Deloitte And Wall Street Journal Exclusive For Sponsored Content

Your favorite newspapers, magazines and blogs are so hungry for content to fill their pages that sometimes, rather than paying their own writers to produce text, video, and other journalism those publications take money from strangers to print their content instead.

You may not have noticed. It’s getting harder and harder to discern journalism from newsy advertising.

You may know it as advertising or maybe “advertorial” but publications are slipping it in under new fancy media names like “sponsored content” and “sponsored posts”. There’s an entire publication called paidContent that promotes the approach as a way for media organizations to pay the bills.

The Wall Street Journal has been accepting sponsored content, in an exclusive contract with Deloitte, for its CFO Journal, CIO Journal for a while and now will feature Deloitte’s content in a new publication, Risk & Compliance Journal.

I have not seen that reported elsewhere.

A recent controversy over “sponsored content” by Scientology in the Atlantic magazine raised the temperature of the discussion amongst media watchers to “hot”.

A critic of the practice, Andrew Sullivan, wrote about what he thinks went wrong with the Atlantic’s foray.

“Obviously sponsored content from Scientologists, with Atlantic employees systematically removing negative comments, is self-evidently awful.

But I have to say I tend to agree with Pareene: why is the Church of Scientology more objectionable as “sponsored content” than, say, Shell or Intel or IBM? Here’s a video entirely provided by Shell:

This is corporate propaganda, not journalism. Yes, it is identified as such – but on the video page, actual journalism by brilliant writers like Alexis Madrigal is interspersed with corporate-funded propaganda. You can easily mistake one for the other.”

Now paidContent reports that the venerable Washington Post is going to try sponsored content to plug its revenue gap. Why?

“Like virtually every other traditional media outlet, the Washington Post has been squeezed hard by the decline in print advertising revenue and the inability of digital ad revenue to fill that gap. Unlike almost every other outlet, however, the Post has resisted putting up a paywall (for now at least) and instead has been experimenting with other methods of monetization.”

Forbes, where I write online and for the magazine, believes in the approach. (No, they still pay me. I don’t have to pay them to write about accounting and audit.) The Forbes BrandVoice platform is similar to what the Washington Post plans. The challenge for readers, according to paidContent is that, “marketing or advertising-driven content from brands is given more or less equal prominence to that created by editorial staff, with the appropriate disclaimers. Corporate bloggers at Forbes have the exact same platform that a staff blogger does, with all the same tools.”

Jack Shafer at Reuters, another critic of Forbes, in particular, addresses the concept of sponsored content as “thought leadership”:

“Lewis DVorkin of Forbes, an early promulgator of sponsored content, continues to bang his drum for it. He claims 20 partners (SAP, UPS, Harris Bank, et al.) for Forbes‘s “BrandVoice.” It’s enough to make you barricade yourself behind Orwell’s collected works when DVorkin approvingly quotes his chief revenue officer’s quip about BrandVoice: “It’s not an ad, it’s thought leadership.”

No, Lewis. If money moved from the client’s hand to that of Forbes, and Forbes posted the client’s copy, it’s an ad.”

Last October, the Wall Street Journal wrote all about the phenomenon, featuring the tactics of another online publication, BuzzFeed.

“Sponsored online content, which blurs some of the traditional boundaries between advertising and editorial, isn’t new. Gawker Media introduced sponsored posts in 2009 in the stream of its regular blog posts. Forbes.com and Huffington Post also have introduced similar advertorials.

Facebook Inc. recently introduced its own form of social advertising, also called sponsored stories, which show up on a user’s Facebook page if a friend “liked” an advertiser’s brand. Facebook Chief Operating Officer Sheryl Sandberg called sponsored stories the “cornerstone” of Facebook’s advertising strategy.”

What The Wall Street Journal didn’t say back in October and it seems no one else has yet reported, is that that paper has been getting paid by Deloitte to publish the firm’s “thought leadership” for a while.

A press release yesterday from Dow Jones, parent company of The Wall Street Journal and a subsidiary of Rupert Murdoch’s News Corp, announced a new addition to the “exclusive” relationship.

“Deloitte LLP has an exclusive arrangement to provide a sponsored stream of content written and compiled by Deloitte LLP, including topical digests, research, insight, and analyses, covering the growing number of risk challenges C-suite executives and board members must manage.

“We look forward to this opportunity to contribute to the discussion on the many risk challenges executives and boards wrestle with in today’s environment–from how to incorporate risk into corporate strategy to managing risk for both value creation and protection,” said Henry Ristuccia, partner, Deloitte & Touche LLP, and Global Leader, Governance, Risk and Compliance Services, Deloitte Touche Tohmatsu Limited.

Deloitte LLP also has a similar exclusive arrangement to sponsor a regular stream of content for CIO Journal, which launched in 2012, and CFO Journal, which launched in 2011. The Wall Street Journal news department is not involved in the creation of the content stream sponsored by Deloitte LLP.”

The Wall Street Journal is fully aware, I’m sure, of all the trouble, Deloitte US and its foreign member firms under its Deloitte Touche Tohmatsu international umbrella firm have gotten themselves into just in the last few years alone. In fact, The Wall Street Journal has a full time accountancy reporter, a very good one.  Michael Rapoport has  to write about Deloitte quite often. But Dow Jones, like Thomson Reuters, also has a software and services arm for “governance, risk, and compliance” tools for corporations and Deloitte is very active in providing GRC services, most recently to JPMorgan in the OCC/Fed foreclosure review situation. So that’s the rationale, I’m sure, for the business alliance.

I told a meeting of the American Accounting Association-Audit Section recently:

In April of 2010, soon-to-be retired CEO of Deloitte Bill Parrett – whose post-retirement gig on the board of Deloitte audit client Blackstone Group was announced before his retirement was final – told a reporter at the Toronto Globe and Mail:
“…there are limits to what an auditor can detect – and those limits often fall far short of what investors expect from the process. “We’ve always had this expectation gap between what the auditor really can do and what the investing public wants the auditor to do, or wants the audit to represent,” he said.

This is the same Deloitte that was, at that time defending itself against several lawsuits, including their own version of the global network challenge related to the Parmalat fraud, as well as experiencing declining revenues and loss of clients for the first time in several years. Of the Big 4, Deloitte, I think, lost the most Fortune 100 audit business as a result the financial crisis – Bear Stearns, Washington Mutual, Fannie Mae, Taylor Bean & Whitaker, Merrill Lynch, American Home Mortgage, and Royal Bank of Scotland, are a few of the major financial institutions audited by Deloitte that failed or were bailed out via forced acquisitions or nationalizations during the crisis.

Deloitte is the same audit firm at the center of the Chinese reverse merger fraud scandal and the dispute between the firms and the SEC over access to auditor workpapers in China. This is the same firm that was the first Big Four ever to receive a “pass with deficiency” grade on a peer review and to have its Part II report publicized by the PCAOB because of stubborn intransigence over acknowledging, let alone fixing, audit quality issues cited by the regulator during the crisis period.

It’s hard enough to figure out from most media reports whether Deloitte – or any of the auditors – acted as an external auditor, internal auditor,  a technology or GRC consultant, a tax advisor, or an M&A due diligence accountant when stories of the firm’s failures and screw-ups make news. The Big Four global public accounting firms are many times referred to, no matter which role or responsibilities they have in a particular engagement, as “accountants”. Readers of The Wall Street Journal news sections directed at CFOs, CIOs, and Risk and Compliance managers will now only hear Deloitte’s voice telling them how to do their job well.

That, to me, is highly dubious.

Update: Late this afternoon, Wall Street Journal spokesperson Sara Blask pointed me to announcements that were made at the time of the CFO Journal and CIO Journal deals with Deloitte. “In both releases we were very transparent that Deloitte is/was sponsoring its content stream.”

I am not implying WSJ/Dow Jones has not been transparent about its dealings with Deloitte, only that Deloitte is a poor choice as “thought leadership” content partner.