meaningful revenue. They are looking for ways to diversify revenue while keeping readers on-site as long as possible. 7

Here are some alternatives publishers are using to generate revenue without creating a poor experience for their readers.

Alternative 1: Contextual Advertising
Contextual advertising for publishers is not a new concept. It is targeting inventory based on the content of the page on which the ad is running. In 2003, Google’s AdSense created contextual advertising program for publishers to implement contextually relevant, text-based ad units that appeared in shaded boxes adjacent to editorial content. 8

Contextual ads delivered an incremental revenue stream for publishers back then. By ContentBiz estimates, online publishers who placed Google’s AdSense contextual ads on their sites, in return for a cut of revenue, made about $1 billion in 2005. 9

Accelerated by the EU’s General Data Protection Regulation (GDPR) and increasing privacy concerns due to behavioral tracking, contextual advertising’s comeback is making waves. According to a YouGov survey of 116 senior executives in the UK and US with responsibility for digital advertising within their company, 61 percent of the US respondents say they will keep spending on contextual advertising and 31 percent will spend even more next year. 10

With technological advances, contextual advertising is much more viable than it was during its inception. It is now possible to identify additional metrics such as visual content of a publisher’s page based on semantic technology. 11 New contextual advertising tools offer higher quality content that drives better brand recognition, longer dwell time and consumer positivity toward publishers.

Terrance Nixon, media supervisor at digital agency Sapient Razorfish, says that contextual advertising helps advertisers target audiences more accurately. 12

“Measurements like click-through rate are actually going up when contextual targeting is overlaid,” he said. “Users feel it and they see it, and it feels natural to them and it triggers a level of trust in relation to the brand that they actually know who they’re talking to, versus someone casting out a wide net and hoping to capture somebody’s interest.” 13

Publishers can consider contextual advertising as a solution to the challenge of capturing readers’ attention without disrupting their online experience by delivering advertisements that are directly correlated with the content the consumer is enjoying. 14

Alternative 2: Branded Content
According to IAB, “branded content” refers to content that is sponsored or promoted by a brand that is non-promotional in nature. 15

Branded content is a growing revenue stream for publishers. The publisher-led branded content business comprises a $7 billion digital market globally in 2018, and growing a healthy 40 percent year-over-year, according to a research done by native ad platform Polar. 16 Digiday surveys in 2018 reported that 85 percent of publishing-executive respondents expect branded content revenues to grow. 17

Other than providing publishers with a promising source of revenue, branded content also creates a more memorable and meaningful interaction between customers and publishers. A quantitative study by Forbes showed that branded content results in a 59 percent lift in recall over display advertising. 18

In order to produce effective branded content, publishers now utilize interactive mediums like branded video, photos, and infographics to align with contextual targeting, increasing user interest and translating to additional time spent on-site. A Nielsen survey showed the average time consumers spend on relevant branded content is eight times more time than traditional advertising. 19

Publishers rarely need to worry about the likability of branded content across generations. Branded content is perceived well across the three major age demographics (Gen X, Millennials, Gen Z). A Time Inc. study demonstrated that 90 percent of respondents like the idea of custom branded content as a way for brands to engage users, and two in three consumers have greater trust in branded content than traditional advertising. 20

Alternative 3: Video Advertising
Online users in the U.S. are expected to spend 81 minutes a day watching digital video and a significantly smaller amount of time – 13 minutes a day – reading a newspaper, according to projections by research firm eMarketer. 21

Publishers discovered that video advertising is a very useful tool to engage with customers and increase ad revenue. 22 According to the US Digital Media Ad Revenue Report, digital video advertising is forecasted to show the biggest compounded annual growth rate in the coming years, reaching $23 billion in revenue in 2021. 23

Publishers could capture the largest slice in the video advertising pie by using the most effective approach. Among all video types, six-second interactive pre-roll videos win out by at least 10 percentage points in effectiveness. 24

In an era where user experience is king, publishers can sustain their businesses only if they are aware of readers’ on-site experience while diversifying their revenue streams.

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2. Moses, Lucia. “The money is real; that’s the problem: Publishers turn a blind eye to content-recommendation ads.” Digiday, Digiday, 15 November 2016.
3. “Study: Nearly 80% of Readers Disapprove of ‘From the Web’ Content Recommendation Widgets.” Arkadium, Arkadium, 17 September 2018.
5. Maheshwari, Sapna. & Herrman, John. “Publishers are Rethinking Those ‘Around the Web’ Ads.” The New York Times, The New York Times, 30 October 2016.
6. Moses, Lucia. “In a shift, publishers can no longer count on content-recommendation guarantee checks.” Digiday, Digiday, 30 January 2018
7. Willens, Max. “Content recommendation networks look for a second act.” Digiday, Digiday, 23 April 2018.
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11. IBID
12. IBID
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15. “Branded Content Creation & Distribution Guide Steps for Success.” Interactive Advertising Bureau, April 2018.
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17. Weiss, Mark. “Digiday Research: Publishers look to branded content and video to grow revenues.” Digiday, Digiday, 18 April 2018.
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19. Elkin, Tobi. “Mode Media Survey Reveals How Branded Content Impacts Consumer Purchase Intent.” Native Insider, 8 March 2016.
20. Main, Sami. “90% of Customers Like Custom Content From Brands, According to a New Time Inc. Study.” AdWeek, AdWeek, 27 June 2017.
21. “Publishers Shifting Focus to Making more Videos.” Video Advertising News, 11 September 2017.
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23. Mortensen, Dylan. “The US Digital Media Ad Revenue Report: The path to $100 billion in annual revenue by 2021.” Business Insider, 25 August 2016.
24. Fleck, Alissa. “Marketers Think the 6-second pre-roll spot is the best digital video ad format.” AdWeek, AdWeek, 31 May 2018.