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Are media companies risking loss of trust?

The New York Times Building in Midtown Manhattan.

Nightscream/via Wikimedia Commons

As media companies seek out new ways to make money, is a crisis of trust brewing?

That's the question that two studies recently have partially attempted to address. Earlier this month, the firm Contently released a study arguing that the proliferation of "native advertising," also known as "sponsored content," can lead to a loss of credibility for the news sites that host it. Last week, the Interactive Advertising Bureau released its own study with research firm Edelman Berland, attempting to dig deeper into the issue.

This type of advertising is important because as media move to digital devices, the rates publishers can charge for ads has plummeted. But "native" or "sponsored" content – articles, photo slideshows and the like that mimic the tone and style of the rest of the website instead of looking like ads – can command better prices. Outlets including The New York Times, Wall Street Journal and The Globe and Mail have all begun publishing these types of ads. But readers may not be on board – and some may feel deceived by it.

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The new IAB study polled 5,000 people who visit U.S. news websites. The majority did not feel that sponsored content actually enhanced the overall experience of the website: over all, just 38 per cent felt it did, or 27 per cent of general news readers (as opposed to business and entertainment, where the number was roughly 45 per cent.)

It also called the transparency of this type of advertising into question: The IAB study found that for those reading general news, just 41 per cent were able to recognize that the material they were looking at was advertising.

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