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Pulse News App Bets the Farm on Sponsored Content

In the era of brand journalism, we talk a lot about “editorial”, “earned” and “sponsored” content–and the respective value of each. Now, leading news app maker Pulse plans to turn the dominant revenue model on its head by relying exclusively on sponsored content for its advertising dollars.

It’s a bold move that reflects the growing influence of branded materials as the line between PR and editorial grows ever fainter.

The company’s primary rival, Flipboard, made headlines as the first app to bring “glossy print-style ads to the iPad”, and Pulse just made a big move in the opposite direction. Their explanation? Mobile is a brave new world for brands, and betting on the success of traditional banner-style promos would amount to “short-term thinking”—however tempting it might be in the moment.

The fact that big-name publishers began pulling their full-page ads from Flipboard this summer strengthens Pulse’s case, because the publishers who dropped out mentioned the downsides of sharing revenue with a third party and noted that they would make more money with traditional banner ads. They also believe that, by partnering with Flipboard, they are discouraging readers from using their own sites and apps.

Publishers who work with Pulse don’t just get increased exposure; they also get a cut of the ad revenue earned “if a sponsored post runs within their content feed or if they bring the advertiser to Pulse”. The fact that advertisers pay on a “cost-per-read basis” is undeniably appealing as well.

While Pulse co-founder Ashkay Kothari acknowledges that traditional banner ad models provide more in the way of immediate profits, he claims that the company now brings in “more than $300,000 a month strictly off inbound interest”—and that this total will only continue to grow as the mobile model becomes more pervasive. Popular sites like BuzzFeed already rely heavily on sponsored content.

To us, this story looks like more evidence of a shift in the relationship between traditional journalism and PR. What do we think—will Pulse’s sponsored content model work? What sort of new opportunities might it provide to savvy brand journalists?

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