The state of native advertising and how it’s reshaping the industry

Native advertising is a term that’s well recognized in every newsroom around the world. It has been on every executive’s list for more than 5 years and for a good reason. The native advertising business model has worked beautifully for more than a handful of publishers.

For example, ESPN makes a lot of money through content recommendations and other more sophisticated forms of native advertising. If you read an article, for example, about LeBron James and the Los Angeles Lakers on ESPN – you will start seeing content recommendations related to the sport and topic you’ve been reading about. This particular way of operating has generated sweet click-through-rates for sites that do business with ESPN.

The same goes for Fox News. Even though the company makes most of its profit through TV ads and commercial time, when you visit their website – you will see a lot of content recommendations from OutBrain, TMZ, and Pop Crush. You will even come across additional articles from the Fox News website that will take you to those pages that the publisher wants you to see.

So, is native advertising becoming a dominant revenue model for today’s media?

The numbers look promising

Year after year, native advertising has grown in importance for people who make their bread and butter solely through producing and distributing content.

According to the FIPP’s report on native advertising in 2018, native made up an impressive 31% of the overall publishing revenue in 2017. In 2018, in some organizations, that number went even higher and reached a mind-blowing 69%.

One of the main reasons for this incredible growth is that publishers are able to set significantly higher prices for native advertisements compared to the traditional ones. FIPP’s study claims that more than 60% of publishers charge more for native advertising than basic promotions. This is up from 56% last year.

The above-mentioned report states that 80% of the respondents have a positive attitude toward native advertising, which means that the majority of stakeholders don’t see anything wrong with offering sponsored content mimicked into regular content, with a tone and style that matches the editorial one. Given the fact that many publishers struggle to monetize their content, native advertising creates a win-win situation for both readers (i.e. content consumers) and publishers and editors (i.e. content creators). Banner ads are slowly becoming history: not only have people developed banner blindness, but they have grown intolerant to poor quality content in the form of clickbait.

This is why subscriptions, memberships, and native advertising are now becoming anew, a lot more gracious ways of making money which allow you to treat your readers respectfully.

However, revenue is not the only thing that native advertising has influenced for the better.

The value of native advertising

Native advertising has also changed the way things are advertised, which now matches the modern consumers’ behavior. The path between the first contact with a certain brand and the actual purchase is a lot less linear than it used to be. Modern types of sponsored content don’t really try to aggressively sell something to people. They tend to appeal to their readers and to woo them. The goal is to build a relationship with them. They offer real value instead of looking at people as walking wallets.

In a lot of newsrooms, journalists working with native advertising have almost sacred roles. Their job isn’t to mask advertisements and present them as regular content pieces, but rather to develop branded stories that have some genuine context to the point that’s being promoted. These stories don’t necessarily have to reflect the opinions of the publication (and everyone in it) per se, but they do have to be truthful and in perfect sync with the quality and values of the domain on which they appear. It’s a far more sophisticated approach that requires a deeper understanding of the matter and adequate skills to come up with effective solutions.

Unlike traditional advertisements, native advertisements don’t actually interrupt readers. They don’t suddenly appear in front of the readers’ eyes and force them to click on something while they’re in the middle of doing something else. Their job is to seamlessly build awareness about specific brands and services, provide context and deeper meaning to the whole process of advertising.

This way of promotion isn’t flashy. It doesn’t try to stand out from everything else on the publisher’s website. On the contrary, it actually tries to blend in. Even though its job is to promote brands and generate sales, quality native advertising pieces have a value of their own. They are good informative pieces.

How publishers organize their newsrooms to support the native business model

A lot of publishers are now more confident regarding the value of their native advertising services, so they are boldly moving forward to new areas and platforms. Thanks to their success with native ads, numerous publishers are starting to act as specific type of media, event/product/service supporters and promoters, and even digital agencies on occasion. They are openly “going to war” with marketing agencies. If they choose to sit quietly, they will miss an opportunity to take advantage of a great business model and perhaps they’ll have to continue to rely on low-margin business models. That won’t keep them afloat for a long time.

Plain and simple, the old way of operating is hardly sustainable. Publishers need to adapt to the new terrain. Apart from adopting the subscription business model, native advertising is one of the promising options modern publishers are embracing to boost their revenue. Some brands are going all in on native, so they are reorganizing their newsrooms in order to fully support the model. Some have dedicated teams whose job is to only think about native, and others have implemented more sophisticated solutions.

For example, Forbes has developed its own native advertising platform called BrandVoice. This particular platform makes it possible for advertisers to publish (for a fee, of course) directly onto Forbes.com using the same CMS as Forbes’ very own journalists and content contributors use on a daily basis.

Once a client submits the post, Forbes’ editors go through it to make sure that the quality meets the publisher’s standards. As soon as the content is approved by the people in charge, it goes live and it gets distributed like any other article on the site. Forbes also uses native ad placements to help promote and distribute BrandVoice partners’ content across Forbes.com. Apart from getting published on one of the most popular domains online, the brands that do native with Forbes also get a healthy flow of organic search value.

Deciding how to structure your native advertising model will have a huge impact on your daily operations and internal resource management. For example, if a publisher decides to offer moderated native advertising services, that is, to provide advertisers with guidelines on how to produce and submit content for their publication – then that particular publisher needs to make sure that it has enough dedicated editors at its disposal to go through these pieces and ensure that the quality of submitted content is good enough to appear on the website.

On the other hand, if the publisher decides to sell creative content production services where its staff creates the advertiser’s content for the publication – a whole different set of rules come into play.

Whichever model they choose, publishers need to be sure that their staff (editors, journalists, sales, marketing, etc.) has the correct skills and mindset to implement and continually improve the model. These skills include the ability to sell packages, create and review native adverts on a scale, effectively communicate ad results, and develop an ongoing relationship with brands who advertise on their publication.

How Content Insights helps you make the most of your native advertising efforts

Even though everything seems pretty clear and straightforward so far, reorganizing internal resources and daily operations is never easy for publishers. Building an in-house native advertising team requires some serious thought. In addition to selecting the right individuals to focus on this particular part of their business, publishers also need to figure out how and where to sell their native advertising services.

The biggest problem regarding native advertising is the lack of transparency. People might not completely understand what they are buying. They don’t really understand what’s the precise ROI of this particular service. “Brand awareness” as a concept won’t resonate with many businesses out there. A lot of today’s entrepreneurs are focused on generating clients, not fans. Popularity doesn’t mean much to them if they’re not making a profit. In order to trust this particular service and continue using it, they need to know how their native ads translate into dollars and new clients.

For publishers that rely on native advertising to survive, this is always a challenge. They experience difficulties with selling their services because they don’t really have much data about their audience to show to the clients. Yeah, they can send them a screenshot of their Google Analytics dashboard, but that doesn’t solve anything. Looking at metrics such as Pageviews and Time on Page won’t really help businesses understand how engaged a particular audience is.

These browser metrics have nothing to do with audience behavior, so they are basically useless for people who are looking to invest in native ads with a particular publisher.

Most publishers sell their native ads by forwarding examples of their previous work to potential clients. These examples often don’t cover the same topics, so they don’t really help the clients see what they’ll be getting in return. Their train of thought usually goes like this: “Sure, the article will probably be good, but how will the audience respond to it?”

Of course, this is not sufficient enough.

Data plays an important role in this process. Making sure that clients understand what value they are getting for their money has proven to be of crucial importance for selling native ads. It’s all about building lasting relationships with brands that are interested in promoting their business on a particular website.

Now, let’s take a moment to look at our use case with The Local again. The Swedish publisher uses Content Insights when negotiating with potential advertisers to give them an in-depth perspective of their audience and how they engage with the content.

Here’s how presenting insights from Content Insights analytics app supports the native business model:

  • Key stakeholders can estimate what the return on their investment in native advertising will be and allocate their budget more precisely
  • Publishers can understand how to better optimize their publication for the native model and balance it with other business models (or reorganize/expand their team accordingly)
  • Best performing topics, authors, and sections that generate the biggest engagement from readers are clearly listed; this allows publishers to design appropriate pricing packages while advertisers can get a clearer idea regarding the possible results

With this information, publishers can build better native teams and offer advertising services to brands that are great contextual fits with their most “active” sections and topics. It’s a data-driven business decision, not a hunch-fueled guess.

If you want to learn more about how Content Insights can help you set up your native advertising operation, feel free to contact us at hi@contentinsights or book a demo.

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