Why Axios Is Betting Big on Native Content, Sponsored Events and Branded Newsletters

Industrywide, native advertising has proven to be a challenge

The company is looking for other sources of revenue, beyond programmatic ads.

Roy Schwartz thinks programmatic “butchered” digital banner advertising, which is why you won’t find any banner ads on Axios, the news website he co-founded nearly two years ago.

Instead, Axios, a scoopy, horse-race-obsessed news site made in and for the so-called swamp of Washington, has hedged its bets on native content and brand-backed events.

Schwartz is the former chief revenue officer of Politico, and he, along with ex-Politico stars Jim VandeHei and Mike Allen jumped ship from the publication in 2016 to launch Axios, a publication that has similar offerings to Politico’s but whose tagline is “smart brevity.” (Full disclosure: this reporter was once employed at Politico, but never worked with Schwartz, VandeHei or Allen.)

After officially kicking off editorial operations in January 2017, the news outlet, which declined to provide revenue information to Adweek for this article, is, according to some reports, on pace to double its revenue to $20 million by the end of 2018.

“In the last couple of years there’s been a move towards more brand content—not to move products specifically, but to talk about the company, talk about what they’re doing and the way in which they’re making their mark in the world,” Schwartz said. “I think brands are now realizing that it is [something] they have to do, and they want to be in an environment that is brand-safe when they’re doing it. All of those things have worked in our favor.”

This year, the website has had its fair share of scoops in tech and politics. It’s also faced a barrage of criticism after one of its journalists, in a promotional video for a four-episode HBO series, appeared cozy and uncritical toward President Donald Trump in an interview during which Trump suggested ending birthright citizenship. The site’s approach to journalism has also been the subject of intense scrutiny.

The benefits of native ads

Scandals or not, though, Axios is growing, and its 137-person team is looking to fill nearly two dozen additional positions at the company. Axios’ branded content team, about 10 people strong and hoping to grow by two, works on short-form native ads that appear on Axios’ website or in its stable of newsletters.

Those native items, which have featured messages from brands like AT&T, Anheuser-Busch and Facebook, borrow the formatting of Axios news bulletins—headline, image and a short block of text—and take up the full screen of a mobile device when they appear in newsletters or on the website. Axios says its short-form native ads have engagement rates that are, on average, four times that of a traditional banner ad, and Schwartz is quick to compare Axios’s native ads to social media advertisements.

“For the reader, you have complete control,” Schwartz said. “For the advertiser, we’re giving you the exact same real estate as our [news] items. No crappy resolution, not off to the side, not smaller, not hidden. You are getting the entire frame of the phone and having an opportunity to interact with our audience.”

Industry-wide, native advertising, once touted by some believers as a saving grace for a struggling industry, hasn’t paid out evenly. BuzzFeed somewhat famously swore off programmatic ad placements upon first launch, but eventually buckled under pressure and introduced them to the site in 2017. Native advertising, too, has been criticized for being harder to scale than programmatic display ads.

Schwartz is unfazed. “It is definitely not as scalable as a banner ad,” he acknowledged, “but we think it’s a lot more scalable than long-form native.”

A major area of real estate for Axios’ native content is within its stable of 17 free email newsletters, which Axios said adds up to more than 1 million subscriptions total. (Because many of the same people subscribe to several Axios newsletters, the newsletter readership is more like 355,000.) The open rate across the newsletters averages about 45 percent, according to the company, and newsletters are sold on a weekly basis, costing anywhere from $10,000 and $150,000 depending on the newsletter. Companies like Bank of America, Boeing and Morgan Stanley have all sponsored Axios’s flagship newsletter, Axios AM.

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