Branded Content: Not Your Father's Advertorial

Some $60 billion in media company value evaporated back in August when investors suddenly caught up with the fact that “cord-cutters” are watching a lot less TV—or in some cases, no TV at all.  

There is no evidence that consumers are any less interested in entertainment, good stories, or useful information, and many media stocks have since recovered. But cord-cutting remains one of the powerful trends reshaping the media and marketing landscape by undermining traditional marketing approaches and changing the longtime partnership between marketers and media companies. While marketers look for new ways to engage with consumers, media companies need to replace lost revenue. A big part of the answer could come from an old friend, one that is undergoing a renaissance in the digital economy—branded content.

Baby boomers often equate branded content with advertorials, but “branded” today takes in a much wider spectrum of content, events, and experiences than ever before. Media companies tend to think in terms of “native advertising.” Marketers talk about “content marketing.” There are almost as many definitions as there are examples. Mine is this: content with a consumer benefit presented in an authentic environment in the service of a brand.



Branded content offers marketers the opportunity to deepen consumer relationships while it provides media companies with new sources of revenue. Our research earlier this year shows that consumers are very receptive, especially in the U.S. One of the more striking findings: Not only do consumers want more interaction with brands, they both like and trust a brand more—and are more likely to purchase it—after encountering branded content. Of particular significance for marketers—there is a 20 percentage-point increase in affinity for brands that consumers are unfamiliar with or indifferent to after consumers experience branded content. The stronger a brand’s position with consumers, the stronger the positive reaction. Media company involvement further fortifies the impact.  

Consumers set conditions, of course. The content must provide a benefit, and it must feel authentic. Authenticity can come from a number of directions:  the content is relevant; it fits its environment; there is natural connection between marketer and topic.  Numerous brands are already meeting these requirements and more than a few are raising the bar—Nike, Titleist, and Lenovo, for example—one reason why branded content is growing fast. We expect spending to increase by about 20% a year in the U.S., from about $10 billion in 2014 to $25 billion in 2019. Almost 70% of marketers say they will spend more on branded content this year.

As in other young, fast-growing markets, a fragmented ecosystem is starting to take root, with multiple players competing to serve the needs of both marketers and media companies. Consolidation will come and professionalism will increase. It’s too soon to pick winners and losers, but for marketers, it is not too early to choose partners and build relationships that will help brands grow. Marketers need to address several questions. What content should they create and how? Which delivery platforms should they use, and in what combination? How does branded content fit within their broader strategy? Some marketers, such Red Bull and Mondelez, are already acting as media companies, creating not only content but also building the audience that consumes it.

For media companies, now is the time to identify new businesses that could be sources of growth. They have a clear set of assets they can extend to brands, including, critically, creative capabilities, audience understanding and trust, and content management technologies. These advantages give media players an opportunity to profit by helping brands meet their objectives. But they must be treated with care—consumer trust is fragile and can be quickly eroded.

There is ample room for marketers and media companies to work together. Experimentation and smart partnership are key. The time to start is now—while consumers are still curious, the marketplace is taking shape, and there is room for anyone who wants to play.

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