In Depth

Longform Ads Pull in Revenue but Raise Ethics Questions

By Jon Lafayette

The package is presented like something you’d see on the local news rather than like a traditional infomercial. Sometimes it resembles a lengthy feature story; other times it’s an interview with a local doctor or businessman, or a roundup of local tourist destinations.

But if viewers listen closely and pay attention to the disclaimers, they’ll realize that they are being pitched a product or service in programming that’s paid for by advertisers.

Such product placement deals are being used increasingly to raise revenues for TV stations pinched by the recession. But they’re also raising questions about ethics and preserving the credibility of local newscasts.

“Sponsorships are problematic for all sorts of newsrooms, not just broadcast newsrooms,” said Kelly McBride, ethics group leader for the Poynter Institute, who stressed that stations ought to have clear policies to avoid the appearance that they are selling their content.

But while most broadcast executives say there’s a clear line at their station between news content that can’t be bought, and other programming that incorporates paid messages from sponsors, “from the audience perspective, it’s very hard to tell the difference,” McBride said. “They assume the worst.”

Last year, KRON-TV in San Francisco caught a lot of grief for airing paid advertising segments. Mother Jones magazine described the segments as having “the look and feel of a real news-talk show, complete with a news ticker scrolling past underneath and Chyrons [the graphic tags that identify the person speaking] that are pretty much indistinguishable from those you’d see on regular news segments.”

Brian Greif, the independent station’s new general manager, said that its move into locally produced paid programming has “added quite a bit of revenue across the group, and at KRON it’s a significant part of what we do now. It’s been a success.”

Greif said KRON views paid programming as a premium product, so it asks more for a 2-minute paid segment than it would charge for four 2-minute spots, but he said the station did not have a specific rate card for the segments.

As a former news director and VP for news at KRON parent Young Broadcasting, which is working its way out of bankruptcy, Greif said he may be more sensitive to news values than other executives. Because of that, the station has “made a number of adjustments over the years to make sure that it fits not only the needs of the advertisers but the needs of the viewers as well.”

For example, he’s phasing out the use of news talent in the paid segments. Former weekend anchor Vicki Liviakis, who hosts commercial segments “Medical Mondays” and “Living Green,” no longer does news, focusing instead on the commercial production side. Two other medical segments continue to be hosted by morning anchor Daryn Folsom because her participation was part of the contract.

KRON continues to experiment, using audience feedback to gauge what viewers feel is acceptable, Grief said. The station also makes sure that it is more than complying with Federal Communications Commission rules regarding sponsorship and payola. Noting that product placement is skyrocketing, the FCC is considering comments about changing its rules for sponsorship identification and embedded advertising.

Greif added that local rival, NBC-owned KNTV, had hired away one of his commercial producers and has begun airing similar programs. KNTV President and General Manager Rich Cerussi declined to comment.

While stations try to draw a line between news and advertorials, sponsored segments are popular with some advertisers precisely because of the positive rub-off they get from the station’s news credibility.

“Because they have a reporter that comes out and actually does the segment, it’s almost like having an endorsement from a radio disc jockey,” said Julia Tyndall, marketing manger for La-Z-Boy Furniture Galleries of Atlanta, who last year appeared on “The Daily 2” segments at the end of newscasts on Cox-owned WSB-TV in Atlanta, touting the store chain’s home design service.

Shannon Walshe, a former anchor at the station now doing some of its infomercials, interviewed her.

Tyndall said La-Z-Boy spends about $50,000 a week advertising on WSB and that the “The Daily 2” segments cost an additional $2,500 to $3,000, including production expenses. The spots resulted in people calling to make appointments and a noticeable increase in Web site hits coming to the stores from online apps on wsbtv.com, the station’s site.

As far as John Friedmann, sales manager at WSB, is concerned, “there’s no news involvement at all,” in “The Daily 2.” “It’s got its own open and close, so basically it’s a 2-minute program unto itself.” The segments are not even introduced by the news anchors, he said.

The 2-minute WSB segments, which run following the newscast at 12:56 p.m. Monday through Friday and 8:56 a.m. on Saturday, are proving popular. Friedmann said that after a slow start, “The Daily 2” began gathering traction. Now there’s a sponsor for the segment every day.

“I think it’s exceeded everybody’s expectations, Friedmann said.

Media General’s WSPA-TV in the Greenville-Spartanburg, S.C., and Asheville, N.C., market, has been creating local shows that rely on product placement to replace syndicated programming. The shows, including “Seen on 7” and “Your Carolina,” are produced by a programming department that is staffed separately from the news department, according to Phil Lane, VP and GM of WSPA.

Viewers shouldn’t confuse these shows, which tell viewers about products for sale and where to buy them, with the station’s top-rated newscasts, Lane said.

“There’s an obvious distinction between the two. It’s not done on the news set; it’s not done with news anchors,” Lane said. One show is shot in downtown Greenville at Michelin on Main, a museum/retail location where the station has a high-definition studio.

“It was our idea from our staff as a way to control costs, save jobs and fill a need for local content and local programming,” he said. The economics are compelling. “It’s a significant savings from what we pay for syndicated programming.”

And it generates more revenue because the station can sell more commercial inventory.
“It’s a win-win on both sides,” Lane said.

The trend is also beginning to attract national advertisers. Kevin Gallagher, executive VP and local activation director at media buying agency Starcom, said he’s put together some deals for clients and expects to do more this year.

Stations are “willing to be more creative in an effort to compete for those limited dollars that the clients have and bend the rules or even break the rules that maybe existed before,” Gallagher said.