Native Advertising – A Bright Road Ahead

August 6, 2013 Paul Van Winssen

The online advertising industry is in the midst of a large-scale strategic disruption. Traditional banner ads have dominated the industry for nearly two decades, yet have recently come under the gun for poor performance. Click through rates are declining and many internet users have adopted “banner blindness”, where they consciously or subconsciously ignore banner display ads. There is an entire laundry list of statistically unlikely things that you are still more prone to do than click on a banner ad, including survive a plane crash.

Enter native advertising, the answer to all of the problems with display ads and a shining light for marketers everywhere. Although big players in the online ad industry are still debating exactly what falls under native advertising and what doesn’t, a standard definition from Solve Media states: “Native advertising refers to a specific mode of monetization that aims to augment user experience by providing value through relevant content delivered in-stream.” In layman’s terms, it is paid media that is delivered to the user in the same method organic content is on that particular site. Sponsored content is almost always clearly marked (as in Facebook’s Sponsored Stories) yet is otherwise displayed to the user in the same fashion as all organic content. The placement is consistent with a given site’s consumer experience, so the ad spot is “native” to the site it lives on. This reduces the likelihood of the ad being entirely ignored by end users and leads to more interaction and improved media metrics.

Widespread Adoption

Since its inception, native ads have become a key factor in the online advertising equation. Many of the biggest sites on the web have adopted native advertising in one form or another. Facebook offers marketers the opportunity to promote stories to friends, followers, or friends of followers right into their news feed. Twitter allows advertisers to promote their tweets into users timelines in a similar fashion. Another social site making a splash with native advertising is Buzzfeed, which features content endorsed by a relevant brand. Buzzfeed has never used a banner ad, and instead works with brands to create compelling, shareable content which tells their story.

Benefits to Native Advertising

As a marketer, native advertising provides an opportunity beyond what traditional banner ads can give. Native offers huge advantages to deliver content-driven campaigns to consumers and engage with them on a large scale. Native advertising allows marketers to get much more creative with ad placements, and design branded experiences that are relevant to their customers. A famous quote by Howard Gossage states: “Nobody reads advertising. People read what they want to read, and sometimes it’s an ad.” By giving marketers more creative control, native allows for branded content that users want to share and engage with. Users experience that content in the same way they would organic posts, reducing the stigma of advertising so they can take the content on its own merits (in theory anyways).

Challenges Along The Way

As with any disruptive idea, there are challenges that marketers must overcome in order to effectively use the native advertising tools at their disposal. The two main challenges publishers and advertisers face with native advertising are convenience and scale. Native advertising’s most considerable asset right now is also its greatest drawback; it both allows and forces marketers to be creative. Because native ads compete with organic content in the same stream, they must be compelling enough that users actually want to engage with them. This means that compared to banner ads, native placements take more time to develop. It is also not easy to purchase native ad placements at scale using tools currently available.

Native vs. Banner Ads

So overall, does native advertising actually perform better than display advertising? Most studies show that native ads outperform banner ads, but not overwhelmingly. Native ads are viewed more often than banner ads, but only slightly. Where native ads do capitalize is with creating branded experiences, which lead consumers to show 18% more purchase intent after viewing them. So native ads are not superior in every way, but they do work. However, they’re also more time consuming to create and buy at scale. This means that native ads may have a lower ROI than banner ads based on the investment necessary to deliver great content.

A Brighter Future

Native advertising is still an idea only in its infant stages. Social platforms like Facebook and Twitter are constantly developing improved ad products that deliver better branded experiences and further increase the benefit of native advertising. Production costs will decrease as more brands repurpose existing content for paid placements to further amplify reach, as opposed to creating content specifically for paid media. Smarter integrations with ad serving platforms will be built, and these and other publishing platforms will begin to cater to native ads. Although it may not yet dominate banners ads from an ROI perspective, make no mistake; native advertising is on the rise.

About the Author

Paul is a social media marketer and startup enthusiast based in Toronto, Canada. He likes to traverse both the tech startup and marketing agency worlds (and everything in between). Paul divides his time equally between tech events and Blue Jays games.

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