Article originally appeared on Marketing Magazine.
Native advertising, which is a strategy to reach consumers with branded content in a non-interruptive fashion is being talked about a lot in 2015. This year in the US alone, eMarketer predicts native advertising will grow to the size of the entire digital ad spend in Canada, or about $4.5B.
Seeing the success of our neighbours to the south, it is not surprising that more brands in Canada are exploring how branded content can be leveraged to stand above the competition in speaking to consumers. Unfortunately, native advertising is not as simple as creating a banner ad and requires a fundamentally different mindset on how consumers build affection with a brand.
So what are the main challenges that brands face when it comes to executing native advertising?
Brands think interruption instead of engagement
When we talk about native advertising, it is hard not to speak about the overarching concept of content marketing. This is a strategic marketing approach focused on creating and distributing valuable, relevant and consistent content to attract and retain a clearly defined audience (CMI). The fundamental notion behind content marketing is communicating with consumers through content without selling.
Such an approach may seem counterintuitive to many marketers; however, the realities of breaking through the noise have changed. With so much advertising thrown at consumers, they simply tune out. For example, nearly 90% of TV viewers skip advertisements on their digital video recorders (The Guardian).
Consumers are tired of being sold to. They seek out content that brings them value, and oftentimes it is produced by brands. (Think of LEGO and their excellent content marketing in the form of theme parks and a recently released 3D cartoon.) Progressive brands that see value in content opt in to channels that deliver this value-adding content through non-interruptive channels. Native advertising offers just that. Unlike pop-up banner or pre-roll advertising that interrupts the user experience, native advertising offers consumers a choice to interact with a branded message.
Brands don’t have processes built around content marketing
Content marketing is new; hence it’s the new-age companies that were super successful in adopting it. HubSpot, Shopify and Netflix are some of the very notable examples. What is interesting is that many mega-brands are becoming very savvy with content too. Intel, MasterCard and P&G are all starting to build internal teams to focus on producing value to consumers through content that brings benefits outside the core value proposition of their product. However, the unfortunate reality is that most brands are lost when it comes to content marketing. While two thirds of all B2C companies are using content marketing, only 27% of companies have a clearly documented strategy (CMI research). According to the study, 50% of the marketers have a strategy only in verbal form. This just shows how far we are from having brands take content seriously.
Brands are uncertain how to measure the results
Over the last 20 years of digital advertising, marketers have been molded into Direct Response-first thinkers: drive traffic, increase conversions, and then increase sales. The realities have changed. Consumers are bombarded with offers and deals daily. What many companies are starting to realize is that one of the most sustainable ways to ensure brand loyalty is not by constantly incentivizing purchases, but by connecting with consumers on a deep level—aligning the company’s values with theirs.
According to the same study done by the Content Marketing Institute, the key metrics that are used to measure the success of content marketing are traffic (60%), sales (54%) and conversion rate (39%). These priorities signal one thing—brands still think of content (and in turn native advertising) as a performance channel. What is more interesting is how many companies attribute these metrics to actual return on investment (ROI). A shocking 21% of respondents admit to not even attempting to track it.
Tracking direct response metrics, having no documented strategy on creating and distributing content, and not tracking ROI from content that is produced are all reasons why only a third of marketers consider content marketing effective. That’s the bad news. The good news is that with native advertising being a paid media channel, tracking ROI is easier, as it leverages many of the familiar strategies used in other paid media channels.
When it comes to measuring the effectiveness of native advertising, Toronto-based StackAdapt encourages brands to get serious about data and analytics. First and foremost, brands need to set benchmarks. That is, to segment users based on the source they come from, look at the content engagement metrics (time on site, page views, social actions etc.) and take the holistic approach by understanding users’ path to conversion analysis. Second, companies that invest in upper- and mid-funnel strategies to build brand awareness, brand affinity, and purchase intent need to split test native advertising with existing paid media channels such as banner advertising. Key performance indicators can include reach, frequency, cost per visit, and engagement metrics described above.