Spending on digital advertising will total more than $40 billion this year in the U.S. Advertisers are relying less on banner ads at the top of websites to attract consumers and sell products. More and more, they’re placing ads that consumers cannot always tell are ads. Often they look like news articles. The Federal Trade Commission has expressed concern that consumers are being misled. Tomorrow the FTC is bringing together advertisers, publishers and legal experts to discuss the growing use of sponsored content. Diane and her guests talk about transparency in online advertising and ongoing concerns about privacy.

Guests

  • Cecilia Kang technology reporter, The Washington Post.
  • Paul Verna senior analyst, eMarketer.
  • Jay Lauf senior vice president, Atlantic Media; publisher, Quartz.
  • Jeffrey Chester executive director, Center for Digital Democracy.

Transcript

  • 10:06:53

    MS. DIANE REHMThanks for joining us. I'm Diane Rehm. Did you know advertising is a multibillion-dollar business? As print and broadcast media look for new ad revenue, they're more often allowing so-called sponsored content on their websites. The Federal Trade Commission is looking into whether the distinction between editorial content and advertising is blurring.

  • 10:07:21

    MS. DIANE REHMJoining me to talk about rules for online advertising: Jeffrey Chester of the Center for Digital Democracy, and Cecilia Kang of The Washington Post, from an NPR studio in New York, Jay Lauf of Atlantic Media's online news magazine Quartz, and from a studio in Maine, Paul Verna of eMarketer, a research and analyst firm. You're invited as always to be part of the program. Join us. Call us on 800-433-8850. Send us an email to drshow@wamu.org. Follow us on Facebook or Twitter. And welcome to all of you.

  • 10:08:11

    MS. CECILIA KANGHello.

  • 10:08:12

    MR. JEFFREY CHESTERHi.

  • 10:08:13

    MR. PAUL VERNAThank you for having us.

  • 10:08:15

    MR. JAY LAUFThank you from New York.

  • 10:08:15

    REHMGood to have you all with me. Cecilia, talk about how online advertising has changed over the last few years.

  • 10:08:25

    KANGOnline advertising is going through tremendous transformation in the sense that advertisers have seen that online ads, the banner ads, those sort of block ads on the top of a web page or the side of a web page, are increasingly being ignored. And it's difficult for advertisers on websites, these -- the content providers that host these ads to get the kind of money that they'd like to get from advertising online that they do offline.

  • 10:08:55

    KANGAnd so there's -- and there's also a challenge in reaching all the audiences that they want to reach, these advertisers online. In comes what's called native advertising, sponsored ads which promises great opportunity for advertisers, as well as some concerning implications.

  • 10:09:16

    REHMSo, Paul Verna, explain the terms native advertising and sponsored content.

  • 10:09:25

    VERNAWell, I'll start by saying that there's no industry-accepted definition of native advertising. But our working definition is ads that mimic the content areas of the venues in which they appear, and that usually means that the ads are outside of the traditional ad positions, and they're embedded within the content. They're ads that are typically designed to be more entertaining than interruptive. And they're generally understood to be ads that are paid for as opposed to, say, a company producing a video that's posted on YouTube and then goes viral.

  • 10:10:03

    VERNANow, sponsored content -- again, there's no specific definition or parameters that separate it from native advertising. But it's essentially when you're on a news website and there's an article that's been written by a corporation and, you know, generally appears to be similar to editorial content, even if it's marked as advertising, that is what we -- you know, what's generally understood to be sponsored content. But...

  • 10:10:41

    REHMOK.

  • 10:10:41

    VERNABut it can also take other forms.

  • 10:10:43

    REHMSo explain why there's concern about both these forms of advertising.

  • 10:10:52

    VERNAWell, I think the concern is with the blurring of the line between advertising and editorial. Now, that's not a new phenomenon. That's been -- there's been a blurring of those lines for as long as advertising and editorial have existed. But what's different now is the social magnification that comes from sites like Facebook and Twitter and YouTube where a piece of content that's actually advertising can be very, very easily shared and reach a much wider audience than originally intended.

  • 10:11:25

    VERNAAnd I think the other side of the concern is for the audiences that are perhaps most vulnerable to being confused or deceived. Now, the largest group or the biggest growth in social media usage is coming from seniors, and they're less likely to perceive the differences between these types of content.

  • 10:11:46

    REHMI see. All right. And to give us a really -- pardon me, pardon me -- a good example, Jay Lauf, talk about the Scientology embed of news into The Atlantic media and what was done about it.

  • 10:12:18

    LAUFYes, certainly. I think, you know, if you look at the Scientology incident, I'll call it, in hindsight, I think, what happened there really was sort of a combustible cocktail of two institutions that ignite a lot of passionate response from audiences. So you have The Atlantic, you know, founded in 1857 by a consortium of people that included Ralph Waldo Emerson, Harriet Beecher Stowe, Oliver Wendell Holmes, for example, that I think has rightly stood for over 150 years for intellectual integrity.

  • 10:12:50

    LAUFAnd there's a very loyal readership and following for that. And I would pose, even outside of our actual readership, there are people who understand and appreciate what something like The Atlantic stands for and are very passionate about that. We ran an ad campaign -- a native ad campaign for the Church of Scientology, an institution that arguably ignites even greater passion in an audience and potentially for, you know, equal and opposite reasons than The Atlantic does.

  • 10:13:21

    LAUFAnd I think what happened in that instance is, you know, it was a cocktail for controversy that created a story that, I think, was relatively easy to write and very, very interesting in the marriage of these two institutions. But if you look back at the actual execution of that native ad campaign -- and we can get into the details on this, Diane, as you wish -- the -- what did not happen and what we did not do at The Atlantic was try to, I think, fool the reader in any way. That campaign was very clearly labeled that it was content from the Church of Scientology and not The Atlantic.

  • 10:13:58

    REHMYeah, see, it says in a little yellow box, sponsored content.

  • 10:14:04

    LAUFCorrect.

  • 10:14:04

    REHMBut what does that mean? Did the Church of Scientology pay The Atlantic magazine to publish this article?

  • 10:14:17

    LAUFYes. Yeah, they did, exactly. And that's what sponsor content means. I think the good thing that came out of this -- and this will be part of this debate over the next 45 minutes or so, I think -- is what that incident did do for us was really made us stop and think proactively about what were the -- what are the guardrails and rules and regulations we wanted to put in place to ensure that our native advertising programs maintained integrity, maintained the integrity of our own brand, respect for the readers and thereby actually maintain the integrity for other advertisers. So what we...

  • 10:14:56

    REHMYou...

  • 10:14:56

    LAUF...did is we've convened a team of senior executives -- it include legal counsel -- and set out a set of -- I think it's -- we're really the first media company to do this -- set out a set of very clear guidelines around rules of engagement that you can find on the website. And you'll notice now, if you go The Atlantic site, right next to that sponsor content box is another box that says, what is this? And that answers the question that you just asked. You click on that, and it'll give the reader details on what it is that they're about to engage with.

  • 10:15:26

    REHMBut, you know, if I turn, for example, to a magazine, if I turn to, say, Harper's Bazaar or Vogue or any of the magazines, big magazines out there, at the top of the page when what I'm reading is an advertisement, it says very clearly, advertisement, I'm concerned about these phrases native advertising and sponsored content as though they in and of themselves become misleading.

  • 10:16:18

    LAUFWell, I think native -- the term native advertising is one that's probably more of an industry term, although obviously it's seeping out into the broader consciousness in terms of people searching for definitions of it. In terms of sponsored content, I think that that's a fair label for content that, in a digital format, is running beyond sort of traditional advertising. And if you -- and actually if you look at magazines, not every advertisement in a magazine is labeled advertisement.

  • 10:16:49

    LAUFSome of them are. They're labeled typically when there's the potential for confusion. And so I think that that -- you know, that's a very clear label. When you're labeling content marketing, so -- for example, one of the definitions of native that Paul didn't, I think, elaborate on is basically giving the tools that editorial teams have to tell stories.

  • 10:17:11

    LAUFAnd by that I mean the written word, video, interactive infographics, for example, to marketers to help tell their stories in more expansive ways. That's sort of the new innovation in digital here. And I think using a label like sponsored content -- and, yes, I think we need some common language here -- can make clear exactly what it is that you're looking at and reading.

  • 10:17:32

    REHMYeah. But then you come back to the point, who wrote this story about Scientology? Did a reporter at The Atlantic write it? Or did the folks at the Church of Scientology write it?

  • 10:17:57

    LAUFRight. Absolutely. And that's where our guidelines -- that's something that informed our current guidelines much more deeply, so...

  • 10:18:02

    REHMYeah. But hold on. You didn't answer my question.

  • 10:18:04

    LAUFSure.

  • 10:18:06

    REHMWho wrote the story?

  • 10:18:08

    LAUFOh, yeah, absolutely, we -- our marketing department at The Atlantic, I believe, in that instance wrote or helped edit the story that was content from the Church of Scientology. In no...

  • 10:18:19

    REHMAll right.

  • 10:18:19

    LAUF...instance ever do our editors get involved in sponsored content in any way, even reviewing it.

  • 10:18:24

    REHMAll right. Jay Lauf of The Atlantic Media. We'll take a short break. When we come back, we'll talk about the workshop that the Federal Trade Commission is hosting tomorrow and get details on that. Stay with us.

  • 10:19:58

    REHMAnd welcome back. We're talking about some new terms, native advertising and sponsored content, two phrases used to describe online advertising which may be embedded within perhaps articles that you or I might read and interpret to be written by that newspaper, by that magazine, by that onsite website. And turning to you now, Jeffrey Chester, talk about the Federal Trade Commission workshop tomorrow. What is that designed to do?

  • 10:20:44

    CHESTERWell, the Federal Trade Commission is pulling back the digital curtain about how online advertising works. And tomorrow there'll be just one of a number of workshops that the Federal Trade Commission plans to hold over the next few months as it looks at different aspects of the online marketplace.

  • 10:21:01

    CHESTERFew consumers really understand how the online advertising and marketing system really works. They collect all our information, they track it site to site, and increasingly they have so much power. They're pulling the strings on a lot of the websites that we use, including websites that provide news and information.

  • 10:21:18

    REHMSo what does the FTC hope to accomplish?

  • 10:21:22

    CHESTERWell, first place, the FTC does have to put in the record how this is affecting news and public affairs, how the ability of advertisers to dictate what we see and read is affecting journalism. It can't regulate in that area, but it can make recommendations. But it needs to raise those issues. Because what's happened online is this: That the advertisers and the brands are at a much more powerful place to influence what we see online.

  • 10:21:47

    CHESTEREven well-known websites and content providers like The Atlantic and Forbes are on bended knee, frankly, selling us out in order to get these advertising dollars that they think they desperately need. So we face a further crisis in journalism as the financial support that advertising has traditionally given it has eroded, and advertisers now can dictate.

  • 10:22:10

    CHESTERIn addition, advertisers are also creating content outside of these editorial sites. They now have the power to bypass these media outlets, create their own radio stations, their own news operations. Major advertisers have created what they call brand newsrooms, every day creating content, flooding the Internet, including social media, with what looks like news and information and entertainment but is nothing more than ads.

  • 10:22:34

    REHMCecilia.

  • 10:22:35

    KANGI was just going to add that, at the workshop tomorrow, it really is a workshop to get the discussion going. But the FTC has had a history in recent years of starting out new guidelines with these sorts of workshops. And this is really the 4th effort in the last three years -- the last few years to try to update their advertising -- deception in advertising rules to apply to the Internet.

  • 10:23:00

    KANGAnd they've done this with the 2009 ruling that made it very clear that if you are a blogger, for instance, and you're getting paid by Dasani Water to say that this is the best water, then you have to say that, you know, that you get -- you know, you have -- that you are getting some sort of -- that you're getting some -- you're endorsing something and getting paid. In 2012, they updated dot com disclosure guidelines that made it clear that the FTC has the authority to enforce advertising deception rules when it comes to smartphones and tablets and every sort of platform for the Internet.

  • 10:23:37

    KANGAnd last year, they updated rules that made it clear that if you're a search engine, like Google or Bing, and your search results -- some of them are sponsored or paid for to get higher listing or better ranking, you have to disclose that. So what the FTC is trying to do with all these efforts is to really become a better kind of cop on the beat when it comes to deception in advertising and clarification in advertising.

  • 10:24:02

    REHMCecilia, I don't want to pick on Atlantic, but we heard Jay say that no editorial writer was involved in producing that Scientology piece online. But you say there have been instances where editorial writers have been involved in producing this so-called sponsored content.

  • 10:24:37

    KANGYes. Companies like Mashable and BuzzFeed have talked about how they really -- a lot of the content on their site from their editorial staff, as well as their sponsor content, is created to look the same and oftentimes created by people within the newsroom. The Huffington Post, for example, has talked about they do have a separation between -- a sort of church and state separation.

  • 10:25:00

    KANGBut they have what they call a partner studio that creates all of their sponsored advertisements. And they hire from their newsroom, and they hire ad people to create, like, listicles and photo galleries and a lot of the content that looks similar to the newsroom. And, full disclosure, Washington Post, we don't use editorial people to do this, but we also participate in sponsored ads broadly. But there is a separation of church and state in that, and I mention this...

  • 10:25:25

    REHMGive me an example, Cecilia...

  • 10:25:28

    KANGOf?

  • 10:25:29

    REHMOf what the Washington Post itself has done.

  • 10:25:34

    KANGYou know, The Washington Post has done native advertising in that they'll be -- there will be advertising on the homepage or on parts of the website that have that sort of disclosure, sponsored ad, but it might look like a -- I mean, I can't think of something right off the top of my head. But a lot of companies that advertise policy issues, for example, might have some sort of advertising that talks about their issue. And they'll have that disclosure on sponsored ad that says it's a sponsored ad or, you know, promoted feature.

  • 10:26:07

    KANGAnd, you know, too, to some of the other speakers' comments, one of the problems is that critics of this practice is that there's too much diversity in language when it comes to disclosures. You know, Twitter calls its native ads promoted tweets. Facebook calls its sponsored ads sponsored stories. BuzzFeed calls it featured partners. So, for a common reader, a typical reader, it's often unclear, well, what's really the difference between a promoted tweet and a featured, you know, ad or a featured partner?

  • 10:26:45

    REHMPaul Verna, I could see that this could be very, very confusing to the perhaps less than superiorly educated online reader.

  • 10:27:01

    VERNAYeah, I would argue that it has the potential to be confusing to any reader or viewer. You know, one thing about this trend is that it's not limited to news sites and to print media. It goes right across digital media in general. So really any industry that's migrating from traditional to digital platforms is going through a disruption where this is starting to happen more where brands are getting more and more involved.

  • 10:27:29

    VERNABut, you know, I live and breathe this stuff every day. And in my Twitter feed, sometimes I see posts from people I follow that are very brand-centric but not identified as promoting a brand. And, to be honest with you, I'm not sure whether there's any money changing hands or whether, you know, a disclosure is in order there. But it's definitely a very fragmented, very confusing scenario right now.

  • 10:27:58

    REHMJay Lauf, where's the pressure coming from? Is it all about money?

  • 10:28:06

    LAUFWell, I think it's two -- there are two impetuses here. One is certainly money, as you noted at the outset of this. You know, banner advertising is not working on a whole host of levels. You know, there's a stat I read, you're nearly 400 times more likely to survive a plane crash than click on a banner ad. And so the performance isn't there for the marketers, and it's a commoditized unit where the pricing structure is so low that publishers can't really make a living on pure banner advertising.

  • 10:28:38

    LAUFSo you've got publishers certainly who, I think, see the opportunity to get premium dollars for a richer type of higher impact advertising. And you've got marketers who -- as I think Jeff noted, or maybe Paul did earlier -- you know, see themselves as storytellers and content creators. And I think there's some legitimacy to this.

  • 10:28:59

    LAUFYou've got companies that have a lot of interesting rich content in R&D labs, in CSR initiatives, in other thought leadership that they're very, very good at creating, not so great at necessarily distributing. And I think that's where they turn to publishers to find a way to get that content out there. What I want to make clear though is certainly at The Atlantic is I agree 100 percent on two things. One is an absolute church and state wall between editorial and advertising.

  • 10:29:28

    LAUFEditors don't get involved in any way, nor should they, in creating or vetting marketer or advertiser content. We believe in clear labeling. It's actually noteworthy in the earlier piece of this discussion, the American Society of Magazine Editors themselves, as me, actually held The Atlantic's new guidelines up as a benchmark for their own guidelines around the use of the phrase sponsored content, that what's-this button that we noted.

  • 10:29:58

    LAUFAnd if you look at Quartz, the site that I'm mainly responsible for currently, we go an extra step. And right where you get to the sharing tool at the end of an article, you're about to share it, we have a line that tells you exactly who wrote the article and finish the phrase with, it is not written by Quartz editorial staff.

  • 10:30:16

    REHMAll right. Jeffrey Chester, you wanted to comment.

  • 10:30:19

    CHESTERWell, first place, I think we need to get Congress involved here. Disclosure is not enough. The role that the advertisers and the brands are playing in shaping the content that Americans see is a scandal, and we need regulation. The FTC's going to be able to do some things to educate the public, but it's not going to be able to force the industry to create the kind of ethical guidelines we need.

  • 10:30:41

    CHESTERAnd, frankly, this is just one of the kind of tools that online advertisers are using. They're also tracking us online. They're using social media tricks. It's time that Congress came in, investigated how online advertising works, and protect consumers' interest.

  • 10:30:56

    REHMJeffrey...

  • 10:30:56

    LAUFJeff, I -- sorry, Diane.

  • 10:30:58

    REHMGo ahead.

  • 10:30:59

    LAUFMay I?

  • 10:30:59

    REHMSure.

  • 10:31:00

    LAUFThis is Jay. I -- on the one hand, I completely agree. We need to protect consumers, and we need to protect readers. On the other hand, this notion that advertisers are dictating, at least in my world -- and I would bet the world of The Washington Post -- I think you used the word dictating the content that is on The Atlantic or Quartz is just not accurate.

  • 10:31:22

    LAUFOur editors have complete freedom and license to write what they would like to write about, what they think is important, what is interesting to our audience and are not dictated in any way, or even influenced in any way, by the advertising site.

  • 10:31:36

    REHMBut, Jay, you'll have to acknowledge there was clearly a great deal of embarrassment on the part of The Atlantic with the online publication of this Scientology piece with participation by a reporter of The Atlantic. And here you are citing your own guidelines as standards for other magazines to use. So it does create, at least in my mind, some real doubts as to whether the publishing houses and news organizations are doing a good job at self-regulation. And, Jeffrey, you would say no.

  • 10:32:28

    CHESTERNo. The industry's really not self-regulated. Look, the editorial outlets are desperate for money. We know the traditional sources for funding journalism has dried up, and advertisers are coming in dangling all this money. And, frankly, the Forbes and The Atlantics know that if they don't accept, they're not on so-called bended knee -- digital bended knee, those big brands will go elsewhere. So self-regulation isn't working. The situation's going to get worse, and it's going to hurt journalism, frankly, as these advertisers and brands further influence what we see and hear.

  • 10:33:01

    REHMPaul Verna, what about online video advertising? And before you answer that, let me just say you are listening to "The Diane Rehm Show." Tell us about video advertising and how large a segment that is and whether it gets into this crossing of lines.

  • 10:33:27

    VERNAWell, video advertising is a large and growing segment. I'll just say quickly that in the digital ad spectrum, the biggest item by far is search followed by banner ads followed by video. Where we get into, you know, video advertising in this debate is, again, with a similar blurring of the lines between what is something that's produced by a company versus whether it's uploaded, say, by an individual on YouTube or created by a program producer. There are a lot of new video series on YouTube that are maybe short, you know, five- to seven-minute episodes.

  • 10:34:16

    VERNAAnd many of these are sponsored or created by companies. And the company's product is actually, you know, embedded into the storyline in a way that maybe goes beyond the traditional product placement. So I think the potential for confusion is present just as much in the video advertising world as in the news or, you know, say more print-driven advertising.

  • 10:34:43

    REHMBut tell me, Paul, how native advertising on a website compares with the video news releases which have been around for more than 20 years.

  • 10:35:00

    VERNAWell, again, I think it's a matter of, if you look at 20 years ago versus now, there's just much more potential for things to be spread virally, to be instantly accessible to a much larger audience. And once that piece of content/advertising is shared, it's not always clear -- you know, if there was a disclosure at the point of origin, that disclosure doesn't necessarily travel down the line where that piece of content is streamed.

  • 10:35:35

    VERNASo I think, just like media is more fragmented, whatever the potential for confusion is from this blurring of the lines is also amplified or complicated by the digital world that we live in.

  • 10:35:51

    REHMAll right. Cecilia, talk about some of the new ways advertisers are using social media like Twitter.

  • 10:36:00

    KANGOh, it's fascinating what's happening on Twitter. Twitter often is used while people are watching TV, for example. It's called the second screen experience. And what Twitter has been able to do is to get advertisers to respond to things that are happening real time on what's called their Twitter streams. And one of the best examples of one of the most successful advertising campaigns on Twitter was in the last Super Bowl when there was a blackout. There was about a 30-minute blackout when I think it was the 49ers against the Ravens.

  • 10:36:30

    KANGAnd during that time, Oreo, the company that produces the sandwich cookie Oreos, produced a quick tweet that -- they had a 14-person social media team waiting for the right moment. And they just put out a quick picture of an Oreo that was kind of in the dark, and it said, you can still dunk in the dark. That tweet got re-tweeted something more -- tens of thousands of times and liked on Facebook as well. And that just shows you there is a huge -- that was such a low-cost way for a brand to get their message out and to get people to think about Oreo.

  • 10:37:05

    KANGAnd it costs $4 million or, you know, millions often for a Super Bowl commercial on TV compared to how quickly and easy it was to do that, so there's a tremendous amount of opportunity. And I was just going to say that native advertising is supposed to double this year to be -- to the tune of more than $2.5 billion potentially from last year. So it's a huge opportunity.

  • 10:37:25

    REHMAll right. Short break, and when we come back, we'll open the phones. Stay with us.

  • 10:39:57

    REHMAnd welcome back. We're going to go right to the phones as we talk about the blurring of lines between advertising and editorial content online. Let's go first to St. Petersburg, Fla. Hi, Susan, you're on the air.

  • 10:40:18

    SUSANGood morning. Thank you for this show.

  • 10:40:20

    REHMCertainly.

  • 10:40:21

    SUSANAnd what I want to say is the big thing is we each have to educate ourselves that everything is a promotion. I mean, I see PBS radio and TV right now as promoting cancer through all their cancer ads. I see the American Medical Association as promoting a lot of expensive stuff that people may or may not ever need. You know, people write books, and they get endorsements from people who may have never even read the book. So we really need to be aware and try not to be too cynical about it, but that everything is a promotion.

  • 10:40:58

    REHMYeah, but this is a brand new line. Jeffrey?

  • 10:41:02

    CHESTERWell, we've been engaged in what I call the brand-washing of America for many, many decades. Advertisers have always -- as been said before -- have had tremendous clout. But today the advertisers and marketers see their role as really helping curate the culture. They can use all of these outlets, and companies like Facebook and Google are opening up their doors so that they can create content. And, remember, this is not just a video news release you might see once.

  • 10:41:27

    CHESTERThis is a video ad that, in fact, collects our information, that tracks us online -- Yahoo calls it smart ads -- that morphs into different things. And in addition, what the advertisers and marketers also want -- and this was referred to -- is they want Americans, in fact, to be the salespersons. They want us to pass this content on to all our friends here because, in fact, they understand that the best way to sell something is to have a friend recommend it. And therefore all the disclosure will go out the window because it came from your best friend. It didn't come from Pepsi or Coke.

  • 10:41:59

    REHMHere is an email from Ann in Raleigh, N.C. She says, "When I do a Google search, I get a screen full of links. The top of the list often carries the headline, sponsored links. Scrolling down, sometimes it's clear from an obvious change of background color where the sponsored links stop and the neutral links I see begin. Too often, a distinction is not clear. This distinction needs to be crystal clear. It's easy to achieve, and FTC should require it." Paul Verna?

  • 10:42:43

    VERNAWell, I think Cecilia alluded to some of the other initiatives the FTC has undertaken over the years, including search advertising guidelines. And I believe that -- I don't know if they specifically talk about the shading, you know, the background screen shading or how much needs to occur. But I would agree with Ann's point, that there is -- it's not always clear when you're shifting from one to the other.

  • 10:43:13

    VERNABut I also understand that, from the FTC's point of view, it's very challenging to spell those things out in a way that can be implemented clearly enough for everyone across the board. And also, the FTC is not -- you know, they can make recommendations, but they can't enforce, you know, how they're implemented.

  • 10:43:35

    REHMJay Lauf, here's a question for you from one of our listeners who wants to say that, with the Scientology ad in The Atlantic, it was the marketing department that did edit. And our caller wants to make sure that this comes out on the air. Is that so?

  • 10:44:01

    LAUFYes. Yeah, Diane, you alluded earlier -- you noted that an editor was involved. And, again, I want to reiterate what I said at the outset -- not at all the case. This is completely -- that ad campaign was completely separate from anything editorial. It was our marketing team who worked with the Scientology group to create that piece. And there never has been and never will be editorial involvement on the advertising side at the Atlantic Media Company.

  • 10:44:30

    REHMBut isn't there even a firewall between the marketing side and the publication side, whether the editorial side gets into it at all?

  • 10:44:46

    LAUFYes. If I can just have you clarify that when you say the marketing side and the publishing side. So, yes, there's a church-and-state wall between editorial and marketing. And, again, this is where, you know, I think, Jeff overstates it a little bit, at least in our case. Our editorial teams have complete independence, whether it's at Quartz, whether it's at The Atlantic, and they should have complete independence.

  • 10:45:09

    LAUFThey should have the independence to criticize the companies that advertise with us, when that is warranted, and they do. And I think, as an institution -- you pointed out earlier, Jeff -- we -- I think the way we look at it is we are trying to figure out a way to remain commercially viable so that an institution like The Atlantic, a place that, you know, was the first place Ernest Hemingway was ever published, for example, is around for the next 150 years.

  • 10:45:36

    LAUFAnd not every one of these institutions is going to be a public trust, is going to have a deep-pocketed benefactor who will feel a cultural obligation to maintain these. So certainly you need to be commercially viable. I think we work very, very hard and take very, very seriously our responsibility to respect our readers in the process.

  • 10:46:00

    LAUFAnd then, lastly, I'll just say, as a pragmatic matter, it would be foolish of us to undermine the integrity of something like The Atlantic or Quartz by deploying shadier tactics because it undermines the entire proposition on which we're built. You don't then have readership. Then you don't have advertising, and you're certainly not going to survive. So I think we're determined to avoid that.

  • 10:46:26

    REHMJay, tell me why you took down the Scientology piece? Was it because of editorial board reaction, or was it because of viewership reaction?

  • 10:46:45

    LAUFIt was really, I think, reaction in general. You know, if you look at the timing of that, I think Lawrence Wright's book was just coming out. It was a very, very hot topic. The timing couldn't have been worse for us. And I think we acknowledged, you know, sort of that ham-handed mistake.

  • 10:47:00

    LAUFBut I think it was such a hot, and negatively hot topic, that we, as a group, as an institution felt this was negatively reflecting on our brand. And it was the right time to stop, pause and really, in a very, very disciplined way, revisit what the rules of engagement were to ensure that we could stand by any of the decisions we made going forward.

  • 10:47:25

    REHMSo how will the decision process be changed going forward?

  • 10:47:32

    LAUFSure. I think there are a couple of things. One is, if you do a before and after, you'll see, you know, more frequent labeling and more obvious labeling of all of our sponsored content across the different brands. I sort of outlined that earlier.

  • 10:47:49

    LAUFBut also what we do when we're indulging in sponsored content is that content is now vetted both by our legal counsel at the company, our communications executives, for everything from matters of just veracity, credibility and legalities on where we can suss those out. So any sponsored content program that you see run on Quartz or The Atlantic is run through, again, legal counsel and our communications groups for those things.

  • 10:48:22

    REHMAll right.

  • 10:48:23

    LAUFAgain, editorial doesn't touch those.

  • 10:48:24

    REHMAll right. Here's an email from Ron. He's in San Antonio, Texas. He says, "Local television stations now sell segments on news and other local programming but do not alert viewers to the fact that Dr. X is on because she paid to be on. Very deceptive." What do you think, Jeffrey?

  • 10:48:52

    CHESTERWell, the forces of advertising that are reshaping our media system, including the Internet, are too powerful. They're too powerful for any one media company, frankly, to stand up against. That's why I hope the Federal Trade Commission will recommend to Congress that, in fact, it propose doing an investigation and propose some legislation. Unlikely there'll be any legislation, but clearly we need to get Congress to investigate these practices and place a more powerful spotlight on what is going on.

  • 10:49:20

    REHMHow likely do you believe that will be, Cecilia?

  • 10:49:24

    KANGWell, it'll be difficult to get legislation, first of all, in this environment, politically, but, second of all, you have to really demonstrate harm oftentimes to get real action here in Washington. And one thing to consider, for those who see quite a bit of opportunity in native advertising, is that people click and often share these sponsored ads, these native ads.

  • 10:49:47

    KANGAnd so people are in some ways voting with their mouses and their swipes, in the sense that, you know, if you look at today I went to Buzz Feed and they had this list they call 15 epic snow tricks you have to see to believe. And that was presented by Columbia Sportswear. And it was highlighted in yellow. And it said featured sponsor.

  • 10:50:05

    KANGBut already, it had thousands of clicks and shares. And if people are doing that, then, you know, one can say that maybe consumers are interested in seeing some of this content that's appearing online. So it's a fine line, you know. And I think that there is a lot of -- there's sort of a lot to balance in considering the harms and the benefits of this.

  • 10:50:26

    CHESTEROK. But how it's affecting journalism is a role for Congress. And although legislation won't pass, it is a great topic for Sen. Rockefeller and the Senate Commerce Committee to get…

  • 10:50:34

    REHMWhile he's still there.

  • 10:50:35

    CHESTERWhile he's still there, so we have about a year to get to the bottom of this. Because really, once again, journalism is on the front lines here. And we have to really look very carefully at what this all means for the future of investigative reporting and independent content. And if we don't do it soon, then, in fact, the advertisers and marketers are going to have a much larger share of the political voice and influence even more the culture.

  • 10:50:58

    REHMAll right. Let's…

  • 10:51:00

    LAUFJeff, hasn't that always been the case through the history of advertising, though?

  • 10:51:03

    CHESTERThey've never been able to track individuals and sell those individuals on a real time basis and create and use the power of big data to create profiles of those individuals and sell those individuals to advertisers. Nor have advertisers ever had the ability, as they have now, in fact, to track and target a single individual and their network of friends through the tools of social media marketing.

  • 10:51:24

    REHMAnd now they can.

  • 10:51:25

    CHESTERAnd now they can. And that's why it's good the FTC, once again, is peeling back the curtain, and it's time for action.

  • 10:51:31

    REHMAll right. Let's go to James in Hampton, Va. You're on the air.

  • 10:51:36

    JAMESHello. I really applaud this conversation. It's actually already enlightened me quite a bit on things I didn't know already. And this is what I'm calling for, is proponent people to really pay attention to what they're getting out of the media. In my eyes, the media and journalism have both been degrading since pretty much the Golden Age and down. It's pretty hard for me to find really good journalism.

  • 10:52:05

    JAMESI need to look into The Atlantic 'cause from what I'm hearing it's a pretty good organization, so I'll look more into it. But he's right about the Federal Trade Commission could look into these things. I'm not a fan of regulation. I'm more of a fan of education, making people aware. That's my view of government role, is to make people aware of what's out there, educate them, giving them the knowledge to make the right decisions on their own. And I'll leave it at that.

  • 10:52:36

    REHMJames, you've made some good points. Thanks for your call. And you're listening to "The Diane Rehm Show." Let's go now to Bill, in Tulsa, Okla. You're on the air.

  • 10:52:51

    BILLYou know, Diane, I've been listening to this story, and I was graduated from a school of journalism where the chairman of the school used to preach to us daily almost, print the facts. Editorial opinion belongs on the editorial page. Wouldn't it be a different world if they had followed that? And let me say this, I'm not trying to -- whatever I'm not trying to do. The only station I listen to is this one.

  • 10:53:30

    REHMI'm glad to hear that. Thanks for calling. But you really also have to broaden your reach and make sure you know everything that's being said and written and not just take one word for it. Thanks for your call, Bill. What do you think about that, Jeffrey? Do you think there has been a degrading of journalism overall?

  • 10:53:58

    CHESTERWell, certainly over the decades, we know it has, which is why your caller is right. This is one of the very few independent outlets left, but we've entered into a new era in the last five or six years because of the high-speed Internet, because of the growth of mobile phones, because, as I said, advertisers now have the ability to bypass the news and information outlets. They can create their own content sites online.

  • 10:54:22

    CHESTERAnd they have goals and strategies far beyond what a news organization might wish to do. So journalism is going to be placed in further crisis because the brands are going to demand that their content, their point of view, be placed at the heart of those content sites, and soon we will have even fewer voices to trust. The other day I just read that now there's a new site to fundraise for investigative reporting, to support individual projects because there's no money for investigative reporting.

  • 10:54:50

    REHMJay Lauf, I want to give you an opportunity to comment.

  • 10:54:57

    LAUFOn Jeff's comments there?

  • 10:54:59

    REHMOn this whole area that we've been talking about today. Where do you see The Atlantic moving? How do you see further sort of circles being put around the kind of content that's posted online that is advertising oriented?

  • 10:55:25

    LAUFYeah, listen, I welcome the conversation that Jeff wants to have and that I think concerned citizens want to have, that we need to have clear and transparent conversations about what is advertising and what is not, what marketers and other institutions are doing around issues like privacy. I think those are very important.

  • 10:55:45

    LAUFI'm a citizen and a reader as well. So I think we welcome those conversations. I do think that, you know, advertising has evolved since it was born, and you've got marketers who have new tools to use. And, yeah, do we want to have guardrails around those tools? Do we want to have rules of engagement? Yes. And I think we've begun to deploy some of those.

  • 10:56:07

    LAUFSo I think it's an ongoing and organic conversation. I think at the end of the day where we probably all agree on this call, is that you have to start with a respect for the reader first. That's the first thing that any institution and every level of the institution -- whether it's the editorial side or the advertising side -- is a respect for the reader.

  • 10:56:27

    LAUFFrom that stems the success on both ends of that equation. You can grow an audience, you can have impact with your journalism if you respect the readers deeply. And the same thing is true, we're finding, for the marketing side. The fact that we've actually increased and improved our labeling, I think, made it more clear than it was before, you know, about our advertising.

  • 10:56:46

    REHMAll right.

  • 10:56:50

    LAUFIt's actually helping our marketers and the institution.

  • 10:56:52

    REHMAnd we'll have to leave it at that. One area we did not get to, which the FTC, I gather, is not going to get into, are children and how they are being targeted. Jay Lauf is with Atlantic Media, publisher of Quartz. Paul Verna is a senior analyst with eMarketer, Cecilia Kang, The Washington Post, Jeffrey Chester of the Center for Digital Democracy, thank you all. And thanks for listening. I'm Diane Rehm.

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