Will Native Advertising Replace Display?

Banner – A Vehicle with 9 Lives

“Death of the banner” was probably already declared 5 minutes after the first banner went live in 1994 (even though it gained 44% CTR!). Since then, the banner has been argued about on a daily basis. In fact, the evolution of digital advertising has seen many factors and elements that supposedly contributed to the destruction of the banner.

One can count several phases in the life of this notorious format:

  1. At the beginning of the millennium, the main factor was Google. Google’s Adwords system enabled contextual advertising which made it much more efficient. However, not long afterwards banner-serving methodology adopted contextual techniques, which effectively eliminated this textual ad advantage.
  2. Following the resulting CTR drop, the “banner blindness” theory came into fashion threatening the existence of the banner format.
  3. Towards the end of the past decade, with online video going mainstream, the banner ad was about to be buried again in order to clear the way for video ads.

Today, all display and textual formats follow the same basic methodology, integrating data in order to reach the best-in-class efficiency and maximize ad monetization. Modern ad-serving software systems enable publishers and advertisers to serve various ad formats at once, optimizing and allocating budgets on the fly according to the results.

What is “Native Advertising” Anyway?

The latest banner-killer (or killer of all display formats) is thought to be Native Advertising. This dystopian generalization poses a crucial question, however: what actually is “Native” and will it really replace other known formats? Let’s take a look at the landscape .

One of the simplest yet most effective forms of native advertising are sponsored posts, pioneered by Facebook and Twitter. With their fundamental beliefs that advertising experiences on their platforms should conform to the user experience – not the other way around – they have unlocked one of the most impactful forms of advertising. This approach has perhaps had the biggest impact on mobile media and marketing, and the feed-based native ad has almost single-handedly provided the mobile advertising industry with a scalable monetization experience as opposed to traditional mobile ad experiences.

But native advertising does not only refer to sponsored posts. If you ask several people how they define “native”, you would probably get a number of different answers – sets from advertorial to branded entertainment to content advertising. In their first publication about native advertising, the Interactive Advertising Bureau, the IAB, addressed the issue by clearly defining the concept:“native is in the eye of the beholder, depending on where one sits in the ecosystem and the strategic and media objectives of the marketer.”

The IAB Task Force identified and described 6 different formats of native advertising, but even then stated that this report is subjected to updates and may serve only as a jumping-off point for deeper exploration on a variety of topics related to native advertising.

A native ad will usually be identified as such (“ad”, “sponsored”, “paid”, etc.) and it will have the look and feel of the content of the site it is placed in. What this means is that unlike regular banners, a native ad fits into the circulation of editorial content, both on mobile and desktop.

That’s what usually makes native advertising so powerful. Not only is it personalized to fit user demographics (like all other ad formats today), it’s also contextual and visually fits the background, which makes it more reliable, eye-catching, and relevant for users. The statistics support this, and according to the native ads platform Polar, click-through rates on native ads ranged from 1.5 percent to 9 percent, while the average CTR of a display ad is a mere 0.06 percent.

The Big Opportunity

One of the most talked about mantras in the industry lately is about how the  digital advertising ecosystem should and will change, for 2 major reasons – fraud traffic and ad-blocking.

A study from last year, carried out in conjunction with the Association of National Advertisers, found that 11% of display ads and almost a quarter of video ads were “viewed” by software and not by people, costing advertisers an estimated $6.3 billion in 2015.

When Tim Cook introduced content-blocking features in iOS9, thus causing a flood of ad-blocking apps in the App Store, the topic became more mainstream than ever. PageFair says that between 8% and 16% of ads are blocked in the US, vs. 10% to 35% in Europe; SecretMedia says that 26% of video ads are blocked in the US vs. 33% to 62% in Europe.

native ads

Those statistics hold a great deal of opportunity for native advertising. Brands and agencies that are  beginning to acknowledge they are paying for display and video ads that no one sees, will make the move towards native platforms, which ad-blocks don’t block (yet), promising better engagement with real human target audiences.

The Problem of Scale

What makes these types of advertising platforms so effective is the large amount of content. This is great news if you are in the travel business, because you already maintain those assets anyway. This creates another problem, though, since creating content at a high scale is both expensive and time consuming.

But the big advertising money is still in the hands of the big brands of the world. For those big spenders, creating a campaign based on hundreds of different content items is a nightmare. Instead of selling a product, they will have to become publishers or content providers and create content revolving around their assets.

To date, there are only several brands which have made this step. P&G is one of them, with its website beinggirl.com for feminine  products. To do this, though brands have to cut advertising budgets and focus almost all of their efforts on content creation.

The need of brands for unique quality content has become so dramatic that lately we have seen how even big publishers are jumping in:

  • The New-York Times recently launched “T Brand Studio” — a team of journalists, video producers, technologists, and strategists that creates and distributes native advertising for brands;
  • Forbes re-launched its BrandVoice platform in order to enable marketers to scale their branded content;
  • Buzzfeed just signed a partnership deal with Group, becoming a content marketing tech company.

Instead of playing a role as a media, publishers are now offering a full service solution that includes strategy and creative as well. They will not only publish the brand’s content, but will develop the concepts and do the actual writing, using their professional writers and reporters. This phenomenon could be dangerous for agencies, who may be replaced by professional publishing teams.

However, content partnerships of brands with publishers still does not solve the scale problem. It even makes it worse, by emphasizing the fact that producing large amounts of quality content costs quite a bit.

Native ad platforms are already suffering from the lack of content and will have to find solutions, together with brands. This presents an opportunity for agencies, which can position themselves as storytelling experts and become the preferred content creators.

Advertising Pros Intervene

Old school marketers, who tend to look at the world through the lens of their media channels, are probably asking their agencies for recommendations on content marketing activity.

Agencies’ solutions will usually be set around a new brand blog or branded content with cooperation from a publisher, and that is a certain trail towards failure. This is because a brand blog usually embraces the same approach to advertising: a focus on the brand and what it needs, not on its audience and what they need.

Advertising is about telling the brand’s story – the products, features and unique qualities – and foisting that information on the target audience when they’re trying to do something else. It’s essentially a self-centered practice.

To succeed in content marketing, you have to think deeply about the challenges, passions, and needs of your audience and then devise a strategy for how you can add value to their lives. Content marketing is about delivering the information, entertainment or utility that your brand is best suited in the world to provide. It’s about them. Not your brand.

This requires a total approach reset. We need to start thinking about how to get target audiences to engage with the brand’s content because they want to and not because we disrupted them. This is the opposite of push marketing. Pull marketing is about really adding value.

Succeeding with content marketing needs to go beyond the one-off. Understanding the mentality of your audience is a process that is built over time.

Content is not another advertising channel. You can turn almost everything you do into great content. Marketing and advertising resources shouldn’t go in the trash as soon as the campaign is over.

Take GoPro for example. This brand is not just a camera, it became “an enjoyment platform for people around the world to watch.” GoPro did this by enabling their fans take over their brand promotion and by utilizing user generated content. Not only do users post videos of their own experiences, but GoPro also buys the rights to self-shot videos with unique and inspiring content, polishes them, and then posts them to its owned channels for additional distribution. By doing so, GoPro is inspiring others to believe that they, too, can “be the hero” by using a GoPro camera to record their experiences. The brand’s content and the brand clients’ content became the best promotional tool of its marketing activity.

Native advertising isn’t the next generation of display. It requires a strong base of content strategy that begins with the creation of valuable, interesting and engaging content and then using native advertising platforms as the vehicle for distribution at scale.

The Native Advertising Playground

native advertising platforms

There are few major players in the native platform market. Those entities usually call themselves “content discovery platforms” because they help publishers expose their content to relevant audiences and help users discover relevant content.

Taboola and Outbrain are the leading global players. Taboola currently serves over 200B recommendations to over 550M unique visitors each month on websites such as USA Today, The Huffington Post, TMZ, Time, Daily Mail, NBC NEWS, The Weather Channel, and FOX Sports. Outbrain’s numbers are similar – they serve 190b recommendations to over 560M unique users every month on websites like CNN, Sky News, Le Monde, slate, Mashable, ESPN and more. Both of these companies are Israeli and their development centers and the bulk of their headquarters are still in Israel.