Why Native Ads May Not Deliver

There have been some interesting studies recently on the low return rates of advertisers who try native advertising. Although spending on native ads is increasing rapidly, and is expected to reach $20 billion in 2018, even Buzzfeed is having trouble getting advertisers to re-up for more than a trial buy. There are many reasons this is happening:

1)Native ads are no longer new. Take a lesson from display ads and remember how, two decades ago people clicked on them and then the numbers began plummeting. That’s because the newness wore off, and much of the initial interest was in the novelty of online advertising. The world’s first banner ad had a click-through rate of 44%. Marketers would kill for a rate like that now, and they don’t even get it from native.

2) Native ads are expensive to produce. You can’t just whip out a native ad if you are a marketer. The campaigns require extremely high quality creative, so that a visitor will move past the knowledge that he or she is reading an ad. It has to contain useful information, delivered in a manner that captures attention. And if you have the publication produce your native ads, you will pay a high price to access high value audiences like professionals or Millennials.

3)Marketers may have already gone too far with their native advertising:

The major criticism hitting native ads in 2016 is very similar to the criticism that banner ads have faced: “You’ve gone too far”. Native ads have become so much like the real thing that readers are increasingly annoyed to find the content they’ve been reading is actually a cleverly disguised advert.

Not to mention that in the US, the FTC has issued new guidelines for native advertising, and the Online Trust Association has studied native ads and found that 55% of them fail the transparency guidelines.

4)And Facebook recently threw a monkey wrench into the whole equation by changing the way its publisher partners were allowed to identify (or not identify) native ads. Until June of this year, sponsored content posted on Facebook did not have to be tagged and measured, and publishers could tell brands anything they wanted to about where the traffic was coming from.

But now that publishers have to tag the brand and explicitly acknowledge that they’re sharing branded content, there’s a very good chance they won’t be nearly as effective as the more deceptive system publishers were using before. This transparency is undoubtedly a good thing for users. But it that could cut into margins on native ad campaigns.

Brands are now going to understand how much of their reach is organic, and how much of it is just Facebook users and thus not able to be attributed to publishers.

We find this all very interesting. The same “big data” that everyone claims they want, and indeed that they have, may be the same data that exposes native advertising as less valuable than marketers had originally thought. Q4 could be the big “tell.”

Can Native Advertising Scale?

At this moment, native advertising only accounts for 5% of digital ad spend, although from the amount of ink it’s gotten and its prominence on conference agendas you’d have thought it was much more.  Native maybe small, however, since 90% of publishers have decided either to use it or at least to try it, this will only be the beginning.

First of all, there are two kinds of native: the first consists of ads that fit into the feed of Facebook or a news site. This is core native or infeed. These ads look like ads, and they may be blocked by ad blockers.

The second is content that is appropriate for the publication but is written by or paid for by the brand. This is more difficult to identify as an ad so more difficult to block. But it is also more difficult to measure

There are also two kinds of advertising: performance and brand. Before the days of ad tech with its focus on measurement, performance advertising was the wicked stepchild of advertising — measurable, yes, but somewhat sleazy with its moniker of junk mail. Brand advertising, with its high concept creative and huge budgets was the fair-haired child: not easily measurable but it worked.

Then came ad tech and brand advertising went right down the drain. The terrible metric of CTR ruined the brands confidence in using online advertising. Now, with native, brands realize they need to be “thought leaders,” and advertising is merging into “content marketing.” Brands are again believing that they can reach consumers and win them over slowly and consistently.

So if we are going to use native widely we are going to have to find a way to re-define what’s meant by a successful campaign. We are going to have to up the quality of creative, both visual and written, and start measuring for further in the future than purchase tomorrow. Like old time brand advertisers, we are going to have to measure for trends, forgo immediate gratification, and stop asking that less of the ad spend be “wasted.” What’s truly wasteful is not using native. Not using native is missing the opportunity to reach high quality consumers and explain in long form and in gripping fashion why your product is good for them.

ZINC does sell native innovations on our secure end-to-end platform.  They run through our private exchange and only appear on premium, brand-safe sites. So we offer scale, and it is SAFE, TRANSPARENT AND QUALITY scale – perfect for brands raising the profile of a product or feature.

Useful Definitions of Native Advertising

The paid ad blockers are dropping from the list of top paid apps in the Apple app store, so the crisis is over for now. But if we are smart, it has taught us a lesson: we have to make advertising better.

We have to quit stalking customers, and start being more intelligent about how we use data. Customers have said over and over again that they don’t mind relevant ads. What they mean is an ad that will help them, not assault them. Data is good, if we use it to determine what customers want, rather than just try to make them want something we are selling.

We also have to treat customers like intelligent people and offer them creative that’s commensurate with their intelligence. In the industry, we know that the biggest metric for success is whether something is shared. As an industry, surely we can come up with shareable content.

This means gravitating more toward native. And native has several different meanings, depending on who is defining it. IAB has come up with six separate categories of what can be considered native:

1. In Feed Ad Units– As the name denotes, it is an ad unit that is located within the website’s normal content well. The content may have been written by or in partnership with the publisher’s team to match the surrounding stories. It is measured on brand metrics such as interaction and brand lift. Example: Buzzfeed’s sponsored articles. Or Digiday’s sponsored content.

2. Search Ads– are generally found above the organic search results. Search ads have been sold with a guaranteed placement on the search engine page, and they are measured on conversion metrics such as a purchase. They have the same appearance as the other results on the page with the exception of disclosure aspects. For example, Google uses the word “ad” in yellow next to the paid post as means of disclosure.

3. Recommendation Widgets– Although the ad is part of the content of the site, it does not look like the editorial content feed. It is delivered through a widget. It is generally recognizable by words like “You might also like” or “You might like”, “Elsewhere from around the web” or “From around the web”, “You may have missed”, or “Recommended for you.” These are the ads delivered by Taboola and Outbrain.

4. Promoted Listings– The websites that carry these ad units, are typically not content based, rather they are usually e-commerce sites. Promoted listings are presented to look identical to the products or services offered on a given site. Example: Amazon’s sponsored products.

5. In-Ad (IAB Standard)– An ad in a standard IAB container that is outside the feed. “It contains contextually relevant content within the ad, links to an offsite page, has been sold with a guaranteed placement, and is measured on brand metrics such as interaction and brand lift.”

6. Custom / Can’t be Contained– This category is left for ads that do not fit in with the other categories.

These definitions may or may not be helpful. What ‘s important is to recognize that all native advertising must be clearly marked as advertising, or we risk making consumers as angry at native as they are at display. We have a reprieve, but the case against advertising hasn’t been dismissed.

ZEDO believes in innovation in ad formats. In fact, we now call our new formats innovations. Because we own an end-to-end platform we can innovate continually. Our three- technology stack  (publisher ad server – exchange – ZINC buying platform for ATDs and independent agencies) means we can innovate ahead of  these IAB standards.  The creative only goes through ZEDO, right from the ATD’s office to the publisher page. So we continually make changes and create better and better innovations.


Native Advertising Has its Work Cut Out for it in 2015

Last year, over $3 billion was invested in branded content or native advertising, which ran not only as product placements in  TV shows like  Ellen ( where Ellen de Generes used a Samsung Galaxy Note 5 to take a selfie),  but as articles or video series  appearing in traditional news players like the Wall Street Journal and the New York Times. Brands looking to find new ways to meet customers, who are increasingly concerned about intrusive advertising,  began to produce content themselves and pay to have it appear where they believed they could find their targets without being annoying. Netflix, advertising its “Orange is the New Black” series, was one of the more successful native advertisers last year. But no one won a Grand Prix for content marketing at Cannes, which is the first time a category came up empty for a big winner in twenty years. The content marketing category is only three years old, and the judges couldn’t agree on a set definition for branded content.

Somehow that difficulty with definition hasn’t turned off advertisers. Next year, the budget number spent on the native category is expected to increase to $4.2 billion, even though only 51% of marketers think their investment was well-spent. This inability to measure ROI is typical of new ad formats; it took a while for marketers to find a way to measure social media marketing, too, and their initial efforts based on trolling for “likes” and followers never did pay off. Social media was finally understood to be a way of knowing the customer better, and a way of getting cross-channel campaigns shared. But first marketers had to find the right creative for the new medium.

That’s what is happening now with native, aka content marketing, sponsored content, branded content, or advertorial. Brands are still trying to figure out how to use native ads to further their marketing objectives, even as the category starts down from the peak of its hype cycle. Native advertising is not the slam-dunk both advertisers and publishers originally thought  it would be.

And it’s even worse for b-to-b marketers, never known for snappy creative. They are used to talking only about their features and benefits to customers who are already somewhat interested. Now they’ve got to learn that in a native ad environment, it’s all about the customer, not the company. Good native ads contain content that is engaging because it is helpful and informative. Most traditional b-2-b advertising is hardly engaging. For these marketers, execution of native ads must change;  the ads must talk about the customers’ problem, rather than the company’s offering. We predict more native ads coming to b-2-b, in the form of useful tools like downloadable white papers and case studies.

We think the biggest takeaways from 2014 for native advertising are that it is no miracle cure for either advertisers or publishers, and like any other form of advertising,  it relies on good creative.


Native Advertising Done Right

If you want to see a really forward-thinking ad campaign, take a look at the native advertising video series done by Intel appearing on The Verge. It cleverly combines several key trends in marketing and advertising: the collaborative economy, the product placement, the native ad, and even wearables.

The title of the series is “The Future is Now.” In the first video, Intel partners with a startup, ACustom Apparel, giving the company, which customer tailors mens’ clothing using 3-D scanning technology to get the measurements right, the bulk of the exposure. This is in line with Intel’s brand, recently morphed from Intel Inside to Intel-Look Inside. There’s one mention of Intel tablets, and a reference to Intel as the technology behind the scanner. Of course those are probably the weakest moments of the video, but since they’re short, they didn’t seem very interruptive.

There are also two brief product placements for other Intel partners: Logitech, whose keyboard is displayed, and Microsoft, whose operating system is on the Windows 8 tablet the startup’s founder shows in the video. It made me wonder who contributed dollars to this program. Back in the day, when I worked in PR at Intel, the company regularly co-marketed with its partners. It wasn’t called native advertising then, nor was it part of a disruptive collaborative economy, but Intel has always showcased good new technology that uses its chips.

While the video is way above average for native advertising, Intel’s partnership with Vox and The Verge is also appropriate: the series appears on one of the most popular technology news sites online.  Once again, the choice of partners is appropriate. The fact that this video is native advertising, or sponsored content, is clearly delineated in the beginning.

And while the collaborative economy and the need for brands to disrupt themselves by partnerships with startups is the first trend, and native advertising is the second, the third is perhaps the most interesting, and it’s the increasing use of computer technology on, in, and for the body. The founder of ACustom Apparel correctly (I believe) predicts that mapping the body is the next frontier of technology, and says that in the next decade it will become increasingly important. We already have custom fitness programs, targeted gene therapies and 3-D printed shoes, so why shouldn’t we also have better-fitting shirts?