A few years ago, I got an unusual request from Google. The search giant was working on an experimental program that encouraged retailers to feature links to products from other retailers on their websites. I forget the exact economics of the deal, whether Google treated it as an advertising unit or more an affiliate program — all I remember was my reaction.
It seemed insane to send customers away from your website and toward the websites of competitors. After spending countless dollars and energies pulling users onto your page, why would you open up an exit door? Even if the ad unit was lucrative, it still seemed like advertising suicide–or at least, like stupidly shooting yourself in the foot.
Clearly the economics of online publishing work a little differently. After all, there are whole businesses, from Fark to Drudge, that do nothing but send people away from their sites. Blogs are encouraged to link to each other and even competitors will usually credit a rival with a link that basically says, “Hey, this person did the best reporting on this story, check it out.”
Still, I’ve always been a little perplexed by the “From Our Partners” or “From Around the Web” thumbnails and links that appear on the pages of basically every major online publisher these days, from the Huffington Post to CNN to Slate. Even Imgur, the image hosting platform, does something like this.
If you didn’t know, those sites aren’t really “partners.” It isn’t the result of some good-natured cooperation between online competitors. It’s not even something like a “linkswap,” which publishers like CollegeHumor pioneered and have been running for more than a decade now. These links are emphatically not hand picked stories that the site’s editors thought worthy of referral (would anyone ever willingly link to an article from Allstate Insurance?).
The business model is simple. Publishers give up a block of space on the side bar or the bottom of the site and Taboola or Outbrain fills that inventory with links to content on third-party sites (and paying participants who want to drive traffic and bid for it). The publishing site and the network share the revenue each time one of those links is clicked.
The relationships are currently responsible for billions of impressions and clicks a day on sites as diverse as the New York Times, TMZ, Politico, Weather.com, Fast Company, RollingStone and Examiner.com.
It’s essentially the same as a banner ad, but somehow it feels different. That’s probably why it works so well. Because even though the links feel vaguely editorial, the content you’re looking at is pretty far from that. This is part of a transaction, where a publisher takes a reader and essentially sells or barters them off to another publisher through an intermediary. And for the most part, the transaction is invisible or obscured to the average user.
Of course, not every site makes this bargain. I asked Patrick de Laive, cofounder of TheNextWeb.com why “From Our Partners” links were conspicuously absent from his site. His reply: “The main reason why we’re not doing something like that is that we don’t see the value for our readers. It might be an ok revenue stream, but as long as there is no clear value for our readers we don’t want to bother them with it.”
So for the sites who do participate, it remains in both the publisher’s best interest and the best interest of the network serving those clicks that users don’t feel deceived or get upset about the site they are referred to. This is where the algorithm kicks in–Outbrain and Taboola have invested huge sums to fine-tune their suggestions. They track billions of clicks of user behavior to decide which links to suggest and to whom they will suggest them.
In fact, both companies pride themselves on being content recommendation engines. Taboola, for example, evolved from founder Adam Singolda’s frustration that his television wasn’t very smart at recommending shows he might like. The idea of making the bottom of each article a hub or a marketplace for content needing an audience is what motivates him.
To some extent, these impulses keep the ads above board and at least of a certain quality. As Lisa LaCour, VP of Marketing at Outbrain, explained it to me over email, “We face the very real possibility that readers will start to mistrust and stop clicking on these links if a high standard of content quality is not maintained. Right now our number one priority is ensuring the quality of our recommendations so that this does not happen. We utilize very stringent measures to ensure that every link we place on our partners’ sites goes to a quality piece of real content.”
But still, scan most of the links, and it’s probably not a coincidence that a good many of them have bikini photo thumbnails, weight loss “success” stories or celebrity names in the headline. Sites get paid by the click and users can’t unclick, so tactics that encourage that action are all that matter at the end of the day. More importantly, great content publishers are far less likely to need to buy traffic than crappy publishers or scammy salespeople.
Thus, the essential dilemma faced by sites today. One editor I spoke to, who runs a large humor website, explained the phenomenon as a double-edged sword: as a reader and writer it’s grating because the units often feature lame content and degrade the brand, but as an employee and shareholder it’s necessary because these ads pay the bills.
In other words, sites–especially sites that try to pay their writers–need revenue somehow, someway. Particularly in a world in which mobile viewership is eating away at the opportunity to serve essentially unlimited amounts of online banners. Either way, we’re hardly–despite what Arianna and Blodget want us to believe–in the “golden age of journalism.”
But again, not every site has to do this. You don’t see the links on Gawker, for the same reason you don’t see crummy remnant ads there either. Gawker has the strategic sense to play the long game and decided not to accept short-term pennies at the expense of long-term dollars.
One popular culture site told me that while it’s currently using one of the “From Our Partners” sites and finds it to be a significant revenue generator, they hope that relationship is temporary, and that such traffic generating tactics are stopgap measures as they build up their sales team and audience. The founder is looking forward, he said, “to the day that we can just redirect traffic internally and not send people away.” For their part, the “Partners” providers tell publishers (including the Observer’s sites) that their data show that traffic doesn’t suffer from these new exit doors, reasoning that people leave at some point anyway and the publisher may as well help them find a relevant exit that even pays a couple pennies.
For now, the tools that allow sites to exclude keywords or publishers they feel are in direct competition with their own site keeps the concept viable. But at the end of the day, the business still faces the paradox I articulated with Google’s experiment. A site spends so much time and energy trying to attract users, is it not short sighted to accept money from other sites (instead of pure advertisers) willing to buy them away?
When I spoke to Outbrain, I asked if they had any examples of the arrangement working really well. The New Yorker was the publication they highlighted, which is indeed impressive. If one of the most trusted and principled publication feels comfortable with the technology, that says something. At the same time, the rep proudly told me how the technology was so well integrated, and mimicked the New Yorker aesthetic so seamlessly, that you couldn’t tell the suggestions came from a third party. (See update below.)
I suppose I am just suspicious of anything that has to disguise what it truly is in order to operate.
Ryan Holiday is a bestselling author and advisor to many brands and writers. His newest book Growth Hacker Marketing: A Primer on the Future of PR, Marketing and Advertising focuses on the untraditional tactics behind a new class of thinkers who disrupted the marketing industry.
Update: A New Yorker rep reached out to Betabeat and said that the Outbrain rep was mistaken, and the publication does not employ Outbrain in this way.