Native Advertising Could Succeed As Display Ads Falter

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Native advertising is rapidly becoming an attractive ad choice for publishers as display advertising becomes less effective in the face of growing ad blocker adoption. According to a report titled “The Rise of Native Ads in Digital News Publications” published by the Tow-Knight Centre for Entrepreneurial Journalism in 2015 –

news publishers believe they see an ad product readers will accept and a path to new revenue as display declines.

3 big takeaways about native advertising

The report’s key findings highlight three key themes.

1. Small and growing revenue share

At the time of the report, native advertising only accounts for roughly five percent of total advertising revenue (with the exception of publications like Buzzfeed that focus heavily on native advertising). At the same time, native advertising’s share of the revenue pie is likely to grow as more publishers shift to native advertising from display advertising.

2. Sponsored stories work better

Not entirely surprisingly, sponsored stories tend to be more popular amongst news publishers. They are specifically “designed to mimic or blend in with editorial content and it takes many forms as editorial”.

When sponsored stories are high quality content that is “relevant, useful and/or entertaining to the publication’s readership”, it tends to be more successful. Readers who resort to ad blockers to hide display ads seem to be more comfortable with sponsored stories because they are typically the sort of content they may otherwise seek out independently.

3. Label clearly

One of the challenges with sponsored stories is ensuring that they are clearly labelled as advertising. They tend to blend in so well with editorial content that readers often don’t understand that they are paid content. This has subjected native advertising forms like sponsored stories to scrutiny by regulators such as the US Federal Trade Commission which has issued guidelines including a recommendation that sponsored stories be labelled as “advertising”.

Promising start, questions remain

Certainly native advertising looks like it could become a dominant and successful advertising medium. At the same time there are questions about native advertising’s potential:

  1. At what point will native advertising’s scale harm profitability?
  2. Just how much native advertising will readers tolerate before it becomes too much?

These questions are linked, certainly, but the second one raises the spectre of something analogous to banner blindness which has plagued display ads. What native advertising’s growth may well mean, though, is less traditional display advertising:

“The better we get at it, the less (pushback) we get. If it means less display, people generally are in favor of the tradeoff.”

If the end result is a better user experience for consumers and improved revenue for publishers, it will clearly be a positive result overall.

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