June 10, 2014

Native Advertising and the Battle For Eyeballs

As with any new digital advertising channel, marketers have been struggling to determine how best to measure and assess the value of native advertising ever since it exploded onto the scene last year. Perhaps the first challenge in measuring the ROI of native advertising is determining a concise definition of what it actually is.

Is native advertising just a new name for an advertorial, or does it also include sponsored posts on Facebook and multimedia content developed by brands and hosted by publishers?  A good definition comes from Dan Greenberg, CEO of Sharethrough, who refers to it as a form of paid media where the ad experience follows the natural form and function of the user experience in which it is placed.”

Since native advertising can take on many different forms, let’s narrow this down by looking specifically at sponsored content.

Publishers love sponsored content for a couple of reasons. First, it’s a new stream of revenue that works in a digital and mobile-centric world. Some have even proclaimed that native advertising has played a big role in “saving” journalism. Second, native advertising adds volumes of contributed content to the media platform, taking the burden off increasingly busy journalists and editors. When done right, sponsored content can look exactly like an extension of existing editorial coverage. Maureen Sullivan, President of AOL.com, recently went on the record saying native advertising works so well because the publisher and the marketer have the same objective: to create the best content for the end user.

Brands also love sponsored content because it gives them an opportunity to control their message and strengthen their bond with current and prospective customers by providing interesting and helpful content. Until recently advertising had been more product-focused. Unless there was a compelling reason to share an ad (humor, emotion, etc.), advertisers had to pay for every impression. With sponsored content, advertisers still pay for the placement, but the best sponsored content is now designed so that it won’t interrupt a consumer’s experience. If the content is compelling enough, the consumer might even share it with their own network at no cost to the marketer. It has forced brand marketers and communicators to do more than entertain and sell. Now they must inform, educate and enlighten.

Many studies have cited findings indicating that consumers don’t care whether something is paid (sponsored) or regular editorial coverage, as long as it delivers value. In fact, the New York Times said this month that readers are spending the exact same amount of time on paid posts as they are on news stories! In some cases, ad-sponsored posts had actually done better than traditional news stories. Researchers at Cal Poly recently conducted a study and found that while younger readers might be more aware that they are consuming native ads, the presence of sponsored versus traditional online advertising had no significant effect on the viewer’s perception of a news website’s credibility.

The biggest potential challenge is awareness. Many readers are not conscious of whether they are consuming a piece of paid content versus a piece of editorial coverage. According to a new survey conducted by HubShout, 62% of respondents didn’t remember what the last sponsored article they read was about or who sponsored it, and only 25% remembered what it was about, but not who had paid for it.

This begs the question of how effective native advertising is for the marketer. If 100,000 people share a smart piece of sponsored content but only 10% realize a particular company is the sponsor, how can its value be quantified?  Just because a reader is consuming and sharing great content, what is the chance that they will actually buy the product in question? And as more readers begin to proactively identify sponsored content for what it is – paid advertising – will it become less effective?

Another possible concern is one of balance, particularly as more marketers gravitate toward native advertising. Will consumers accept reading entire newspapers comprised solely of sponsored content? Who will provide fair and balanced news, and what is the tipping point?

Native advertising and sponsored content have forced marketers to think outside the box and focus on what best serves the consumer, but calculating the ROI and predicting future value is still a work in progress.

By: Stephanie Dressler

Stephanie Dressler is vice president of digital & brand strategy at Dukas Public Relations.

She holds a Master’s degree from NYU in Corporate Communications and Public Relations.