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Trends That Gave Rise to Native Advertising (Featured on Marketing Magazine)

Digital advertising evolution: a closer look at the fundamentals. Piece originally appeared on Marketing Magazine

In 2015 the term that undeniably takes centre stage in the digital media world is native advertising. Even though many marketers continue to battle over exactly which advertisements should be called native, the fundamental premise is the same: uninterrupted delivery of content produced by or in collaboration with a brand. To understand why native advertising gained such momentum over the last couple of years, we ought to look at the underlying industry trends that will continue to shape native advertising as one of the dominant digital media channels.

Shift to values-based advertising

When advertising first emerged, the main focus was the list of its features to differentiate it from the competition. However, as more companies started competing for consumer attention, it became evident that it is impossible to win the ‘feature war.’ What more progressive brands came to realize is that in order to win consumers over, they had to connect with them on a level deeper than just transactional. The emergence of social media, which allowed brands to shift from a monologue to a two-way conversation with consumers, presented an opportunity to engage with consumers by showing shared values and being more human. The democratization of such powerful distribution channels allowed even smaller companies to show their human side. Take Green Shoe Studio, a production company based in East Peoria, IL. Instead of focusing on the capabilities of their recording studio, they instead showcased their values by allowing an elderly man to record a love song in tribute to his wife. This short documentary generated millions of views on YouTube.

Shift to Pull Marketing

According to a study done by the National Center for Biotechnology Information, the average attention span has dropped from 12 seconds in 2000 to eight seconds in 2013—a second shorter than that of a gold fish. This comes as no surprise, given that the typical Internet user is exposed to up to 3000 advertisements a day (Huffington Post). As a result, more brands see the value in finding ways to get users to discover them in order to stand above the crowd of competition that aggressively pushes their messages at consumers.

Such thinking gave rise to the concept of content marketing: a strategic initiative of creating content that delivers value beyond the core product offering. The underlying magic of content marketing is that it delivers value in a non-interruptive manner. “Instead of pitching your products or services, you are delivering information that makes your buyer more intelligent” (CMI). According to the Content Marketing Institute, over 90% of all companies now invest in content marketing. As the creation of content increases, so does the need for scalable distribution channels.

Brands start to think like publishers

Traditionally publishers approached their monetization by building an audience and then selling opportunities to engage with their audience to advertisers. Prior to the wide adoption of social and native channels, brands in turn relied heavily on these publishers with their established distribution channels to reach their consumers with content. However, with the proliferation of the aforementioned digital distribution channels, brands began to realize the efficiencies in reaching the right audience that these channels have created.

Instead of relying just on the audience of a particular publisher, brands take a publisher-agnostic approach to distribute their content through programmatic native advertising technology partners. By producing original content and hosting it on their properties, they are able to cherry pick the audience of interest and drive users to this content. Native advertising channels emerge to complement closed social media networks and reach users with branded content across the web.

Everything goes mobile 

The current challenge that markets face is that most of the Internet, together with the advertising solutions to monetize it—banner ads—have evolved around static web. The nature of mobile content consumption rotates largely around the concept of infinite scrolling, similar to that of large social networks like Facebook. This evolution called for new ad formats that are integrated ‘in-feed.’ The historical solution for mobile has been tiny ads (300×50) that don’t provide enough room for delivering a brand message. On top of that, over 50% of clicks are reported accidental (Business Insider).

Today, well over half of Canadians own a smartphone (Catalyst) and their mobile usage grows exponentially. Mobile data traffic is expected to grow 762% by 2018 (Financial Post). As expected, advertisers see this growing appetite for mobile usage as an opportunity to reach consumers on the go. The strong demand for new ad formats to address the evolved nature of content consumption on mobile devices, called for a solution that would link the marketing message to the user experience.

First pioneered by social networks and search giant Google, we are seeing native advertising strategy being widely adopted. As per a study done by eMarketer, 73% of US media buyers now invest in native advertising. And rightfully so; according to a study done at IPG Media Lab, native advertising beats banner ads on every engagement metric, from increasing brand favorability to a lift in purchase intent.

4 min read

Native Advertising DSP: Programmatic Approach to Buying In-Feed Native Ads

Programmatic buying is breaking into the native advertising industry with IAB’s recent release of OpenRTB 2.3 and Native Ads v1.0 protocol for automated trading of media. The mission behind the release is to foster innovation in Real-Time Bidding (RTB) marketplace for Native Ads by providing a technology standard for companies to innovate around. By establishing this open, flexible, standard for the new ad format, In-Feed Native Advertising, the programmatic ecosystem will see its rapid adoption amongst publishers and advertisers.

The fundamental difference of the new OpenRTB 2.3 protocol is that it allows for passing individual ad elements in a form of metadata, unlike banner advertising where a static image file is being passed. This allows for virtually infinite variability in what native ads can look like. A company that played a major role in defining the key elements an in-feed native ad should have is Facebook.

Over last few years we have seen several companies enter the native advertising industry. Their work primarily resembled that of an ad network — they juggled working with both publishers and advertisers. Even though native advertising implies integration and customization, every company needed some degree of standardization to grow the size of the publisher network they can tap into, on the premise of which they can attract more advertiser dollars. We’ve seen this happen to banner and video ad formats, and it is now happening in native advertising too — companies start shifting towards either supply-side to represent publishers (and become an exchange or an SSP) or demand-side to represent advertisers. This narrow focus is instrumental in avoiding the conflict of interest ad networks have — having to maximize revenue for publishers while driving the most ROI for advertisers. These conflicting goals can on be avoided in an open marketplace environment.

 

Native Advertising is gobbling up budgets, but the novelty for the new format is quickly is wearing off and media buyers started to demand performance. It may have been sufficient to simply integrate a native ad in a contextually relevant environment 2 years ago, but in 2015 buyers want to make sure the right users see these ads. In fact, according to eMarketer, 70% of media buyers place audience-targeting as a top priority when buying native advertising. With the rise of native advertising exchanges such as AdsNative, PubNative, DistroScale etc., trading desks looked for a platform that would allow tapping into all of the exchanges for maximum scale, targeting and workflow efficiencies. Native Advertising DSP allows buying native advertising across all exchanges through one interface. Some of the most notable advantages of using a DSP to buy native advertising:

  1. Centralizing campaign reporting provides actionable data across all exchanges.
  2. Leveraging DSPs machine learning algorithms allows for optimization of campaigns across all exchanges towards one goal.
  3. Having full transparency on where the ads are running and the cost that is associated with buying native ads. Centralized platforms make campaign pacing decisions and budgeting easy.
  4. Appling frequency cap on all media buys. This eliminates scenarios in which a user is over-exposed to ads through different exchanges. Having a universal frequency cap ensures users that have converted on the site are removed from targeting across all exchanges and aren’t targeted over and over again.
  5. Buying advertising against 1st or 3rd party data across all exchanges. This ties into the point above, of having tight control of what users are targeted, how often, and with what message.

Native advertising channel is an infrequent opportunity for brands to get an upper hand on their competition by scaling engaging content to build deep connections with consumers. With the wide adoption of automated ad buying, Native Advertising DSPs provides brands with a cutting-edge access point to serve native ads to their target audience at scale with full pricing and site-level transparency.

4 min read