• by Sean Hargrave , Staff Writer, July 2, 2014

There's an infamous joke in the British army about Monty coming over the dunes to tell his Second World War soldiers there was good news and bad news. The bad news was delivered first -- we've got no food, so we're going to have to eat sand. What on earth could be the good news, enquired a plucky 'Desert Rat'? The answer? There's lot of it!

National newspaper editors must know the feeling. Readership figures have never been higher, while commercial success has never been more elusive.

There are two big factors weighing against advertising success in digital. The most obvious is that each story is presented as an individual Web page and nobody wants to be on the story about a pedophile or a stressed exec jumping in front of a tube train. In print you are part of a two-page spread and not so closely linked to bad news. The Web changes that. Several brands have been caught out with news stories where adverts have appeared next to inappropriate stories -- a kitchen knife manufacturer, for example, recently ensured it was on a national newspaper story about knives only to find the story was of the stabbing variety, rather than the vegetable preparing kind.

The second point is the most overwhelming. Take a measure of orange squash and keep adding water and you're left with pretty much just water. The more readers newspapers get online, the less valuable they become incrementally. Get together four hundred thousand executives interested in the business news at FT.com, charge them for articles and then serve ads to this corralled audience and you are on to a winner. Gather up a hundred million free monthly "browsers" at The Guardian or MailOnline  -- peaking at around 5 million viewing sessions per day -- and you're the equivalent of a dog chasing its tail. You're providing so many opportunities for impressions that you oversupply -- and the quality of advertising goes down and so do CPM rates.

So it's a good development for advertisers. Loads of ad spots going in well-known national newspapers at low cost. Trouble is, everyone's gone banner blind and a campaign that gets clicked on one in a thousand times is considered about average.

Turns out, then, that to one degree or another, both publishers and advertisers are facing a long stretch of dipping into an abundance of cheap sand dinners.

There are two answers, and they're not necessarily mutually exclusive.

Do what FT.com or The Times does and charge people for access or go The Daily Telegraph route and give a few pages away before readers have to subscribe. You get subscription money and advertising fees without all the watering down.

Then there's native. It's obviously more suited to the likes of The Guardian who have no paywall in place to get between a brand's sponsored content and readers. At last there is now a commercial plus point to free sharing through social media.

Of course, there's nothing to stop a paywall news provider offering native content that is well suited to its corralled, paying audience. However, most brands looking for reach through viral, social sharing will opt for a free news site.

There have, of course, been a couple of very interesting announcements by The Guardian about its "partner zones," including a deal with energy firm E.ON. Content is clearly marked as "sponsored" and yet, I can testify, the paper's editorial standards are adhered to so articles are interesting, get shared and everyone's happy.

So, there you have it. If anything is going to turn around the fortunes of free newspapers it's native. It really is that simple.

Or put it this way. As The Guardian readies itself to announce further losses next week -- which will be made up for by asset disposals elsewhere within the group -- what do you think will offer them a lifeline? A few more million free readers or a deepening of its native relationship with trusted brands?