Native ads: the good, the bad and the ugly

People tend to have strong opinions about the relative merits of advertising, whether it be called native, sponsored content or advertorial.

There is an emerging wave of opinion that suggests that sponsored content damages a publisher’s credibility and there is good evidence that appears to substantiate this, at least.

However, with Native ad revenues increasing by over 77% in the US between 2012 and 2013; and institutions such as the Wall Street Journal and the New York Times joining the bandwagon, we’ve also witnessed a re-think on this area. What’s driving so much money to supposedly credibility damaging content?

What do readers actually think?

This is of fundamental importance. We can speculate on how to label sponsored content and the ethics behind it endlessly; but it’s the reaction of consumers which constitute the success of any given digital magazine. Contently, a start-up which connects brands with writers, recently commissioned a survey to get closer to the truth. Just over half of the 542 respondents said that they didn’t trust native advertising, regardless of what it was about, and over two-thirds said they felt deceived when they realized that a brand was behind a piece of editorial, or even a video.

The results of the study also suggests that readers aren’t even clear about what ‘sponsored’ actually means. 18% think that the sponsor paid for it’s name to just be next to the article, 20% think the editorial team wrote it, but that the sponsor’s money facilitated its creation; and finally, 13% think that the sponsor wrote the article itself.

In a nutshell, there’s a lack of transparency about how sponsored content actually gets on an editor’s desk in the first place. This is understandable given how murkily interpersonal certain sponsorship deals can appear, but it also issues a challenge for publishers to be more open about these processes.

Do native ads actually outperform banners?

Advocates of the native ad phenomenon say that they have higher click-through and engagement rates than traditional banner advertising. They suggest that the context and quality of the content gets taken more seriously than their colorful counterparts, the banner ad. The banner ad, as a concept, is now 18 years old. Respondents from a recent survey led by IPG Media Lab revealed that native ads were looked at 53% more frequently than banner ads. The same survey revealed that native ads registered 18% higher lift in purchase intent and 9% lift for brand affinity responses than banner ads.

A staggering 5.3 trillion display ads are currently served to U.S. internet users a year, of which 85% are clicked on by just 5% of Internet users. This suggests a narrow demographic of Website users who are actually responding to ads in the first place; this is something that advertisers need to consider. It’s most probable that the more seasoned Internet users won’t be responding as readily as those who are newer to the Internet, particularly given the increasing proliferation of tools like adblocker. However, sponsored content is more visible for all types of Internet users and can usually bypass such software.

How can publishers monetize digital editions?

With this debate and the associated evidence in mind, we come to the crucial question for most publishers: What are the best ways to monetize digital editions? Publishers we are working with are experimenting with both their subscriptions models and their advertising streams. There are obvious successes in the native ads model (Mashable, Buzzfeed), but also an understanding that certain publications are just too hesitant to risk the impact on credibility.

Perhaps the smartest thing to do is to broaden ones revenue model. Hearst Magazines, are edging towards their consumers with a recently launched Cosmopolitan festival of fashion. Condé Nast now have their own bespoke multi-media publishing service. These examples show that there isn’t a shortage of ways that publishers can capitalize on their big brands, whether that be a native ad, banner advertising or a completely new business model entirely.

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