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.”