Publishers are expanding their content studios to do more agency work

“If we don’t do it, somebody else is going to do it,” Dotdash CEO Neil Vogel said. “I am not interested in building a content studio and working on one-off, white-label products. But we’re particularly adept at this.”

Many publishers that got into branded content to diversify revenue and get closer to advertisers now find themselves handling a double-edged sword, with a growing number of advertisers asking them to produce content for use outside of publishers’ properties — or without mention of the publisher. That puts the publishers directly in the agency business.

Some publishers, including PopSugar, have embraced this opportunity, adding entire agency services divisions to their businesses. Others approach white-labeling with more caution, seeing a lower-margin business with different economics that potentially cannibalizes the branded content businesses they are building.

“We’re naturally becoming more than a content studio,” said Annie Granatstein, the head of WP Brand Studio, The Washington Post’s branded content operation, which has mostly eschewed white-labeling. “So naturally, they start coming to us with questions that are deeper than just a campaign.”

Brand requests for white-labeling are relatively recent and tend to represent a small slice of publishers’ revenues. PopSugar CRO Geoff Schiller said these services, which PopSugar began offering about two years ago, represent a single-digit percentage of his company’s revenue, though it’s more than doubled year over year.

Brands’ appetites for digital content have been growing steadily for years. But just as many brands have struggled to attract the talent necessary to bring marketing in house, they’re often turning to publishers to create it, particularly those they already have relationships with. That’s partly because they have had trouble attracting people who can do this.

“Digital is the most pervasive, mobile and low-cost way for [brands] to touch their audiences daily. But they need fresh, original content to do this, or they get stale,” said Ken Pasternak, the managing director of Marshall Strategy. “The white-labeling trend you’re seeing tells me many brands prefer to buy it rather than build it.”

Publishers are hesitant about white-labeling because it’s often lower-margin than branded content programs that include media.

“Our business models are based on distribution,” Granatstein said. “The profit margin is based on the media buy. If we’re not distributing the content, we’re not promoting the content [and then] we have to completely rethink everything about the business.”

Whole new teams can be needed. PopSugar, which has done everything from creating white-labeled content for advertiser-owned websites to producing episodes of broadcast television on a white-labeled basis, hires contractors depending on the client needs. Working with brands repeatedly makes it easier to do these programs efficiently. “Margin is an evolution,” said Schiller. “The more clients we take on, the easier it’s been to get more efficient.”

In other cases, a publisher will serve brand’s white-labeled content needs through a larger partnership. Last month, Refinery29 launched The29th, a London-based creative consultancy. Kate Ward, Refinery29’s evp and head of international business, said among the services The29th is providing its first client, Walgreens Boots Alliance, is white-labeled content.

Organizational headaches aside, it’s not a given that white-label work cannibalizes branded content or other kinds of media sales. Schiller said that, in the two years that have passed since PopSugar launched its agency services business, the clients it has worked with have all increased their branded content investment at least 200 percent.

And by limiting white-labeling projects to brands they already do a lot of business with, many publishers see a chance to pursue it opportunistically. “I’d rather us compete with us,” Vogel said.