May 11, 2015 Last Updated 1:58 pm

Native: It’s not just for advertisers anymore

Guest columnist says native advertising hold ‘opportunities for both advertisers and publishers to create and optimize brand new streams of audience engagement and revenue’

You can’t go two minutes without hearing about the latest advance in native advertising and how it is the next big thing that is going to take over the digital media industry. A constant presence of “You Might Also Like” widgets and sponsored articles has sprung up on sites ranging from TMZ to The Wall Street Journal as publishers strive to take advantage of this rapidly growing native market that eMarketer projects will double from $4.3 billion this year to $8.8 billion in 2018. But not all publishers are reaping the benefits of this emerging monetization strategy…though their time is fast approaching.

johanna130While over 50% of marketers engaged in native advertising last year, Cxense found that only 20% of publishers report having run native ads on their sites in October 2014. In simple economic terms, demand exceeds supply, which should theoretically drive more supply (publishers) into the marekt. And yet, even with these seemingly beneficial economic winds at their backs, many small to mid-sized publishers resist due to fear of the unknown.

One of the largest barriers to entry for publishers wanting a piece of the pie is confusion around what actually constitutes native advertising. The question is not an easy one to answer and even the IAB avoids getting into specifics, offering only a broad definition that seems to include all paid ads that “blend seamlessly into the surrounding content.” Not much guidance to a timid publisher, hoping for the safety of familiarity when asked to embrace a new monetization tactic for their website.

The complex native market can be divided into two primary buckets. First is sponsored content, when a brand or advertiser works with a publisher to develop custom content, blurring the line between editorial and advertising. The second bucket is recommended content, when advertisements are integrated into a publisher’s layout in a way that appears natural. This latter category accounts for approximately 60% of non-social native ad spend, and provides a lower-risk opportunity for publishers to enter the market.

Working to lull these hold-out publishers are recent technological and industry advances that have propelled native advertising into the programmatic age, simplifying the buying and selling processes while minimizing barriers to entry.

  1. The IAB released their newest version of OpenRTB v2.3 in March, which now includes guidelines for native ad creation in real-time bidding environments, accounting for assets like title, description copy, images and content landing page URL. Regardless of programmatic buying potential, native ads are only impactful when they are relevant to the content readers are consuming at that moment.
  2. Native platforms have developed increasingly sophisticated algorithms so that as technology advances, so too does the ability to optimize campaigns across contextual relevance, placement and user engagement trends to drive the highest CPMs for publishers.
  3. Lastly, tech providers are improving publisher controls to ensure the ability to optimize and filter out undesirable or non-performing advertisers and/or campaigns.

Taken together, these advancements allow publishers to combine the relevance and personalization of native with the efficiency and automation of programmatic. The power of native advertising depends on the contextual relevance of surrounding content. New RTB technology and sophisticated algorithms now allow publishers to automate this process, making it the perfect time for them to enter the native fray and leverage the tactic in developing fresh revenue streams.

There are certainly signs that publishers are leveraging emerging technology to revamp their monetization strategies, finding creative ways to grow revenue without losing sight of other solidly performing traditional ad strategies. For example, ESPN has integrated native ads into their in-house sales platform by partnering with Outbrain, enabling the ESPN sales team to offer placements across all advertising products. Still other publishers are capitalizing on the monetary value of their own readership by recirculating users amongst different co-owned properties in order to keep users on their site longer and, therefore, increase overall monetization. Reader’s Digest has partnered with Taboola for this very purpose, and Rodale (publisher of Men’s Health and Runner’s World) has recently teamed up with Outbrain.

Native advertising holds significant opportunities for both advertisers and publishers to create and optimize brand new streams of audience engagement and revenue. To date, it has been the advertisers that have been quicker to adapt and adopt, but the simple economics of supply and demand, coupled with native’s technology backend finally entering the programmatic world, seem to bode well for a huge uptick in publisher adoption and financial success.

Johanna Pesso is VP of Product at CPXi, a digital media holding company providing
technologies, services and processes to marketers and content providers.

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