Transcript of Online News Association Panel on Church, State, News, Advertising from “Building Trust On the Web,” Consumer Reports WebWatch’s First National Summit on Web Credibility

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Speakers:

  • KW = Kinsey Wilson, USAToday.com
  • JG = Joel Gurin, Consumers Union
  • JJ = Joseph Jaffee, New Marketing Consultant
  • JK = Jason Krebs, New York Times Digital
  • RJ = Rich Jaroslovsky, Online News Association
  • LA= Len Apcar, New York Times Digital
  • NS = New Speaker

Note: This is an edited transcript of the proceedings. 

KW: I’m going to do quick introductions, and you guys are welcome to add and augment as you like. I’m Kinsey Wilson, I’m vice president and editor-in-chief of USAToday.com.

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Jason Krebs, who is vice president of sales, NYTimes.com. Rich Jaroslovsky, formerly of theWall Street Journaland Smith Brothers Investment and, finally, president of the Online News Association. Joseph Jaffee, who bills himself as a new marketing consultant; I’ll let you elaborate on that. And Joel Gurin, who is executive vice president of Consumers Union.

I’m going to try and tee this off by essentially presenting some examples both from the online world, but also from television, of how advertising is starting to encroach on the content and some of the issues that it poses, specifically for news organizations, but also, frankly, for producers of entertainment and sports broadcasting and other types of content.

Everybody’s probably got their own favorite examples. One of mine is the insertion of digitally-inserted ads in sporting events now. The interesting thing about this, to me, is that it gets around some of the restrictions that stadiums impose on advertisers as to what they can advertise on the walls. But it also potentially puts in the hand of the broadcaster the power of control over the advertising, even ultimately if they end up showing it with the leagues.

On the flipside of the coin, you have the example of the Washington Redskins who, whenever they hold a press conference now, have a bank of video screens behind them that bear the logos of FedEx and their other corporate sponsors. So that anytime ESPN or one of the local news stations wants to show a clip of [Redskins coach] Steve Spurrier explaining why the Redskins haven’t done so well, you have the logos of the advertisers in the news clip.

With the growing popularity of TiVo, television is looking for ways to go beyond or get around the ability of the user to slice out the 30-second TV spot.

The soap opera “All My Children” has built an entire 13-week subplot around Revlon products. And in perhaps the boldest example, the producers of “Live from Tomorrow” — which hasn’t actually aired yet; it’s a news, variety and entertainment show — have dispensed with the 30-second spot altogether in favor of built-in sponsorships. Originally Pepsi and Visa were reported to be initial sponsors of this, but the show’s been delayed. Apparently they backed out and they don’t have sponsors at the moment.

Matty Leshin, who is the show’s producer says, “Listen, I think the notion that there’s something wrong with commercial products being involved in our programming is a pretty old-fashioned idea. The business of television is driven by commercials and it’s driven by commercial money. The important thing about our show is that it’s completely transparent to the viewer. We’re not trying to product-place something, we’re not trying to hide something in the show. We’re very upfront about the fact that the show surrounds itself with new and interesting products that people actually want to know about.”

His comments raise an interesting question: Is transparency enough? Does full disclosure absolve you of any further need to separate an editorial on paid content? Or can credibility, integrity and authority — the cornerstones of our business — be undermined even in the face of full disclosure? One of the ideas I’d like to come back to.

On the Web side of this, just as television has been struggling with how to deliver advertiser value in a market that’s not only fragmenting but giving users more control over how much advertising they can view, on the Web we’ve all be wrestling with what the value proposition is really from the start.

Example here is the Absolut Dow campaign that CBS MarketWatch ran, where they actually wrapped their regular Dow and S&P and NASDAQ fever line charts within the Dow bottle.

Q: Is that just a decoration, or is that actually the real figures?

KW: Those are the actual figures. It’s not just a representation of. My understanding is that that’s the chart they normally have there, and they modified it.

USA Today — not to avoid some of the things we’ve experimented with — USA Today was probably one of the earliest to play with extending the real estate, and allowing the use of the flag and some other elements of the page to enhance the advertiser impact.

I don’t know the date of this — well, it’s actually up there. This is from 11/98. I think the first time that we experimented with this was, we did an online clone of the Super Bowl commercial that allowed a Honda car to get out an animation and come out of the ad well. This is one we wouldn’t do today, but I put it up here as an example of the kinds of things we sort of broke the mold with.

The Times has gotten some press for its sponsored archives. This, I believe, was an HBO ad, where HBO was allowed to select articles from the Times archives. The two of you can please feel free to correct me if I get any of the details here wrong.

My understanding is, these pages were accessed through a conventional advertising spot rather than through navigation or an editorial page element. Had something of the look and feel of the New York Times‘ site, but didn’t necessarily, wasn’t an exact representation of the pages. This is a more recent one, “Live from Baghdad,” which was also an HBO Films advertisement.

A number of sites have started experimenting with sponsored links. We are one of them. A couple of things to point out here. One is that the sponsored advertiser links appear in context with editorial content, and there is some similarity in the presentation. We’ve tried to distinguish it by the use of color and labeling.

But we’ve also learned the hard way what can happen around certain kinds of stories. In the case of ephedra and the death of Steve Belcher, we ended up with ambulance-chasing lawyer ads next to virtually every story we ran on ephedra. We’ve gone in and selectively pulled out inappropriate juxtapositions as we try and learn how to manage these.

Probably the most stunning example of advertising edging its way into content is Sony’s approach to the New York Times, to USA Today, to other publishers, asking to place editorial copy that they had freelancers write, and have it presented essentially as news content on our sites.

National Geographic took the bait, and what you see here is an example of a typical National Geographic news page. This is the sponsored Sony content. It was accessed from the news pages, the navigation in their news pages, under a heading that said “Special Series Digital Lifestyles Feature by Sony.” And then when you closed out the story, you were presented with a five- or six-page questionnaire which asked whether you’d be more inclined to buy, in this case, a digital camera. Whether you’d read more articles by Sony, and so forth.

T. Scott Edwards, consumer segment marketing officer for Sony Electronics said, “We’re breaking paradigms here. We consider ourselves a content provider. We are buying the ad space.” David Cohen, senior vice president and interactive media director on the Sony account at Universal McCann said, “We’re trying to blur the line between advertising and editorial boundaries. This is certainly not a traditional online media campaign.”

I invited Cohen, by the way, to be part of the panel today, and unfortunately he had a conflict. But, Joel, I was going to ask you first if you could stand in for Sony and explain what you think they were driving at there. Whether this is something that they would like to repeat, whether it’s a successful advertising strategy, and then what it portends, more broadly.

JG: It’s not something that I think they will repeat again. They seem to be quite standoffish about it. Although, having said that, I think it’s pretty important to — it makes me think about Steven Heyer, Coca-Cola President and COO, who addressed the Madison & Vine conference that LH put together. He basically said the days are gone where brands like Coca-Cola need to be on the receiving end in terms of buying space on NBC. He said, “We are the biggest network in the world. We reach more people than all of the networks combined.”

So he kind of put a pretty firm stake in the ground in terms of recognizing the fact that, as a broadcast or a network, that the large global brands in the world are actually kind of able to maybe turn the tables, in a sense. I think it’s probably good as a context-setter.

As far as the Sony work is concerned, I’m on the fence. I’m all for innovation. But there are elements of that campaign that concern me a little bit as a former media director. I was interactive media director at [unintelligible], so I’ll comment on absolute stuff another time as well. I’ll talk about that later.

But I think that one has to recognize that what Sony did was groundbreaking in many respects. Being able to almost prostrate themselves in front of the consumer who, let’s face it, is more empowered today than ever before in the history of marketing and media. Allowing the consumer to have the final say in terms of this is relevant or this is not relevant, this rewards my attention, or this insults my intelligence. I’m a big fan of allowing the consumer to decide, and ultimately giving them the final vote.

But in terms of where Sony stands, would they do it again? I think they might do something different. Would they do this again? Probably not.

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KW: Because it attracted controversy, or because it, even from an advertisers’ standpoint, blurred the line too much between the identity of the advertiser and the online publication?

JJ: I think probably because of the controversy, as opposed to the blurring of church and state. I think that’s less of an issue to them. But then again, they don’t have to worry about it, like some people in this room probably do. But I think that they just were, they’re a little bit more — I don’t want to call them conservative, maybe that’s not too fair, but because they did push the boundaries pretty radically. But I don’t think that this was something that they anticipated.

If you look at the MSN Butterfly launch, the MSN8 Butterfly launch — I should say MSN8 ISP [Internet Service Provider] launch, which really kind of infested New York with butterflies all over. No one will ever know whether that was planned or not. Whether they anticipated all the city outcry or not. But did they get hundreds of thousands of dollars of free publicity? Damn straight. And they apologized. Again, was that apology genuine or not? We’ll never know. Is it great marketing? I’d say probably yes.

KW: Joel, talk a little bit about why we should be concerned about encroachments of this kind, and the position of Consumers Union.

JG: Sure. Consumers Union is in a sort of smug position on some of these issues, because of course we don’t take advertising. So we can just sit here and tell the rest of the world what to do. In our WebWatch persona, we really are very concerned about these issues, and that’s a concern that’s based on consumer concerns.

There’s some good reports out there that I hope you’ll all have a chance to look at, but just to give you a couple of quick statistics out of them: The Princeton survey that we did about a year ago, called “A Matter of Trust: What Users Want from Web Sites.” We found 59 pecent of people said that it was very important that advertising is clearly labeled as advertising, and distinguished from news and information on the site.

That was a higher rating, and we asked people about several factors that were important to them on the Web, and that was higher than any other factor except for privacy. It was almost at the same level as privacy policy.

October 2002, we did a study on health and finance sites called “Expert Versus Online Consumers: A Comparative Credibility Study.” Really asked both experts and consumers what they thought enhanced the credibility of a site. There were about 20 positive factors and absolutely 10 negative ones, and for both the experts and the consumers, the most negative factor was if the site made it hard to distinguish ads from content. So people really thought that was like the biggest credibility buster that they could come up with.

Finally, we did one, also in October, called “How Do People Evaluate a Web site’s Credibility?” This one didn’t find that advertising was the most important factor, but it was certainly a very significant factor. The finding was that ads are especially harmful to a site’s credibility if they lead a user to believe that the site’s content is swayed or controlled by the ad, or that the site is connected to the advertisement and is trying to sell the user something.

Just based on the research that WebWatch has been doing, we feel there is a lot of reason to think that consumers really do care about these issues, and I think it’s almost a kind of dilemma. If you think about the Sony approach versus pop-up ads, I guess the concern for advertisers has to be how do you get through to people?

It’s really like one extreme is, you just go so aggressively that you get through the radar, and the other is that you try to go under the radar. Sony, I think, is a very good example of going under the radar by trying to blur that line.

There is a long history, you all know, in print. My own background is, before I came to Consumers Union, I was the editor of American Health Magazine for about nine years, which was a regular commercial magazine that did take advertising, so it dealt with these issues all the time. And certainly there’s a long print history and guidelines and so on, in terms of separation of church and state.

What seems to be happening on the Web, as far as we can tell, is that — because it’s a new medium, because there are so many variations of how you do advertising, how you do links, how you do sponsored links, what it looks like when you link, what it looks like when you see it on your homepage, and so on — it’s been harder to really come up with hard and fast guidelines.

The WebWatch guidelines, which there are multiple copies of out in the hall, do talk about transparency and credibility, and say particularly that it’s very important that advertising be clearly labeled and really visually distinct. Which is similar to the kinds of guidelines that magazines have used for years.

You have to be upfront about it. And our take on it is that this is both good for consumers — because looking at that Sony thing, I think you have to be really very attentive at least until you get to the end and hit the survey, to realize that this is not just National Geographic’s own feature writers doing this, that that really feels deceptive to consumers, but that ultimately it’s going to backfire both on advertisers and on sites. And that there is a risk here.

Are consumers going to be horribly harmed if they feel like they’ve been taken in by Sony? Probably not. Particularly if they get to the end and they realize the whole thing was kind of a game. But is the Web going to be harmed? Probably yeah. Is the site’s credibility going to be harmed? Probably. And, ultimately, it really does become an unfortunate vicious cycle, I think, if that line is blurred too much.

KW: If editors are striving for transparency on the one hand, and arguably consumers are looking for the same thing, advertisers are pushing the other way, trying to associate themselves as closely with the credibility and the brand value of that brand, the identity of the property they’re associated with. How do you, from a sales standpoint, Jason, how do you balance those two competing factors?

You talk a little bit about, from your perspective, what advertisers are demanding, and how you’re having to wrestle, day in, day out with providing that maximum value while still honoring some of the rules and boundary lines that you all describe.

JK: When advertisers come to us with the idea of wanting to do something like that — which doesn’t happen a lot, in a way you’re flattered — because they see the value in the audience that you have, and they want to speak to them, so that’s always a good thing.

But these instances are a lot rarer than you would think from the publicity that they’ve caused.

Actually, the Sony people were very gracious when we said we didn’t — we talked about what we want to do, and they came to us with the thought of what they had. And we just disagreed on how it was going to be presented.

We would have taken their information and put it in the form of which you should, and it would have been a different look and feel than the rest of our Web site. And we would have been fine with that. They just didn’t want that. They did want it to look like the same navigation as our article pages, as you saw they did with National Geographic.

We said no. The spin on it, when we saw that Ad Age article, and it seemed so, it was being flamed, we were kind of surprised. We were taken off guard, that it received that much publicity, because it wasn’t that big of a deal to us, because we’ve done a lot of — we’ve encountered these before, and it was just differing philosophies.

I think the beauty of what we’ve built — the only thing I would say about to counter what Joel said a little bit, if something happens that goes up online that’s weird — and I think it’s really weird what Sony did and it’s on National Geographic — I don’t think it hurts the entire Web. It just hurts National Geographic.

And that’s why people still do come to us to advertise, because they know that we’re not going to do things like that, and that’s why readers still come back and look at the site, because we’re not going to do things like that.

KW: If Sony is the exception, though, there are nonetheless other, more subtle examples, where I think advertisers are constantly pushing. You get into the issue of having to decide on whether or not you impose frequency caps on the number of loops you allow in an animation, and whether you’re going to allow advertisers to break certain boundaries or display eye-blasters across the content. Can you talk a little bit about the more typical examples?

JK: We look at every situation, and we have a committee where we, when different ideas come in to us, and they start to boil up, I look at it, my bosses look at it. Len [Apcar], our editor-in-chief, who’s in the back of the room, looks at it. We all look and we say, “What do we think? What do we feel? Should the sound be on?”

We have some pretty firm rules. We say, “No sound.” And we say 10 seconds max for certain things. And when they try and push us, it’s good gamesmanship. I think it’s the advertiser looking to push the boundaries. They want to be the first one on NYTimes.com to go 15 seconds, and they want to be the first one to do something new on the homepage where no one else has.

We put a new position out there which a number of other people just adopted, called the half-page ad. A lot of them just wanted to be the first ones to be on it. We had a great deal of interest, and it was just a matter of saying, they wanted to be the first one to do this, and they wanted it to look like it was their idea for their own publicity or for their agency to say that they got this for them.

Their agency goes back to the client, “We got you 12 seconds and everyone else only has 10.” So those are the things that come up. I don’t know if I’m actually educated. It’s not that — we don’t find that to be as big a problem with people wanting to blur the lines.

But it’s the technical issues. If it’s creative, if the newest guy comes up with a new way to do an overlay. Is it, “This one won’t slow down people’s machines. We promise.” “This one is the best way to do it.” Those things come up, and we look at them, and we see how they feel.

Q: The managing editor of the Dallas Morning News said that he didn’t have complete control over it, but he said if he had, he thinks that the rules for print online should be exactly the same as the rules for print. No one in the Times, I think, would allow an ad on the front page of the paper, and yet you were just talking about the ads on the front page, if that’s what you want to call it, the homepage. So the question is, was there a debate about that? Did you bring in the editorial people? Which is church and which is state?

JK: It’s probably from Day One, and we never say the word “never,” except saying never will we jeopardize our editorial integrity. That’s the only “never” there is. Everything else, we’ll look at.

From Day One, when the Web site was launched, obviously every person at the newspaper, who’s familiar with the newspaper, said, “You’re not going to put all the content up.” Or, “People are going to subscribe, right? The same price that they have to pay for the newspaper.” And from Day One that was, “No, it’s going to be free, and we’re going to register people, and it we’re supported from advertising.”

So the rules of the gentleman, and I didn’t hear what he said, but we would want to run it exactly like the newspaper is run, have the same rules. That went out the window from the start. Except for the part of editorial integrity. That is a hard, firm line that will never be crossed. We have a number of ads on the homepage of NYTimes.com. No one has a problem with that. Would a newspaper ever do that? There are small ads on the front pages of the New York Times newspaper. I can’t speak to that. In 10 years, would there be? Who knows?

KW: Rich, if the only rule is, we won’t jeopardize editorial integrity, does editorial integrity, in effect, become fungible because everything is in negotiation except the abstract value? How, particularly at the Journal, how did this play out and what was the line you were trying to draw?

RJ: The problem is that the New York Times‘ and the Wall Street Journal’s and the Washington Post’s and MSNBC’s and CNN’s ideas of “editorial integrity” are different from each other, and may be very different from some other sites’ definition of editorial integrity.

The CBS MarketWatch page that you showed, and MarketWatch has really pioneered a number of things. I remember the Budweiser wallpaper, where an entire page of content, the markets page or whatever, had as very faint wallpaper the Budweiser logo, over and over and over again.

I’m sure if you asked folks at MarketWatch, as indeed I have, they would say, “Well, that doesn’t compromise our editorial integrity. Budweiser didn’t have any say over what was going on that page.”

So the real issue, to me, is: Okay, what is editorial integrity? And I would argue — as I have to occasionally with the MarketWatch people — that they absolutely do, no pun intended, violate their own editorial integrity by things like the Budweiser and the Absolut ads.

That’s the sort of thing where, yeah, people particularly in the early days would bring in stuff to WSJ.com and the ad side would bring in something like that, and I’d look at it and I’d say, “Not going to happen.”

KW: Explain why you think it violates editorial integrity. There’s no — it’s an interesting example, because one can argue certainly that the average reader would not construe that somehow that the markets data had been manipulated or skewed in some fashion because it’s surrounded with the Absolut logo.

RJ: Why would somebody automatically assume that was not true? If you looked closely and one of the lines was marked, “Absolut sales,” it might be an effective ad.

Q: That was the question from the audience. Are those the actual numbers, or is that Absolut’s ad copy? So I think even we’re confused.

RJ: There is a separation of the advertising message and the editorial message, I think is a requirement. It is the muddying of the line. It is where exactly the news ends and the advertising message begins is where you can have all kinds of mischief.

I’ve used this example for many years, and everybody in this room is much too young to remember it, as I am, but I’ve seen the old videotapes. Fifty years ago, when you turned on NBC for their 15-minute John Cameron Swayze newscast, it was called the Camel Cavalcade of News. And John Cameron Swayze was sitting at a desk with a Camel logo in front of him, and in the middle of the newscast, he would stop and deliver a Camel commercial. That’s the way it was done. And over time, the standards evolved, and you don’t necessarily, you don’t see Tom Brokaw delivering an Ex-Lax ad these days.

Q: You do hear Charles Osgood doing it, still, on radio.

RJ: Radio is, particularly all-news radio, is a good example of what happens when you don’t separate that message. I happen to listen to WCBS, the all-news station here in New York. And for a while when I was doing a long driving commute, they were doing, the radio guys were doing commercials, as they still do, I think, for the nutritional supplements. I suspect some of them had ephedra in them.

“I went to sleep. Overnight I lost five pounds. This is great stuff.” Or, “Gee, I really wanted laser surgery, so I went to Dr. Joe for laser eye surgery.” To me, I think WCBS should be ashamed of itself.

KW: Let me put Len and/or Jason on the spot. Is there a distinction between — I guess the first question is, do you agree that the Absolut ad crosses the line? And then secondly, is there a distinction to be drawn between that and the sponsorship of markets information, which you have on your pages, and which we also allow?

LA: First of all, as the editor, I do agree with what you all said about Absolut. Blurring the line is a huge issue with me, is a huge issue with the paper generally. We have advertising acceptability standards that are spelled out. They’re in a little booklet form. They’re available to advertisers or prospective advertisers. We have it on our own site; it’s a little different.

I don’t like it whenever the line blurs, or there becomes what I call a kind of a caricature of the editorial presentation for the sake of news, which is what I thought was going on with the Absolut model. Then I think people can rightly say there’s a commercial interest in the way this is presented; that crosses the line.

Is it okay to have an adjacency of Absolut next to the markets presentation? I think so. Now, we don’t say, “Sponsored by,” I don’t think. I would be surprised if we did. That’s just a little banner, as far as I’m concerned, smaller than Tiffany or that Payne position by the Web from the paper, right? That’s a paid position, if I remember. “Sponsored by,” actually, is a hot topic for us right now.

JK: We don’t feel the need. In a lot of cases, we do put the word “Advertisement” on top of something. Which is even a little bit not giving the consumer enough credit. You don’t hear any, when the TV show is going to commercial, them saying, “And now let’s go to a commercial.”

It just doesn’t happen. When you’re turning a page in the newspaper, it doesn’t say “Advertisement” on top of every page, unless it’s an advertorial or something like that. So we didn’t feel like we needed to call this —

KW: Our publisher, incidentally, has become the biggest advocate of putting “Advertisement” above the ads, because he’s tired of having to go back to advertisers who try to imitate our editorial look and feel and make their ads appear that it’s part of the ad well. We have to tell them they’re out of bounds. So easier to just leave those and let —

Q: I still don’t see why there couldn’t be a button that’s like standardized across the whole Internet, that you click on it, and everything that’s an ad just turns red. A big block of red. [TALKOVER] It’s temporary and you can control it. Like a light switch, just a little flash. Oh, I see.

NS: Like TiVo.

KW: Talk a little bit about that issue. And also, there was a distinction you drew earlier when we were talking about [unintelligible], the difference between ethical conflicts and pure intrusiveness and noise and clutter and so forth. They are sometimes overlapping issues, but I think we tend to talk about them in the same breath sometimes.

JJ: Let’s go back to that Absolut Dow for a second. There are probably two problems with that. These are the real problems with that. First of all, the way that the stock market has been lately, that would drive someone to drink. That’s a joke.

The second problem is that it’s not really incredibly great and compellingly creative. And I’m representing a creative realm for a second. I’ll tell you an idea. I’m so glad Jason said about pushing, because I guess as a buyer I’m your worst marketer. Because I’m trying to push, when I was a buyer, all the sellers. Why? Because I can. Because it’s a buyer’s market, number one.

Number two, because I have technology, which allows me to do things that, as an advertiser or, on behalf of my clients, we could never do before. And number three, because consumers are just so damn hard to reach these days, because of the TiVos, because of XM serious satellite radio, etc., etc.

So I’m pushing all time. One of the things that I pushed when I was working on Absolut was to, we wanted to create Absolut Google. And what we were going to do is, you would do a search, a contextually relevant search. So Vodka: Absolut: Nightlife, something that really was a slam-dunk for that audience. And the real results would come back in the shape of an Absolut bottle. Now, that is a great piece of creative. I say that because I didn’t come up with it; my creative director did.

But Google didn’t want to have anything to do with it. And I thought that they were really — they wanted to create a print ad which had fake results in an Absolut bottle. But that just completely was off the mark.

Now, having said that, let me take a step back. Google said that because they could. New York Times says it because they can, because they’re brands. Google was just now recognized as the world’s most recognized brand, in terms of brand-name recognition. That’s above Coke, Nike, etc. Google is just pervasive.

New York Times has built itself, and deserves the respect and the credibility that it’s earned by virtue of the fact that they’ve spent a lot of time, a lot of money building up that trust, that relationship, that rapport with consumers. It’s not something New York Times would have done, and probably rightly so. Although, as a buyer, I’m still going to push the envelope as often as I can. Maybe one day I’ll catch him off guard.

But I think it’s important to recognize, we always complain that we’re being held to higher standards. Take spam, for example. I’m never going to endorse spam. But the fact is, we go back to our apartments, and we have three or four or five credit card solicitations and we have telemarketers calling us at nine o’clock at night.

So we look at television, for example. What’s happening in “American Idol” is a huge blur right now, where you see a little montage with someone sitting in a Ford. Or even what’s going on in James Bond, for example, in the latest 007.

I brought this with me today, this is the latest issue of Wired magazine. Or is it? It’s actually called Unwired magazine, and it’s an entire issue dedicated to I5. Now, if you go through it — look at your advertisers on the back, look at advertisers here, and I could go on and on and on and on — and you’ll notice that this whole issue is owned and potentially run by Intel. And it’s a brilliant piece of marketing, I believe.

Not only are there only Intel ads in this publication, but all their OEM advertising is also in this. So you’ve got stuff from Dell and IBM and so on and so forth. For the first time in their entire history, they were able to bring their OEM advertising together under a branding umbrella. It was just a breakthrough for them, in print.

I went through this now, just before I sat down. I said, “Where is the ‘Sponsored by Intel,’ now?” Because now I was thinking, “There’s nothing.” Now, is this blurring? What do you think?

LA: Is that published by Wired?

JJ: “Special Wired Report.”

LA: So it was?

JJ: Yeah.

RJ: Who created [TALKOVER] content?

JJ: This was all created from the editors.

RJ: From the editors of Wired? The real question here is, it seems to me, is this an ad? Or is this a special issue of Wired that Wiredessentially sold to a specified, targeted set of advertisers? They’re both valid questions. They’re somewhat different questions, though.

I haven’t read this, though I do have it at home. Presumably an article about the fact that my son was ready to kill me because every time somebody used the 2.4 gigahertz cordless phone in our house he would get knocked off the wireless network. I don’t know if that article was in there, but it should have been.

And the question is, could it have been? What would have been the reaction of Intel? Would Intel have even known that that article was in the works until they picked up the magazine?

KW: Did this come poly-bagged a regular edition of the magazine?

RJ: Yes.

KW: It did. So it didn’t substitute — ?

JG: [TALKOVER] subscribers?

RJ: Yeah, it came, as Kinsey said, I’ve got it at home; I just haven’t read it yet. But it came poly-bagged with the regular Wired.

LA: See, that’s the question this raises in my mind as a reader. Now, was this really written by the Wired staff? Or was this written and somehow vetted by Intel first, and they have editorial — it raises questions that I as a reader [TALKOVER] every time I look at this.

RJ: There’s some interesting — I think there’s a couple of levels here. One level is — and it’s sort of hard sometimes, I think, to sort out ethical issues, annoyance factors and perception factors. So if I’m a reader and I’m picking this up, any of those three might be active.

I’m going to ask, number one, is there an ethical conflict of interest issue, the thing you just asked? Did Intel just basically write this, and the editors had their arms twisted and went along with it? There’s an annoyance issue. Once I sort of figure out what the game is here as a reader, I’m going to be annoyed by this. And then there’s definitely a perception issue, which is: I’m less likely to trust Wired in the future.

And I think a lot of this may not really be unethical, may definitely be annoying, and definitely can lead to a change in perception. And I think a lot of what — there’s a couple of factors that it seems that I think are probably related.

One is, as you just said, Joe, consumers are harder and harder to reach, so advertisers have to be more aggressive, more creative, trying more and more different ways to try to reach them. At the same time, partly as a result of that — and also as a result, on a broader scale, of things like Enron and Tyco and WorldCom and everything else — we know from a lot of surveys that consumers are becoming more and more suspicious of business and more and more resentful of businesses, possibly than any time in recent history, just because of the kind of halo from all of those events.

And finally, added on to that on the Web, you have a situation where the models for the business model for most sites is, as we were just talking about, it’s not the New York Times in print. It’s a model that is totally advertising-dependent for revenue, which changes the dynamic.

One of the things that magazines have dealt with for years is: How do you balance the need to give consumers something that they’re willing to pay for, that’s high enough quality and trustworthy enough that they’re willing to pay for it? Which kind of forces you to push back. Versus the revenue you get from advertising, and what’s that balance? On the Web, it seems that it really can be unbalanced, because your revenue model is completely ad-driven.

All of those things, I think, add up to a potentially kind of dangerous situation. And the danger really is of developing a situation where the medium is really devalued, and where people see it as free but not particularly trustworthy or valuable. And then ultimately it becomes not that useful to either advertisers or the editors and the consumers.

I think, ultimately, it seems to me it really comes down to transparency, disclosure, clarity. That so much of it is about clarity and simply — I think people accept advertising; they just don’t like it when it looks like editorial.

Q: The other side of it, they’re interested in the editorial content, and they trust the editorial content; they want to see relevant advertising. Who’s selling the stuff? Who’s making the stuff? Where can I buy it? They have to trust the editorial first.

RJ: But you would probably see ads from people other than Intel in here. And that’s one of the tip-offs.

Q: Can you, you yourselves are obviously very concerned about the editorial integrity and the way that advertising on you site is being perceived or not perceived as being advertising. But can you talk about the latest reactions that you’ve gotten from your readers that have surprised you or supported your view, and if there are any particular types of advertising that you did that your readers pushed back on? Can you talk about that?

KW: If one of you is comfortable addressing that, I will look for a study that we did of our readership, where we asked them to compare four different types of intrusive advertising, and I’ll show you the slide that has the last results on that.

JK: I feel very good about how our readers feel about the advertising on this site, because over a million of them have told us that they want to receive emails just from advertisers that we will send to them. At the time they sign up, they can elect to receive a lot of different niche emails. Some of which they know are exclusively supported.

A product like TicketWatch, which we send out to over 250,000 people, when a producer of a Broadway show comes to us and says, “We’ll buy that list from you.” That list has been growing by the day, and the advertisers keep buying it because it puts people into the seats. So that advertising works.

Absolutely, do we upset people sometimes? Yes. When we do something that they feel is not right. There’s a lot of Times loyalists out there, and they are the reason that we are as successful as we are, and they feel like it’s their paper and their Web site. And if we do something that they don’t like, they’re going to let us know about it.

Q: [INAUDIBLE]?

JK: Anything that gets in the way of reading the news on the site. If it’s an interstitial, if it’s an overlay. If it’s something that may just didn’t seem right. There’s a lot of independent pundits out there that feel that they are professional or wannabe professional editors and journalists.

And we hear from them, and it’s great to get it. We read all the email, our CEO reads the email, I read the emails, the editor reads the emails.

LA: Our publisher.

JK: Our publisher reads the emails as well. He’s very involved in it. So we take our role very seriously. And the only person, the only people who are going upset the editorial integrity or do something to upset that beautiful and the magic that we produce, is going to be us.

If we do this over a long period of time, something that’s wrong or something that’s bad or something that people don’t like. If Wired put that out every single month in their magazine, they’d suffer. We’re going to suffer if we put too many ads on a page or if we put too much in between the reader and what they really want to get. We control our destiny in that regard.

KW: In many cases, presumably, the advertiser in the long run, suffers. Though not all. In the counter example on our side, I think, is Orbitz. Which despite the annoyance factor, has been hugely successful in simply creating general brand awareness.

JK: That’s a good point. We do send the feedback to our clients when readers write in, “I will never buy something from Orbitz ever again, because they are the worst thing I’ve ever seen. How dare they? I hate them!” We forward those to people.

We consult with our advertisers when they want to do X, Y, and Z on the site. If they want to do an interstitial, or they come up, as Joseph says, “Let’s do this, let’s do this.” And we say, “Well, we’ve done something like that before, and here’s the response that we’ve gotten. And you probably don’t want to do that.” But if they want to go ahead and do it anyway, just experimental, we share the feedback with them.

KW: We did a quick site survey to gauge reader reaction to various types of intrusive advertising, and we asked them to compare pop-under with an interstitial and unspecified other, and then a custom unit we created that we use on our homefront, that we call a sliding billboard.

Which, when you land on a page, starts as a closed pencil, opens up for three seconds, and then closes again. It’s essentially designed to — the idea is that the reader ends up where they intended to land, they recognize that. But before they have a chance to start reading the editorial content, they get a brief message and then it clicks closed.

And that proved to be the one that people found the least intrusive, at least in the survey. It’s a small piece of evidence. We’ve done some others.

JJ: I think that’s one of the small [INAUDIBLE] formats, the idea of the sliding billboard or the expanding banner, the one that kind of starts off vague, just enough to get your attention, and then kind of slinks into the background saying, “Well, if you want me, you know where to find me. If this is relevant to you, then…”

I call it opt-in intrusiveness. In other words, the consumer’s saying, “This is relevant. I want to buy a car, so bring it on. I don’t care. Hit me with your DH demo and the sound.” It makes sense.

By the way, it’s a critical update that you have to know about. You don’t want to think about where the —

KW: You just need the annoyance factor.

JJ: Like on the plane today, they said it was “strictly prohibited” to smoke. And I said, “What’s the difference between ‘prohibited’ and ‘strictly prohibited’?”

You asked a question earlier about the ethical practices. And I think that’s probably the —

[END OF SIDE A OF TAPE]

JJ (cont.): …firm line between news and content. Content is entertaining and engaging and can be entertaining content. But I think when you talk about news, when you talk about finding out that someone that you went to school with maybe lost their lives or was taken prisoner of war in Iraq and then find out that that wasn’t true, that’s a huge issue.

That’s where, I’m playing devil’s advocate by pushing a little bit and saying I’ll push Jason, but I do draw the line when it comes to the fact that news is news and the rest of content can be blurred, maybe. But news, you have to be pretty careful.

And the thing that concerns me is the murmur in the industry that the Web cannot be trusted for accurate information. That is probably bigger than privacy as a concern that we have to worry about.

And so, that’s why we need, probably, the likes of the New York Timesof the world to kind of stand their ground as a brand, but also for their trust, and never, ever — so I take my hat off to you for [INAUDIBLE] blurring, Jason.

[COLLOQUY]

JJ: There were three examples that I thought of as well. Someone mentioned earlier the idea of Fortune’s 100 Best Companies to Work for, and IBM places a diversity ad right next to the content. That is a kind of a blur, but yet most people in this room would probably call that great media planning. That’s the first example.

The second one is, one thing we did on the likes of CBS MarketWatch for the return of the blue-light special at KMart was, we turned homepages blue. And in addition, what we did is, we actually blended the banner and the skyscraper placement into the background.

It’s a common practice, and Jason, I’d be curious to get your input as well. But smart creators know that all they have to do is make sure that this is no border around the banner, and make sure that they use the same color or the same color palette as the actual background of the site. So that’s the second example. Again, is that blurring? Maybe, maybe not.

The third one is the idea of pop culture to the point of becoming, crossing the boundary from the ethical perspective. I always, say, great product placement, how do you know great product placement? When you’re not sure if it was paid for or not.

The first time I heard the word “Google” mentioned on West Wing, I thought that was great, because it’s so much part of our lives now. But the third or fourth or fifth time, I kind of started to smell a rat. And that’s when it started to become annoying, but also to the point where I might be turned off the West Wing. So those are just three examples.

JK: I have an Aha! moment here for the panel. If you come to the NYTimes.com with a white banner, because our background is white, it must have a border on it. It must have a black border.

JJ: Has that always been your policy?

JK: Yes.

JJ: You make my life difficult, Jason.

NS: Yeah, we have the same policy [INAUDIBLE].

Q: I think that’s one of the problems with the Web. In print, we can require different typography for ads. Somebody wants to make an ad look like a news story, we can different fonts. On the Web [TALKOVER].

RJ: As if that really takes care of it.

Q: It’s part of it. We can’t even do that on the Web.

RJ: I’m flashing back to a panel I was on seven or eight years ago now. Early days of the Web. And it was a bunch of print newspaper editors, this was, as I say, early days of the Web. And they were saying, “How can we trust the Web? You can’t distinguish advertising from editorial content.”

And I finally — usually I’m pretty good-natured about that kind of thing — but finally at one point I said, “Now, let me ask you guys a question in the audience here. You’re all newspaper editors. How many of you have, in your Sunday papers, automotive sections that carry headlines like ‘New Lexus Sets New Standard of Comfort, Value’ or ‘Luxury, Value’?

“And now let’s flip over to your to your real estate page. ‘New Ryeland Homes Community Sets New Standard of Luxury, Value’.” And by the end of the conversation, people were kind of looking down. The issues are not unique to the Web. They have to be addressed differently. But in other media as well, including the established medium of most daily newspapers.

In the last panel, Len was mentioning the New York Times Automotive Section, which is a shining exception to the rule, because there’s real journalism on that section. But, boy, you know, in what — I’m being charitable by saying only 75 percent. Probably closer to 95 percent of other papers, when you flip to the automotive section, you’re getting advertorial content, where it may or oftentimes may not be clear that that’s what you’re getting.

KW: If you go a step further into television, local television markets. One of the interesting things that I’ve been hearing about on these panels is where newspaper and TV Web sites are combined, their respective editorial standards suddenly come into conflict.

Two sites that I’m aware of, one in Oklahoma, and one in Tampa, Florida, have had this issue around health content. Where the local TV station has a relationship with a group of hospitals that provide essentially advertorial content, and have the expectation that they’re going to be able to run that on their Web site under a section labeled “Health,” and so forth. It’s an anathema to the print side, but the two worlds collide.

RJ: So who wins?

JG: I could predict.

KW: I think actually it turned out that, the two that I’m aware of, in Tampa, the newspaper folks won, and in Oklahoma the TV folks won.

JG: Ethical entropy.

RJ: Just to add one other level — and I don’t know if you all think this is relevant or not — but we’re also at a time of media conglomeration, real issues around media ownership, and issues like Fox News taking out big ads saying “Fair and balanced,” and the rest of us wondering if maybe they’re protesting a bit too much.

The whole Clear Channel radio controversy, all of this. We could really be in an era where the whole credibility of news as news comes under question. And I think in that kind of context, just being that much more careful to maintain the credibility of really credible sites, newspapers and TV stations becomes that much more important.

JJ: I would just say that there are two things happening. The first, I think Rich mentioned it, was the idea that what’s old is new again. Go back to Texaco Theatre or whatever the case may be, all the way back when. We’re back there again, when you look at what television is doing with Coke and [INAUDIBLE] in “American Idol.”

The other thing is, advertising is evolving, and I think publishers and advertisers and agencies that don’t evolve with it or help it evolve will be left behind. There’s no doubt about that.

This is a very interesting execution. Lexus teamed up with MSN, and basically, I think, brought their entire positioning and brand promise, which is about luxury, to life. And so they created this luxury for living cyclet or resource in a sense.

I don’t know that there is anything there that explicitly says, “This is what it is, this is what it isn’t.” But the fact is that Lexus’ collateral drives you here. There are ads that ultimately drive you here. And you end up with editorial that comes from many of MSN’s assets like Slate on, MSNBC, etc. So there was an article on SARS [severe acute respiratory syndrome] up there a second ago. And kind of subtly integrated Lexus branding and calls to action.

But this is, you could call this Madison & Vine brought to life on the Web. I think it’s smart, and I think you’ll see more of this. And I wouldn’t write this off as any form of blur just yet.

KW: Is this any different than the sponsored archives? What is the basis for justifying an advertiser being able to make selections of editorial content? Archived editorial content presented in something akin to an editorial wrap?

JK: I think it’s different, because we clearly say it on every page, that these articles are not chosen by staff of New York Times. So it’s pretty clear that it’s not there. MSN itself may say that MSN is not an editorial property, which it is not. It’s an ISP [Internet service provider].

And they pull from other areas. So for them there’s no line to cross, because they just don’t have a line.

KW: But they’re lending Slate content and MSNBC content to the — I guess I would go back to my original question, which is: Is that full disclosure? That is, the thing that allows you to justify the archives sufficient, or does the reader overlook it?

JJ: Could this have been Lexus.nytimes.com?

JK: If it didn’t look like our pages, and we said it was not written by [TALKOVER].

JJ: It’s kind of like this, maybe without the MSN —

JK: It would have to say, “This is not NYTimes.com. material. These articles are not chosen by NYTimes.com editors.” We put those disclaimers on [TALKOVER]. We allow people to reprint New York Times articles. Absolutely. We sell those. There’s a whole lucrative division of the New York Times called News Services that sells New York Times articles.

You sign a standard waiver of how they’re going to appear. And we would look at this, and Len would look at this. We’d see how it feels like. What else are they doing? How are people getting it? That’s the biggest piece of this. How are people going to get here? We would only drive people to this from advertisements on our site, not from editorial referrals.

JJ: I would just add, in fairness, this comes back to the point that I raised earlier, which is there’s a big difference between news and content, and in this case Jason’s right. MSN is not a news organization or content provider per se. And so this becomes a little bit more palatable and acceptable.

Q: But except the same guy who oversees news at MSN oversees it at MSNBC and oversees it at Slate. Does that change your — ?

JK: I don’t think that’s true, but if it were, then yeah, they would have to — well, yes, I guess, at the very top. It’s all Bill Gates, right?

Q: And us it’s all [INAUDIBLE]. He oversees everything.

JK: It’s the publisher, right? Business side and news side come together at a publisher.

Q: He oversees advertising sales and he oversees news on my site and on the paper’s site. [INAUDIBLE]

LA: I think Jason would agree with this. We probably drive the [INAUDIBLE] unless it’s crazy enough that they would say [TALKOVER].

JK: Or Len would drive me crazy first.

JG: At the risk of being slightly controversial, but since I did hand out a bouquet to the Times earlier, I have to say that while the “Laramie Project” page that you showed probably gives me less pause, what I think was a precursor site, the promotional site for “Lord of the Rings,” the first movie, made me queasy.

It was similar in concept, but it included editorial content, quasi-editorial content from Miramax or whoever it is that makes the “Lord of the Rings” movies. And I was critical of that.

JK: It made us queasy. That’s why we got better at it. We got better, we do these more, and this is what the result was. Because we firmly believe in experimentation.

LA: The latest one was “The Hours.” Then there was one [INAUDIBLE] television movie.

JK: We had “JFK” as well, which was one of the recent, but “The Hours” was the most recent.

LA: We’ve gotten so good at this now that when we do it, nobody comments on it.

JK: And we wouldn’t have been able to do it if we didn’t try that first one. And we heard it. We agreed. We looked at it after we put it up. We said, “Okay, what are we going to change next time?” People were ready.

RJ: Is there a big difference, do you think, between restricting it to reprinting archives versus having any original content that might be sponsored?

JK: Yeah, the sponsoring of original content or the “Brought to you by” is not, we haven’t come to [TALKOVER].

LA: I would just like to say one thing. Perhaps I’m naive about this, and Jason, would there be an article page with a half-page ad on it?

JK: It depends. If he didn’t lie on his registration.

LA: The only reason why I point this out, it’s just a fair point to make. We won’t survive by constantly saying no to advertisers. But what we are trying, what I try to tell myself we’re trying to do is [TALKOVER].

JK: Look at this. This is something that can turn pure advertisements. You say, “Do people know it’s an ad that’s coming up?” We put everywhere: “It’s an ad, you could skip it, you could do this, you could wait.”

[TALKOVER]

JJ: That’s not a whole page. So you’re doing full-page as well?

LA: This is [TALKOVER]. My only point is that there’s a twofold — there you go; there’s a half-page ad. There’s a half-page ad; we liked it. We introduced it a week or two ago. Forbes is going to follow it. CBS MarketWatch is following it. Jason, maybe there’s another —

JK: The PostThe Post is going to follow it.

LA: This was, by the way, very popular in the newspapers in this room. This is very much a newspaper ad design sensibility.

But what I was in favor of this is, it was better than what we had on the site on a couple of different levels and, two, it gave the advertising creative people more of a canvas to work with. We complained that there all-stars were out doing Web-created. They complained we didn’t give them enough space.

So we said, “Okay, we’ll come back with an alternative.” And the method to our madness here was to try to create an environment that raised all of advertising on the Web. Maybe we will, maybe we won’t. But the idea is not only to make MCI more comfortable coming in here and doing some creative through its agency or whoever did this, but maybe we want to also attract some other major advertiser that we would like, who has otherwise been turned off to the Web. One that thinks it’s all a lot of noise and banners and skyscrapers and Googles and clicks, and all sorts of garbage that’s distracting.

JK: We forced the agencies and technologists to come up with the things that fly across the screen, because in the first five years, all we were doing was giving them this size space to add text in. So we created that.

KW: Let me ask Joe to look at it from the advertisers’ perspective. Because we’ve debated, internally in our shops, whether or not to follow this. And there’s some debate as to whether this is really going to work as a unit for the advertiser. This particular layout. Editorially, I would agree with you.

Q: I was concerned with the “Laramie Project” archives. One, how did that come about? Whose idea was it, theirs or yours? Second, what was the reaction to it? And third, have you done anything else like that? Archived material that was relevant to a particular [INAUDIBLE]?

JK: We’ve been doing these for seven years, micro-sites. We did one with Maxwell House seven years ago. We’ve been doing these where we work with clients and produce something that’s a little bit different than their Web site, a little bit different than our Web site, but we can promote it through our Web site.