Disruptions, doubts and hold-ups: state of the native advertising nation

Native advertising is the latest disrupter on the online advertising scene, and could translate into big bucks for companies and publishers alike. At first glance it just seems like a re-invented form of advertorial, but it’s subtly different, ever so powerful — and also quite controversial. Here is the lowdown on what it is, what it isn’t — and why you should care.

Just an advertorial on the interweb?

It’s understandable why native content advertising and advertorials are still often confused. Both consist of editorial content, placed in context, and are associated with some form of branding. The key difference however between the two can be summarized in one word: value.

Advertorials are not what they appear to be. They look like regular content but they’re secretly laced with the intent to influence consumer purchasing behaviour. This style of biased advertising was never going to fly in the information age in which transparency has become sacred. The advertorial thus needed to evolve or risk extinction.

Native content advertising lays all its cards on the table; no deception of any sort. Content is typically marked as “Sponsored”, “Presented by” and “Brought to you by” with accompanying brand name and or logo nearby hyperlinking out to the associated brand’s landing page of choice. Some publishers have gone a step further and made their native content displays air tight — by providing a short explanation on what the sponsored content is all about and its relation to the publication. As time goes by, distinguishing between a publisher’s content and it’s sponsored content may become trickier. Then again, that is the intended effect is it not? As long as the value to the reader remains the focal point, no cages will be rattled in this historical shift in advertising.

Could this value through engagement be the attribute directly linked to the entire format taking off in the way it has? Or could the uptake also be due to multiplatform publishing’s harnessing of extensive social networks to get their message out via content? Are banner campaigns shifting into a more supportive role while juicy content takes centre stage? Or has the penny dropped that it’s in fact easier to aggregate content across multiple platforms (different measurements and formats) as opposed to graphic ads?

In November 2013, Hexagram published a report that set out to answer some of these questions and in doing so created quite a buzz in the advertising world. The report is aptly entitled “The State of Native Advertising 2014” and is the first real report of this magnitude to be launched into the native advertising industry.

The survey asked more than 1 000 publishers, agencies and marketers their perspectives on the current state of native advertising and how they see its future playing out. The results were as interesting as they were promising for digital advertising’s youngest grandchild.

The driving force

Publishers have clearly been driving the growth of general native advertising with 62% of those surveyed having adopted the format into their overall advertising offering. Obvious big names spring to mind; Forbes, Buzzfeed, Digg, The Atlantic and not to forget perhaps the most talked about recently, The New York Times. Hexagram’s survey reported a 41% brand (marketers) adoption rate and 34% for the agencies.

The most prevalent forms came up as blog posts (65%) and articles (63%); the bread and butter of publishers — an unsurprising correlation to the above-mentioned adoption rates. Next on the native advertising popularity list are Facebook ads (56%), videos (52%), tweets (46%) and infographics (35%). The survey makes a special point to note that publishers have significantly less experience in the latter mentioned styles. For the moment, everything outside of blog posts and articles is being done well by agencies and brands themselves. This could very well prove to be a new area of competition in future not only between publishers but also in the publisher-agency sphere.

The majority of publishers, agencies and brands in the survey seem to be on board the 21st century marketing express. When asked to motivate their use of the new format, 67% stated that they were seeking a more relevant message for their brand or on their platforms. 63% said they were reaching out for consumer engagement. 62% had their fingers crossed in achieving buzz status and 43% mentioned combating the internet’s fastest growing pandemic, banner blindness.

What’s the hold up for some?

The survey delved into why certain publishers, agencies and brands have refrained from implementing native advertisements despite the large uptake.

Forty-four percent of the entire sample size cited budgetary resources as their primary reason. Could it be that the premium nature of native advertising is being exploited in its infancy? Thirty percent of the sample were demotivated by the fact that not enough information about traffic sources and others metrics are currently available to deem it budget-worthy. Twenty-three percent thought that both lack of transparency to readers and actual relevance to their brand held them back from committing. Twenty percent reckoned that native advertising was more likely to suffer a backlash compared to traditional advertising.

Harsh stuff — but these findings in particular will no doubt serve as motivation to those currently offering and those looking to offer the new approach in future, to wholeheartedly develop their native advertising strategies. With the industry’s current ROI fixation still raging, no advertiser can afford to have any element of their offering, pitch or track record look sketchy, undeveloped and undocumented.

In the total sample, 11% of publishers, 23% of brands and 18% of agencies have no immediate plan to implement any form of native advertising. The real question of value to advocates thereof, is whether or not these diehards will be swayed over time. With the emergence of more quantifiable, concrete data surely to creep up all over the globe in the coming years, and taking into consideration the trend to move with the consumer-centric digital times, these numbers of abstinence stand to shrink somewhat.

Future optimism

Publishers foresee further growth in their revenue from native advertising operations. The survey found that the vast majority of all publishers trust that it “represents a new revenue stream” and predict their revenue to increase by 10% in the next year as a direct result of implementation. With current mean revenues amounting to 20.4%, it comes as a surprise that both publishers offering and not offering native advertising estimated “an average of 30.1% of their revenue will come from native ad campaigns in one year.”

The future adoption and usage for brands will become clearer with time. Of the brands currently allocating budget to native advertising campaigns, the native ads share is estimated to increase from the current 27.5% to 33% of total budget in one year’s time. All brands estimate an average spend of 24.3% of their budget on native in one year’s time. Publishers will no doubt be pleased with this level of adoption rate. Regardless of whether brands increase their spending or not, one can certainly expect increased innovation in the types of native ads publishers will offer and pitch to brands in the near future.

Although agencies currently on board only forecast a slight increase in time and resource allocation in the coming year, (up from 25.5% to 27.9%), the report suggests that they will have an increasingly important role in the industry. For agencies to remain competitive with publishers and brands, they will need to up skill in terms of their content marketing capabilities. Open the hiring flood gates, a new era of talent poaching has begun.

Conclusively, the report included glorious insight into adoption rates for 2014. An additional 16% of publishers, 20% percent of brands and 12% of agencies surveyed plan to add native advertising to their offering in 2014.

A true test for advertising

The pressure is now on for native advertising to deliver on its prophesied potential. The key to unlocking this however may be no more than an arm’s length away. The report makes special mention of “mobile” and how it holds many of the secrets to better consumer targeting. But let’s not get ahead of ourselves. A mammoth amount still needs to be achieved at ground level.

It’s natural to want to shy away from and avoid these daunting, uncharted territories as publishers. But as Derrick Thomson writes in The Atlantic, its key for publishers to keep in mind that “Advertising… pays good journalists to find the truth.” This is the justification and motivation that the industry needs to propel it beyond the current horizon.

It all needs to start with the big players — for the reason that they will be instrumental in bringing liquidity and, in turn, stability to the industry. The sooner standards are set (something which the Interactive Advertising Bureau is working towards) and pricing infrastructures are established, the better for all. However, this will require a new, perhaps even revolutionary, degree of collaboration and drive.

That having being said, native advertising has the potential to bring the facets of the advertising world closer together. Its success relies more on teamwork and knowledge sharing than any form of advertising before it. The most successful forms in years to come will be those in which publishers, agencies and brands function as collaborative units with a common objective; to deliver valuable content in a highly appropriate context to consumers.

How to implement native content advertising, successfully

In summary, for the successful implementation of native content advertising one should remember to keep the following in mind:

• Prominence: Native articles should never be elevated above regular content but should rather appear on the same plain, seamlessly blending in with current content.
• Distribution: Native articles should appear in a publisher’s general feed much the same as conventional articles do. The same applies to how stories are pushed through company newsletters and social media channels.
• Value: Content should further enrich a user’s experience on a platform. Let the sponsoring brand channel trendy, progressive and industry-leading insight. It’s not about the particular brand at all. Remember, advertorials became unpopular for a reason.
• Collaboration: Publishers, brands an agencies should meet half way and work side by side with a clear understanding of each other’s strategies and goals.
• Transparency: Native content should clearly state that it is indeed sponsored. No sneakiness.