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.
Other brands choose instead to run short-form native articles on Axios’ website, which saw 11 million uniques visitors in October, according to comScore. Native placements on Axios’ site, which appear in-stream in between Axios’ articles, are sold on a CPM basis, Axios said. One media buyer who spoke to Adweek said two pieces of native content on Axios’s website carried a price tag of between $80,000 and $100,000.
Natalya Namts, the associate director of digital investment at Mindshare North America, said one client she worked with used both newsletter sponsorships and native content posts on the site to good effect.
“They index well against policy makers, and have the ability to distribute branded messages from advertisers via their newsletters and on their homepage,” Namts said. “That said, you have to look at the competitive set they’re in. They’re competing against publishers such as Politico and The Washington Post, which have a larger scale and similar offerings. The biggest challenge for them moving forward as they compete for more ad dollars is going to be that question around scale.”
A growing events business
Then there’s Axios’s events business, which gives brands signage and short commercial break-like videos that play for event attendees in between editorial interviews and panels conducted by newsmakers and Axios journalists. Axios has hosted three dozen events in 2018, all but one of which were branded, a spokesperson said. Those sponsored events start with a price tag of around $75,000, which increases depending on the size and type of event.
The events sometimes give the branded team a place to create native content that later runs on the site. Verizon, for example, sponsored a breakfast event in Los Angeles, and 24 hours later ran a series of native news items from the event created by Axios’ branded team. Verizon plans to work with Axios again in 2019, said Lauren Tilstra, Verizon’s head of executive communications.
Noah Mallin, the managing partner and head of experience, content and sponsorship at Wavemaker, said Axios is an attractive buy for some of his clients who are in highly regulated industries or who rely on government contracts.
“For them, Axios makes some sense because their audience is studded with people who are decision-makers,” Mallin said. “The challenge is that news tends to draw specific types of advertisers, and Axios does more than anybody else, because they’re so focused on the political junkie.”
Other clients are waiting to see what Axios’s scale will look like before getting on board. One media buyer with knowledge of Axios’ offerings said they had taken a wait-and-see approach, particularly because Axios hasn’t yet reached the scale that makes sense for their clients.
It’s unclear whether Axios is profitable, but the approach Axios has taken highlights some of the ways in which publishers have pursued business models that don’t primarily rely upon the increasingly fickle world of traditional digital display. As platforms like Facebook and Google increase their dominance in the digital ad space, many digital publishers have invested in alternate revenue streams, breaking into the events business, pursuing content deals with television and streaming services, or investing in video content. Still others are building out subscription offerings and membership programs.
Axios, for its part, has indicated interest in a high-end subscription offering, but that plan “remains on the shelf,” Axios’ spokesperson said.