How ElectNext found its native ad groove

By Erin Griffith , written on October 14, 2013

From The News Desk

When New York startup ElectNext launched, the company's goal was simple -- become a Crunchbase for politicians. The company built political baseball card which tracked the voting records and beliefs of political figures. News outlets could embed ElectNext's stat cards into their stories to provide more context for the players mentioned.

It was a cool idea, but not necessarily a cool business. Publishers saw the data as "nice to have," but not "need to have." The ElectNext widget took up space on the page but it wasn't earning publishers any money. Likewise, political groups liked the tool, which helped them to follow the most relevant news, but really wanted help responding to breaking news.

Even readers didn't quite love the data, because it didn't have enough relevant context. Sure, it's great to know that a certain politician voted a certain way, but that data point alone doesn't replace good old-fashioned analysis done by a human.

Thanks to some early fundraising ($1.3 million from Brooklyn Bridge Ventures, Liberty City Ventures, Comcast Ventures, Digital News Ventures, Knight Foundation and Investor's Circle), ElectNext had the luxury of doubling back and reworking its product. The company debuts the results of that revamp today, which founder Keya Dannenbaum says solves all of the problems its first iteration faced -- revenue, responding, and relevance.

The answer (as it seems to be for all digital media companies these days) lies in native ads.

It's called Featured Perspectives. The tool allows political advocacy groups to purchase space inside the ElectNext widget, where they can express their responses to the news. It is as if a news site allowed sponsors to pay to post in the comment section of a story. Currently Featured Perspectives have varied prices and revenue splits, but early users are paying $500 each, 40 percent of which is shared with publishers.

The goal is to give political organizations the opportunity to ride the news cycle -- they can respond to issues as they're being discussed in the news. And they get a bit of brand lift as a result of being vocal and visible on certain issues, Dannenbaum says. Perhaps more importantly to ElectNext's bottom line, publishers can generate premium revenue on their articles. "Publishers are aware there is a whole lot of money in politics, and a new precedent for how much is spent each cycle online," she says. "They're asking, 'How do we capture some of that in a way that preserves our integrity?'"

Which brings up the biggest knock against native ad units: They blur the line between editorial and advertising, which confuses the reader and is bad for journalism. Dannenbaum says she's seen no pushback from publishers because the ElectNext Featured Perspectives unit is explicitly delineated from the content. "There is usually a line on the page and that's where our content lives," she says. "It's marked 'Sponsored opinion' or 'Sponsored content.'"

Here's a recent example: The governor of Pennsylvania recently made comments comparing same-sex marriage to incest. Human Rights Campaign, an LGBT advocacy group, responded to the article about his comments with a Featured Perspective.

ElectNext has been running the product in beta-mode for the past four weeks with and two political organizations. The organizations purchase featured perspectives around twice a week. Here is another example related to school reform featuring two featured perspectives from opposing side of the debate. (ElectNext may win lots of business this way -- if your opponent is suddenly given a voice on news outlets, you better be there speaking up, too.)

Lots of startups are experimenting with native ad units, to varying degrees. The second-biggest knock on the category is that it doesn't scale easily. At BuzzFeed, for example, the company requires an editor to write each sponsored list. But self-serve platforms like that of Twitter, or Facebook, and, as of today, Foursquare, take out the human middle-man. ElectNext aims to get to that point too, though it currently customizes the embeddable units for its publishers.

Not every native attempt automatically turns to gold. New York startup Urtak built a slick polling tool that hundreds of publishers like Sports Illustrated, Mashable and InStyle implemented on their sites. The company planned to sell native ads within the polls, essentially making them sponsored. It didn't catch on and Urtak shut down last month.

Dannenbaum says that ElectNext will avoid common native advertising pitfalls because it is offering content that's totally dedicated to the "conversation" around an article. "It's designed to be a single continuous experience," she says. "It's not yet another content unit that is attached to the article."

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