Native Advertising Opportunities & Native Monetization for Publishers

Fact:  for the foreseeable future, brands are going to continue to spend dollars to reach consumers to try and convince them at some point to purchase their product or service.  Brands do this by using tactics to drive conversion or boost purchase funnel favorability (across different stages).

There’s been a recent meme, conversation, trend, topic, or whatever you want to call it around Native Monetization opportunities.  I’ve spoken about the opportunity publicly a few times including in a conversation started by Buzzfeed’s Jon Steinberg on Branch and most recently today in a Digiday article.

But what is Native Advertising?  According to iMediaConnection, native advertising is defined as, “advertising unit designed to integrate seamlessly with a user’s consumption experience.”

I believe that for most of the Internet, we’ve not found our native ad units.  Note however, a unanimous native ad unit across the Internet is a idealistic dream.  On TV, the unanimous unit is the “spot” and the equivalent of that in digital is the banner.  Note, these units are not native.

Recently, Tumblr announced Radar, Outbrain is gaining steam, Buzzfeed is showing strong Viral Lift, Sharethrough is penning a piece on TechCrunch about native monetization and Silicon Valley, and Facebook announced new native units.  The “native advertising” space is heating up.

Advertising is content and content is generally designed for consumers.  This means that advertising is essentially consumer centric, but is it.. in reality?  While creative might borderline consumer centric by the time it gets thru legal and business affairs of marketers, the actual media unit it’s being placed within might make the entire campaign fail.  All the hard work by the strategy agency, creative agency, production agency, planning agency all gone down the tubes because the placement of the media got it virtually unrecognized.    Yikes.  Many people believe that banner ads are dead and this is why*.

Native advertising as defined above are integrated within the user’s consumption experience.  It could be the holy grail of advertising.  When done correctly, it performs extremely well.  We’ve done it here at the agency and I continue to beat my drum about it.

However, native advertising is not without it’s limitations and issues.

  1. The biggest issue is that you need to work with every single publisher on a media plan independently, at least for now, because there is little to no scalability across pubs.  This takes a lot of time and has cost implications.
  2. Additionally, each publisher will require their own creative, produced in formats that might be unique to only one particular publisher.  This has production budget (non-working media) implications because these budgets are not infinite.  In one of the latest GM/Facebook articles, GM released that they had spent $30MM on non-working media and $10MM on Facebook ads.  The $30MM was on support and infrastructure to make that $10MM more effective.  While I think this number is grossly out of proportion, I do think in a more cleverly planned approach it is a reality.

These are two of many limitations.  Again, native monetization is not new.  Classifieds in newspapers are native.  TV Guide advertising is native.  Paid search is native. With all the new platforms emerging in the digital space, we’re going to see similar native models come to life.  I’m excited for those – and those agencies and marketers who can get thru the limitations will reap the benefits.  I’m excited about this as it’s going to keep me busy planning and investing.

If you are an entrepreneur who is building a platform or solution to address native monetization, we at kbs+ Ventures would like to meet you.

* I do not believe banner ads are dead.  I actually believe they are going thru a renaissance.

  • http://www.jonsteinberg.com jonsteinberg

    Any given campaign may have only say five native partners. These campaigns for top to mid funnel far out perform banners. And the margins are strong because the ROI is strong. So I don’t see the scalability issues. And the staffing exists in agencies to cover this work. In fact, especially for the large holding companies, this is exactly where great account teams should focus to do great work for their clients. If the creative team works closely with the media team and publisher, this works perfectly.

    And I think all signs are pointing to banners just not working for premium publishers and anything Other than DR:
    http://storify.com/jonsteinberg/how-banners-are-working.

    They were never a good product. They’re just liquid and standard.

    • http://www.darrenherman.com dherman76

       I was referring to scalability issues around using it for more than 5 partners.  Most media plans have more than 5 partners… imagine doing this for a whole media plan tapping into 10-15+ partners.  Most agencies aren’t setup for that – or if they are, the are allocating a ton of non-working media budget to it.

      • http://www.jonsteinberg.com jonsteinberg

        This is why the creative budgets need to work in concert with the media budgets.  And ultimately it’s on the native publisher/platform (me) to adapt the creative or find innovative cross-platform solutions.  We’re doing one right now where we’re working with another native partner.  

        Ultimately, it’s what makes for great campaigns.  And I think it’s the right use of man hours and costs – we’re finding that we can adapt any creative in minimal time using software on our end.

  • http://www.jonsteinberg.com jonsteinberg

    Any given campaign may have only say five native partners. These campaigns for top to mid funnel far out perform banners. And the margins are strong because the ROI is strong. So I don't see the scalability issues. And the staffing exists in agencies to cover this work. In fact, especially for the large holding companies, this is exactly where great account teams should focus to do great work for their clients. If the creative team works closely with the media team and publisher, this works perfectly.

    And I think all signs are pointing to banners just not working for premium publishers and anything Other than DR:
    http://storify.com/jonsteinber….

    They were never a good product. They're just liquid and standard.

  • http://www.darrenherman.com dherman76

     I was referring to scalability issues around using it for more than 5 partners.  Most media plans have more than 5 partners… imagine doing this for a whole media plan tapping into 10-15+ partners.  Most agencies aren't setup for that – or if they are, the are allocating a ton of non-working media budget to it.

  • http://www.jonsteinberg.com jonsteinberg

    This is why the creative budgets need to work in concert with the media budgets.  And ultimately it's on the native publisher/platform (me) to adapt the creative or find innovative cross-platform solutions.  We're doing one right now where we're working with another native partner.  

    Ultimately, it's what makes for great campaigns.  And I think it's the right use of man hours and costs – we're finding that we can adapt any creative in minimal time using software on our end.

  • http://twitter.com/GreenMediaCEO Patricia Marchetti

    The key is integrating the advertising within the consumer’s experience.  With few exceptions, I don’t think banner ads are well integrated into any publication… including mine.  If they were, I think the click through rates would be far higher. I strongly suspect it’s not just a problem with crappy creative.  

    We’re moving more into branded content – advertorial articles, long form videos – and we’re finding that this content can be used across publications and channels (scalable). And using tech to match our article topics with specific event listings, rebates, etc directly sponsored by brands.  I think that giving the consumer something (information, entertainment, discounts,etc) in return for agreeing to be advertised to subtly works better.   It’s why newspaper and magazine advertorials work.  And why product placement in TV shows and movies seems to be growing faster.  

  • http://twitter.com/GreenMediaCEO Patricia Marchetti

    The key is integrating the advertising within the consumer's experience.  With few exceptions, I don't think banner ads are well integrated into any publication… including mine.  If they were, I think the click through rates would be far higher. I strongly suspect it's not just a problem with crappy creative.  

    We're moving more into branded content – advertorial articles, long form videos – and we're finding that this content can be used across publications and channels (scalable). And using tech to match our article topics with specific event listings, rebates, etc directly sponsored by brands.  I think that giving the consumer something (information, entertainment, discounts,etc) in return for agreeing to be advertised to subtly works better.   It's why newspaper and magazine advertorials work.  And why product placement in TV shows and movies seems to be growing faster.  

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