Priceonomics

If you read articles and blog posts online, you’ve noticed them. Below the article, in the space where publishers often link to additional articles, are links to an odd mishmash of content. Under cryptic headings like “Around The Web” or “Content You Might Like,” there are 3 to 8 headlines ranging from “10 Universities With The Richest Alumni” and “7 Basics of Linkedin Etiquette” to “Miley Cyrus’ Daring Crop Top Leaves Little To The Imagination” and “Billionaires Dump Stocks, Prepare For The Unthinkable.” 

At a glance, you might think that the social media intern has done a poor job at curating content. These links appear on the sites of prestigious publishers like Bloomberg News, Time, and The Atlantic. Linkedin etiquette may interest some readers, but does celebrity gossip about Miley Cyrus’s outfit meet The Atlantic’s editorial line?

On closer inspection, these headlines are not curated content -- at least not in the traditional sense. They are advertisements. An inconspicuous line reading “Sponsored Content” often appears next to the links, and the URLs contain a referral link placed by a marketing company to ensure that it gets paid for each click. 

The sponsored content seems mostly harmless. It’s deceptive to place paid advertisements masquerading as articles in a space where readers have grown accustomed to seeing links to articles recommended by news publishers. (By placing “sponsored content” in a spot visitors actually look at, framed as interesting blog posts, the ads are more effective and therefore worth more.) But it’s no secret that journalism could use the money. Is it that bad to nudge readers toward gossip rags and travel websites to support publications’ bottom lines?

Some of the sponsored content, however, is not so harmless. 

One common link warns readers of an imminent economic catastrophe in the guise of a news headline. It links readers to a pseudo-article titled “Economist[s] Caution: Prepare For Massive Wealth Destruction.” The article quickly transitions from an alarmist news update to one that sells readers on the idea of buying access to advice that can save them from financial armageddon. It ends with an “interview” called “The Aftershock Survival Summit,” which is very clearly meant to scare credulous Americans into buying a bullshit financial product. 

Are journalistic outfits okay with lending an air of legitimacy to these scams?

Who Says It’s Recommended for Me?

Two companies dominate the “content discovery business” of placing those ubiquitous “From The Web” and “Content You May Like” advertising widgets: Taboola and Outbrain. Both are Israeli startups that have achieved revenues in the hundreds of millions of dollars. And both espouse higher rhetoric than suggested by the clickbait readers know them by.

Taboola is the insurgent, but it seems more common among news publishers. (As we'll see, it also appears responsible for the lion's share, if not the entirety, of the scammy links placed by the two companies.) Like any good entrepreneur, its founder and CEO Adam Singolda has a founding story. After 7 years in the Israeli army, Singolda wanted to do nothing but watch television. Sitting on his couch, he made an important discovery: there was nothing good on TV.

Singolda decided it was crazy that people spend so much time creating great content, yet that content is difficult to find. As he told an interviewer, “We need a search engine in reverse.” Since people don’t Google around for entertaining content, content and information “should look for us.” That means putting content where the people are -- like at the end of articles -- so that people can easily discover it. 

That’s what Taboola does, and it also uses observations of people’s online browsing behavior to target its sponsored content -- hence “recommended for you.” Taboola allows publishers to attract new readers by placing links to their articles on other news or entertainment websites. Taboola is also extremely useful for “content marketing”: promoting websites and products through useful or interesting blog posts. To take a real example, imagine Ancestry.com promotes its product as the film Lincoln hits theaters by writing a blog post about how George Clooney and Abraham Lincoln are related. How do readers find that blog post? Taboola’s sponsored content provides an answer. 

Taboola earns a few pennies every time a reader clicks on one of its links, which it then splits with the website hosting the headlines. The 7 year-old company self-reported $1MM in revenue in 2012 and $100MM in 2013. As private companies, neither Taboola nor Outbrain release information on how much publishers can earn by hosting links. But public estimates put the upward bound at $1 or $2 per thousand pageviews. That means Time, which averaged 70 million or so pageviews a month over the last year, could make up to $840,000 or $1.7 million annually.

Adam Singolda speaks the peppy language of growing startups. In an email, he describes Taboola’s “long term vision” as creating “a better web.” Custom targeting content to individuals and allowing them to rate which Taboola sponsored content they like and dislike, Singolda says in an interview, will “bring that magic” of the personalized nature of Pandora or Facebook to sponsored content.

Many of the ads/headlines served up by Taboola (and Outbrain), however, don’t fit Singolda’s glittering image of a “better web.” Pure clickbait is the norm, which means lots of “headlines” promising revealing photos of celebrities, plenty of listicles from content farms, and no shortage of thinly disguised sales pitches. (How do cruise ships fill their unsold cabins?) Content from mainstream publishers is usually low quality, as in Bloomberg News luring readers with the headline “Scarlett Johansson’s Line ‘Too Much’ For Fox: CEO” and a picture of the glamorous actress. Or “Five Items You Won’t Believe Costco Actually Sells.”

And then there is sponsored content like the Aftershock Survival Summit. 

The Aftershock Survival Summit

The article from Bloomberg News is a solid if uninspiring piece of financial journalism. “Wall Street’s financial engineers are getting creative again,” the first line reads, before reviewing the resurgence of complex financial instruments in the real estate sector.

A headline about economic news at the end of the article -- a piece of sponsored content placed by Taboola’s algorithm -- is slightly more sensational. Below a black and white picture of former Fed Chairman Ben Bernanke, the headline reads, “Billionaires Dump Stocks, Prepare for the Unthinkable.” Anyone who clicks on the headline is directed to an “article” on Moneynews, a site that is part of conservative leaning NewsMax Media. The article begins:

Take immediate steps to protect your wealth . . . NOW!

That’s exactly what many well-respected economists, billionaires, and noted authors are telling you to do — experts such as Marc Faber, Peter Schiff, Donald Trump, and Robert Wiedemer. According to them, we are on the verge of another recession, and this one will be far worse than what we experienced during the last financial crisis.

Amid a peppering of scary quotes about American debt and a global recession that will wipe out 50% of people's wealth, the "article" shares this chart, which it claims "has been quietly making the rounds on Wall Street" and "shows a direct correlation between today’s stock market and the one leading up to the historic 1929 collapse."

The chart has two distinct y-axis labels. As The Atlantic's Matthew O'Brien points out -- in a blog post that often has a link to this Moneynews "article" -- the "eerie" similarities disappear when you look at the chart with a constant y-axis:


Source: The Atlantic

The goal of the chart, O’Brien argues, is to “scare the bejesus out of people” so that they “hurry up and invest with the geniuses who first identified this spooky pattern before it's too late!” Those geniuses won’t help people avoid a global economic meltdown, but they will charge the suckers who ask them to manage their money fees of 2% or more -- one of Wall Street’s most mundane, lucrative and parasitic practices.  

The Moneynews article has the same goal: to separate scared, credulous Americans from their money. 

It quickly introduces an interview with “investment adviser” Robert Wiedemer. The interview makes the case for a looming economic collapse and details a “comprehensive blueprint for economic survival that’s really commanding global attention.” It turns out that everyone loved the interview, but evil politicians and mainstream media “shut it down.” Luckily the good people at Newsmax are making it available!

The interview is titled the “Aftershock Survival Summit.” But it is not an interview; it is an infomercial disguised as journalism that exhorts viewers to buy Wiedemer’s new book Aftershock: Protect Yourself and Profit in the Next Financial Meltdown as well as subscriptions to Newsmax’s financial newsletters that promise “a proven strategy for turning every $50,000 into $1 million.” 

(In case you missed the conflict of interest, Newsmax is conducting an interview that peddles its own products; Wiedemer is also a paid consultant to Newsmax.)

It’s impossible to overstate what total bullshit Robert Wiedemer and Moneynews are peddling. We could start with the point literally made in the Idiot’s Guide to Personal Finance that any financial guru promising huge financial returns should be too busy raking in money to share advice in financial newsletters. There’s also the nonsensical advice Wiedemer shares, like “saving money for a rainy day” minutes after declaring that 100% inflation is just around the corner.

But the most telling sign is that, just as with any impossible sales pitch made in the sleazy underbelly of the Internet (whether it’s financial advice or “weird tricks” that allow men to “get” any woman they want), the “summit” uses every trick in the infomercial and sleazy salesmen playbook to sell its outlandish claims. 

The summit exudes false exclusivity, repeatedly promising viewers that only a small number of viewers can access this “limited time only” deal, even though Newsmax has been promoting the interview since 2011. (In fact, the summit is now so out of date that it puts the start of the financial apocalypse in 2013.) It features repetition, driving the idea of economic collapse into people’s heads for forty minutes before reaching the ordering screen. The interviewer plays at asking skeptical questions, but quickly reverts to playing along. (“You’re offering viewers an incredible opportunity, right Bob?”) And it relies on staking out extreme positions to scare viewers, but then retreating to seem reasonable. “I’m no goldbug,” Wiedemer declares just minutes after advising people to sell their homes and invest in gold.

It seems impossible that anyone is gullible enough to buy Wiedemer and Moneynews’s snakeoil. But as Adam Singolda says of Taboola’s customers, “People are only going to spend [on Taboola ad buys] if it works.” 

In 2011, CNN reported that Wiedemer’s strategy of predicting doom and gloom had created a “multimillion-dollar empire.” Publicity from a string of appearances on conservative media shows made Aftershock a New York Times bestseller. Over 1,000 people paid $399 for investment advice from Wiedemer and his colleagues and, more importantly, Wiedemer told CNN that the book brought $100 million in assets into Absolute Investment Management, where he is a partner. We do not have information on the success of the “Survival Summit,” but the continued ad buys from Taboola indicate that it succeeds at scaring people into giving money to Wiedemer and his colleagues. 

And the entire scam is set up by by publishers like Bloomberg and The Atlantic hosting the “headline,” which gives the Moneynews “article” the semblance of journalistic objectivity.

The Sponsored Content Debate

Over the past few years, the most talked about topic on the business side of journalism is sponsored content or “native advertising.” 

By hosting sponsored content that looks like any other article or blog post, publishers hope to earn sustainable revenues. So for $100,000, Buzzfeed staff will write 4 or 5 posts like its “Do Not Read This If You Are Hungry And Like Grilled Cheese” post it made for Kraft Singles. Every fifth post on Quartz is sponsored content for someone like Goldman Sachs or Chevron. And big names like The New York Times and The Atlantic have published native advertising written by the organization paying for the privilege. 

The growing practice has inspired debate. Publishers generally label the articles as “sponsored” or “paid” content, but as the articles succeed because they blend in with regular articles, sponsored content is inherently deceptive and unlikely to ever be too clearly labelled. Andrew Sullivan has criticized the practice as destroying any trust readers still have in journalism, while the Federal Trade Commission has begun to investigate whether sponsored content is unlawfully deceptive.  

The “recommended content” links placed by Outbrain and Taboola have not inspired similar conversations. 

On one hand, that might be understandable. Taboola links don’t seem nearly as deceptive as a full article. Over email, Taboola CEO Adam Singolda pointed out that companies like Facebook and Google host links or advertisements from Moneynews and the Aftershock Survival Summit. This author’s daily email from The New York Times includes ads for financial products and mortgage sites just as scammy. Is Taboola sponsored content any different from trashy ads?

But in the case of scammy ads, the difference between an ad and a sponsored link is crucial. The illusion of journalistic integrity provided by the news publishers that host these “headlines” is key to the sale of these useless financial products, scam diet pills, and shady mortgage deals. "With Outbrain Amplify," Outbrain tells customers, "links to your content appear as recommendations on the web's largest content publishers including sites like Wall Street Journal, Reuters & People.com." Bloomberg News, The Atlantic, and the other publications hosting sponsored links are not just hosting advertising for these deceptive sales pitches; they are enabling them. 

Easy Answers

So what do purveyors of these ads think about them?

Adam Singolda responded to our questions about Taboola placing dubious content by arguing that quality is subjective. Singolda also described “improving the web” as “a marathon and not a sprint,” suggesting that Taboola’s tools that give consumers and publishers the ability to curate content will improve recommended content over time. 

For those sharing this author’s opinion of the subjective value of content about Miley Cyrus’s tattoos, there’s reason for skepticism about Taboola’s marathon ending with higher quality content. In a Twitter exchange, the CEO of Outbrain conceded that links like "Sienna Miller is contrite, topless in 'Esquire UK'" is “sadly… what the audience is engaging most with.” 

Moreover, subjectivity seems a poor defense about the quality of advertorials that sell unscientific diet pills or scare Americans into buying expensive financial advice. Notably, when Outbrain decided in 2012 to invest in customer trust by cracking down on misleading headlines and business practices, it took a 20% revenue hit and lost some of its biggest customers.

But while links to Miley Cyrus slideshows may be inevitable, headlines for scammy products don’t need to be. Both Taboola and Outbrain offer publishers and other websites hosting their links the ability to control what headlines appear. Sponsored content is placed by an algorithm, but Bloomberg News, for example, can block headlines from the Wall Street Journal. Or The Atlantic can eschew all links that mention Kim Kardashian. Or any publisher paying attention can block links to the Aftershock Survival Summit. 

Why news publishers don’t take advantage of that ability remains a mystery. As publishers don’t receive a commission on any sales made after clicking on the headlines, there is no financial incentive to keep these scammy links. They can be blocked without jeopardizing the millions of advertising dollars Taboola and Outbrain provide.

In response to our inquiry, Bloomberg News declined to comment. Anna Bross of The Atlantic simply stated that the content is labelled as sponsored content and that “We use the tools provided through the Taboola platform to block inappropriate content when we see it.” Mrs. Bross did not elaborate on how often they check for inappropriate headlines or who in the organization has the ability to block content or get rid of sponsored content altogether. A representative for Slate responded similarly, although she clarified that Slate works only with Outbrain, which does seem to have more stringent quality controls. (In an email, a spokesperson defended Outbrain's quality content guidelines and stated that only Taboola is responsible for the scam links mentioned in this article.)


The question of whether to host sponsored links from Taboola or Outbrain is a difficult one for publishers. As venture capitalist Marc Andreessen expresses in the above Twitter exchange, the “Content You May Like” widgets degrade the user experience and even other advertisers’ experience. He describes it as part of a “race to the bottom” of bad content chasing bad ads chasing bad content. Of course, even if it does long term damage to a journalistic outfit’s brand and readers’ trust, it’s difficult for publishers to say no to what feels like millions of dollars in free money during hard financial times. 

But dealing with the specific case of dubious links like the Aftershock Survival Summit should be easy. Whoever at these publications has the ability to get rid of scammy headlines from appearing on their sites just needs to care enough about the rhetoric in their mission statement to block bullshit content.

This post was written by Alex Mayyasi. Follow him on Twitter here or Google PlusTo get occasional notifications when we write blog posts, sign up for our email list. Additional statements were added to this article on April 24, 2014.


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