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Daily Show alumnus John Oliver recently tackled the subject of native advertising on his satirical news show. During the segment he compared this blurring of the traditional church-state division between news and advertising, to ripping out a person’s heart. His point? The trust in a publisher’s integrity, is “what made the whole thing work.”

When was the last time you spent nearly two minutes reading an ad? It may have been more recently than you think.

Almost nobody looks at ads. That's the challenge facing all publishers in a digital world. Even if readers have not installed ad-blocking software on their devices, most have trained themselves to develop a kind of visual filtration system. Good content gets through. The rest is detritus.

But the acceleration of publishers offering up "native advertising" is changing that. Also known as "sponsored content," the idea is to present what looks like an article someone might want to read, brought to you by a sponsor. Examples include a piece on cloud computing branded with the IBM logo; an article about a trade show in Las Vegas sponsored by the Las Vegas Convention and Visitors Authority; and stories about the future of energy paid for by Shell and Chevron.

Looked at one way, this is the oldest media model there is. Media content such as television shows, radio programming, and the news have for the most part been funded by the ads that appear on the page alongside articles, or during commercial breaks.

But the breakdown in the value of advertising brought on by the growth of digital media, for which rates are far lower, has threatened business models for publishers and blurred the traditionally firm lines between advertisers and the editorial work they sponsor.

The difference now is that advertisers are weaving their way more seamlessly into that content.

The idea is to create articles that are readable and attractive, so advertisers might avoid being ignored as usual. And publishers can charge more than the pittance that the ads at the top or the side of a Web page usually command. Sponsored content varies widely in format and scope, so prices vary too, but for many publishers it garners roughly a 40- to 60-per-cent premium on regular ads.

But does it work? Toronto-based company Polar, which helps publishers manage their sponsored content and measure the results, says that on average, Canadian readers who click on sponsored articles spend nearly two minutes – 1:55 to be precise – looking at that content. (That is on desktop computers and tablets; on smartphones the average is 1:38, which is still much more than most people ever spend looking at an ad.) Polar's clients include Condé Nast, the Associated Press, The Telegraph in Britain, the Toronto Star and The Globe and Mail (which publishes native advertising on its website).

This new format is gaining popularity among advertisers as people spend more time on mobile devices, where traditional online banner ads are an even more awkward fit. Facebook Inc. has seen its advertising revenue surge, driven by mobile ads, because it has trained its users to expect messages from brands embedded right in their "news feeds"alongside updates from friends. Similarly, native advertising mixes sponsored stories in with editorial headlines on websites.

For online magazine Slate, roughly 60 per cent of ad revenue now comes from campaigns that include some element of sponsored content.

"It's vital to our survival, and we're making investments in that area," said Lindsay Nelson, vice-president of integrated programs at Slate.

The click-through rate on that kind of content – the percentage of people who actually click a headline to look at the article – is up to 1 per cent at Slate, dramatically higher than click-through rates on traditional online ads. (Studies peg these roughly at a dismal one-tenth of 1 per cent.)

But sponsored content still struggles to get people to click on it. Polar's numbers are surprisingly low on that point: Sponsored headlines are clicked on just 0.16 per cent of the time on average in Canada on desktops; 0.3 per cent on tablets and 0.2 per cent on smartphones.

Polar CEO Kunal Gupta says that the average is deceiving: Publishers who do a good job on native advertising achieve click-through-rates closer to Slate's level, but many are still figuring out what works. The high average time spent with those articles, though, is an indication that once people do click, they are actually looking at what's there.

Not surprisingly, Polar found that in Canada, posts without shading (a light background colour many publishers use to indicate that this content is different from the rest) are 93 per cent better at encouraging people to click.

"If the ad looks and feels like editorial, they click on it more," Mr. Gupta said.

But that is causing critics to raise the alarm about a crisis of trust brewing for media companies.

"The only ones who are doing very, very well with it also happen to be the ones for whom the stakes are very low. That's Buzzfeed," said Bob Garfield, an author and host of the NPR- distributed show On the Media, who has covered media and advertising for years.

"It's hard to have a lot of moral indignation about native advertising in a slide show about cats. But when Slate does it, when the New York Times does it, when the Guardian does it, when the Washington Post does it, it's a different thing. Somehow the whole industry has talked itself into ethical blinders."

Daily Show alumnus John Oliver recently tackled the subject on his satirical news show. During the segment he compared this blurring of the traditional church-state division between news and advertising, to ripping out a person's heart. His point? The trust in a publisher's integrity, is "what made the whole thing work." (Mr. Oliver did not lay blame only on media companies: many readers' unwillingness to pay for news online has also contributed to the financial threat facing the free press.)

Last month, the Interactive Advertising Bureau polled 5,000 people who visit U.S. news websites. The study called the transparency of this type of advertising into question: It found that for those reading general news, just 41 per cent were able to recognize that the material they were looking at was advertising.

"Nobody wins if you're tricking people," said Sam Slaughter, vice-president of content for New York-based Contently, which works with brands such as American Express, Wal-Mart, and Coke to help format and analyze their sponsored content.

The solution, he believes, is to create more relevant content that is clearly labelled as advertising. Mr. Gupta at Polar believes a standard is needed for how publishers do so.

Currently, the standard is all over the place. What used to be known as an "advertorial" in print frequently appeared in a different font, and with a clear label at the top of the page that said "advertising."

Native advertising, on the other hand, is often formatted to look much like other articles on a site. And it goes by many names, including "paid post," "sponsored content," and "content from (Brand X)."

When readers are fooled, there are consequences for publishers. Contently released a study in June that found that two-thirds of readers "have felt deceived upon realizing that an article or video was sponsored by a brand," and that 59 per cent think that news sites lose credibility when they publish this type of material.

It's a risk that Mr. Garfield insists is not worth the meagre reward.

"The revenue … is not in any way going to replace the shortfall that has come with the digital revolution," he said. "… The situation is simply more desperate and as such, people are willing to do desperate things – to barter away the trust you have accrued over your entire publishing history for a couple of bucks that won't even save your life."

Engagement with native advertising in Canada (Source: Polar Average time spent consuming sponsored content):

Desktop: 1m55s (global: 0m48s)

Tablet: 1m55s (global: 0m44s)

Smartphone: 1m38s (global: 1m23s)

Average click-through rate:

Desktop: 0.160 per cent (global: 0.110 per cent)

Tablet: 0.295 per cent (global: .254 per cent)

Smartphone: 0.195 per cent (global: .235 per cent)

Using no shading does 93 per cent better for convincing people to click (globally, light shading does 57 per cent better over all)

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