Native advertising is not a new concept. Custom content, advertorials, and product placement strategies have long been in the advertiser's toolbox to help drive brand awareness and user engagement. Yet the discussion around native advertising has grown steadily in the last couple years and is strikingly more pronounced in 2013.
If banner ads were successfully promoting branding messages for marketers, native advertising would not be receiving the attention that it is. Advertisers simply aren't seeing meaningful brand lift for the vast majority of their banner advertising campaigns.
The advent of real-time bidding has improved the efficiency of digital media buying by an incredible margin. But this efficiency has come directly at the expense of the publisher. One could very reasonably argue that this is simply a more efficient use of media dollars, but the issue is that this hurts the publisher's bottom line. Native advertising offers publishers a new alternative to the ever-declining CPMs of banner advertising.
Mobile also presents a complex challenge for publishers. Users rarely intentionally click on ads generally -- and mobile ads show a strikingly high rate of accidental clicks. Articles are often zoomed to exclude advertising content on the sides. And Flash, the software language used for most ads, simply doesn't work on most mobile devices. But mobile represents a growing piece of a publisher's traffic -- often directly at the expense of desktop browsing.
There is no single reason for why native advertising is at the forefront now. Rather, poor banner ad engagement and declining CPMs incrementally stress publishers to consider alternative monetization sources. Mobile and tablets make banner ads less relevant for the future and require considerations for alternative revenue streams. Technology is finally getting to the point where native advertising can be scalable across multiple publishers without requiring unique content for each.
eMarketer estimates sponsorship spending in the U.S. will rise 22.1 percent this year. By 2017, spending is expected to exceed $3 billion, and much of the growth will come from ad publishers seeking revenue from native executions.
Native advertising comes in all shapes and sizes. Here is a snapshot of the native landscape today. This chart is organized by the medium of content, or how that medium is powered. The most saturated sector of the market in terms of discussion today is sponsored posts and articles, but there are many other emerging forms of native advertising that are changing the game.
As you can see in the above infographic, certain parts of the native landscape are becoming quite populated, while other spaces are still wide open. Let's take a look at some of the biggest players in each area.
Sponsored post and articles
Facebook: The sponsored post
In January 2011, Facebook began offering promoted posts in the form of Sponsored Stories, which look like status updates and are displayed directly in the social streams of friends of page followers. Although the Facebook Exchange's ads in the right rail dominate the "last cookie wins" war, they fall short in driving CTR anywhere near the industry average. Sponsored posts are a great alternative on Facebook because they are consumed within the flow of organic user engagement, and the program is built for scale on mobile and desktop. Sponsored posts are seeing significantly higher engagement rates, and half of the program's revenue comes from mobile usage.
BuzzFeed: Sponsored articles, never banners
BuzzFeed has never run a banner advertisement. Instead it allows companies to sponsor stories on the site that match the content and editorial style of its usual posts. BuzzFeed focuses on delivering viral content that reaches more than 60 million monthly unique visitors. It has set up native advertising agency training through which it works with brands to identify relevant, trending, on-message content that has the potential to spread socially. It is known for posting a wide variety of sponsored content, from fluffy animal GIF features to more niche B2B campaigns.
Sharethrough: Native advertising platform
Sharethrough is an advertising platform that distributes brand content in native ad placements across the web. It focused originally on sponsored video and has expanded into sponsored posts -- ones that work on both desktop and mobile. Sharethrough Mobile Sponsored Stories allow brands to promote their original content, such as videos, articles, posts, and reviews, across mobile sites in a scalable platform that respects and enhances the unique user experience of each site. Mobile Sponsored Stories appear as part of the stream of content within a publisher's mobile site experience and are automatically updated to match the look and feel of the organic site content, albeit with indication that the stories are sponsored.
YouTube: Video-sharing for all
When YouTube was acquired by Google, it was inevitable that there would be a scalable, self-service monetization platform. Any Google account holder can promote his or her videos to the right viewers. These videos appear as promoted videos across the platform. Users pay only when a viewer chooses to watch their videos. Depending on whether one considers pre-roll ads to be native, TrueView video ads have also been available since December 2008.
Imgur: The simple image sharer
Imgur is a free image-hosting provider that makes sharing images simple. The site also features the Imgur Gallery, a real-time collection of the most popular images being circulated on the internet. Imgur runs sponsored images in the gallery, which appear in the same stream as user-posted content but are marked as sponsored. The company notes on its blog, "The integrity of the gallery is important to us, so the sponsored image is an advertisement that we have approved and found to be relevant to our community. It will be highlighted to let you know it's sponsored."
TripleLift: Advertising for the visual web
(Editor's note: The author of this article is the CEO of TripleLift, a technology provider that turns brands' images into native ads.) With the advent of image-driven platforms like Pinterest and Instagram, consumers are engaging with and sharing brands' visual content more than ever. Websites are becoming increasingly, if not entirely, image driven across every vertical. Brands can work with TripleLift to identify and promote their best images based on real-time consumer engagement, while publishers can partner with TripleLift to create native ad experiences with sponsored images on their sites. These advertisements are scalable and formatted to run on both desktop and mobile.
Pandora: Custom radio stations
Pandora allows users to create custom radio stations based on artists, songs, or genres they enjoy on any connected device. Pandora has more than 100 branded stations where advertisers can sponsor a certain musical theme that works for their products and target demographics.
Disqus is an online discussion and commenting service for websites and online communities that uses a networked platform. Promoted Discovery points users to content that marketers are looking to promote to your audience. As a publisher, you earn a revenue share from Disqus for each click on a promoted content link. Advertisers agree to pay Disqus to distribute their content in relevant places across the web.
Zemanta is plugin that adds related links and images to one's WordPress blog as it is written. This allows advertisers to increase their SEO and "link love" through evergreen links that live in a publisher's organic content. Zemanta indexes the advertisers' content and recommends it to bloggers when they create semantically related articles. Zemanta offers a channel where content marketers can reach 500,000 active bloggers.
Uncrate is a digital magazine for men that features content regarding several new products daily. Uncrate runs sponsored product or gear campaigns that fit into its stream of content. All the products are clearly marked as sponsored or featured, but they are generally of the same nature as the publication's organic content. Uncrate features products for all price ranges, including ridiculously priced inspirational products.
Yelp provides a local business directory service and reviews to help visitors find the best matched business for their needs. Yelpers have written more than 11 million local reviews, which makes Yelp the leading U.S. local guide for real word-of-mouth on everything from boutiques and mechanics to restaurants and dentists. Yelp offers the opportunity for businesses to pay to have their companies displayed in the sponsored section of the search results page for specific targeted searches.
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