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Global Intelligence for the Digital Transition

Native advertising: The first key steps

Most digital industry veterans are used to the idea that many innovations – particularly in online advertising – have an element of complexity. It can be a real challenge to quickly understand the technology, operations and strategic implications of the latest developments.

But this is a way in which ‘native advertising’ – a term that first appeared barely two years ago – stands out from many of the latest digital trends: it’s remarkably simple to grasp. Not that this should be in any way surprising. In fact, a cynic would say it’s just ‘advertorial’ resurrected in a digital world with an intriguing new name.

Indeed, native advertising is no wondrous innovation, resting on some form of mystical, proprietary technology such as Google’s search algorithm or Facebook’s social platform. Its origins are humble – and transparent. They lie in every digital publisher’s aims to reverse the downward spiral of banner adBanner AdBasic ad units that are usually embedded within a site, application or game and…

At the same time, publishers (think they) are addressing advertisers’ chronic concern about ‘banner blindness’ and ad blockers, as well as brands’ perennial wish to be ever more closely associated with journalistic content. Finally, more by accident and less by design, native advertising is a ‘platform agnostic’ format, in the sense that, unlike banners, it migrates seamlessly to mobile (either in a responsive design or m-optimized approach), which is where an increasing portion of publishers’ audience is moving.

Advertisers appear to be increasingly considering or endorsing the ‘native’ approach – OPA/Radar Research data show that 32% of Chief Marketing Officers have bought or are planning to buy native in the next six months – and yet the fundamental questions remain unanswered. Will native advertising prove to be a tectonic shift in online brand marketing or will it be no more than a fad, a practice soon to revert to the niche market share of the advertorial? And if it does indeed flourish and continue to rise, who will benefit most and what can publishers do to develop and sustain a competitive advantage?

The simple truth is that native advertising is still beset by scale issues which at best can be considered teething problems. First, despite encouraging steps by the Interactive Advertising Bureau, there isn’t yet any substantial or extensive standardization of formats, with the gamut running from grand custom productions at one end to simple, almost rudimentary ‘newsfeed’ offerings at the other. Second, no uniformity (or, sometimes, transparency) in pricing exists, whether this concerns fixed or variable (e.g. per article views) rates or a scale element depending on article length and/or use of multimedia. Finally, there are no commonly accepted appraisal metrics, making it difficult for advertisers to justify a major investment in an activity that they don’t know how to measure effectively.

Still, elements of native’s value are becoming increasingly apparent, especially on the consumer side. IDG Media research found that consumers viewed native ads 52% more often than banner ads (specifically, 4.1 times per sessionSession1) a sequence of Internet activity made by one user at one site. If a user…

And yet, the fact that all this was resolved as the industry developed and matured is not the main factor pointing to native’s potential. What emerges as critical is the simple fact that the giants of social media, Facebook and Twitter, have endorsed and amplified it – particularly in their mobile offerings – to the point that it is the dominant format, absorbing more than US$1.5 billion last year. In fact, the fundamental point here is that an entire new generation of internet users – those that predominantly have these social media platforms as ‘home pages’ from which they snack content, play games and communicate with their friends – are getting accustomed to this form of (often targeted) advertising and consider it increasingly a natural part or extension of their user experience.

However, if all of the above point to native advertising being a substantial trend, they do not necessarily clarify who – beyond Facebook, Twitter et al – can benefit from it. Nor do they point to a specific ‘best practice’ policy framework for publishers to implement and profit from, and that is indeed a pity as native advertising is an area where publishers could have a relative edge, given their wealth of content and the quality of their brands. In fact, an optimist may argue that, in particular, context-based native advertising could prove to be premium publishers’ answer to search advertising:  a well-placed commercial message blending naturally with an express user preference (targeted editorial content, e.g. a specific article, on the one hand, a keywordKeywordSpecific word(s) entered into a search engine by the user that result(s) in a…

The first steps towards introducing native advertising rest on three main pillars. But note that any native ad strategy should be based on an initial low-key, scalable approach. Not only because native, despite current trends, may not prove to be the game-changer that some predict, but also due to the fact that it is a practice that can be ratcheted up as demand evolves. The other critical precondition would be a clear, consistent and transparent policy with regards to (conspicuous) labelling: not only is this an absolute necessity in terms of respecting one’s readers but it also addresses criticisms about ‘grey’ advertising. Having assured this, besides sales and marketing, starting with a design and front-end developer as well as a couple of digitally-savvy journalists will do.  Once (or if) advertisers are queuing outside the publisher’s offices, then a ‘Content Studio’ à la NYT or WSJ is the next logical step – but not before.

The principal pillar for native advertising is a segmentation of the sales proposition into three broad offerings, namely:

A second pillar in getting started with native is a clear segmentation of the advertiser market so that different offers cater to distinctly different communication needs and preferences. This should be centered on two clusters:

  • Companies that have a regular flow of press releases to distribute to media, e.g. banks, insurance and telcos. These companies usually hire PR agencies to do the spinning or ‘persuading’ of journalists, usually (regrettably) successfully given the shrinking editorial budgets most newspapers have had to cope with. The ‘newsfeed’ offering alleviates such commercial pressures while bringing transparency and revenues to the publisher.
  • Companies that would like to engage more deeply in content marketing. This is where the larger, bespoke productions can be most effective for the brand – and lucrative for the publisher. The publisher’s specific targets would depend on its audience and editorial context, e.g. fast-moving consumer goods and entertainment for the younger demographic, or fashion/beauty for female readers, or health for the older demographic.  However, the prime candidates for such projects are companies involved in major Corporate Social Responsibility activities, as these endeavours often have a content dimension and, at the same time, are particularly difficult to convey through a simple advertisement.

The final cornerstone in terms of an initial publishing strategy on native advertising may prove to be the trickiest and most elusive: alliances. Publishers have a horrid record of coming together (be it in a joint operating agreement or a full-blown joint venture) in business enterprises to try to address a common threat or opportunity, usually to create scale which, especially in digital marketplaces, can prove critical. Finding successful shared publishing endeavours is more the exception than the rule. However, in the case of native advertising, it may well emerge as an imperative: large portals (e.g. Yahoo!) are also starting to invest in native and, at the same time, firms such as Simple ReachReach1) unique users that visited the site over the course of the reporting period,…

What can publishers do, at least at a national level, to avoid such a scenario? Their pre-emptive response should be three pronged. To begin with, they should be the first to pursue the ‘race to scale’ and, possibly via industry bodies, take the initiative to set format standards (particularly for the ‘newsfeed’ offering) before portals and aggregators do. An ‘ethics’ corollary of this would be standardized disclaimers, concerning separation of editorial from commercial messages. Second, they should actively engage with advertisers – again, more likely than not at industry level – so that performance metrics are agreed upon and these express also the publishers’ viewpoint, often ignored in a buyers’ market like online display advertisingDisplay AdvertisingA form of online advertising where an advertiser’s message is shown on a…

In short, publishers are particularly well-placed to take advantage of the growth of native advertising. Indeed, it’s bound to come as a relief to the industry that finally a form of digital advertising has emerged that values the quality of the brand, its tradition, heritage and news values, as well as the original content that is being created on a daily basis. In addition, the first steps to get a functioning native advertising operation going are not too complex or expensive.

It would be an immense pity if the chronic fragmentation – which is often a euphemism for divisive bickering – of the publishing industry again proved to be the main culprit for another missed opportunity. There won’t be many more.

Article by Constantine Kamaras

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