What Is Native Advertising? The Future Of Digital Ad Dollars Explained

by Jason Keath on Oct 31, 2013

native advertisingBanner ads are dying.

Since their launch in 2000, banner ads have declined from a 9% click through rate (CTR) to .11% average CTR today. And each year that number falls.

Banner ads are now tiny billboards used as a support mechanism in online advertising and not the main show.

The future of online ad dollars is native advertising.

Native advertising is content as the ad, specifically content that would or could normally be native to the placement of the ad. [Tweet This]

The term native advertising has risen to prominence over the last couple years and there are varying definitions. We are going to focus on three main types of native ads.

  1. Sponsored Articles
  2. Sponsored Links
  3. Social Ads

First, let’s review a couple things that are NOT native advertising.

Search ads: Many have labeled Google’s search ads as the original native advertising, weaving paid search results into or above the organic results. This is true, but search ads stand apart as their own industry today and are not new. So we are excluding them from this breakdown.

Video ads: Most video ads are not native. They are pre-roll ads mostly and rarely take on the challenge of being relevant to their placement.

Paid Endorsements: Influencer marketing, blogger outreach, celebrity integrations, etc. While paid content deals can be a part of these agreements, these are less like native ads and more similar to traditional paid endorsements and spokesperson campaigns.

A native ad is a Facebook post that an advertiser paid to place into your news feed. It’s that Buzzfeed article that JetBlue paid to have written about fun places you should travel. And it’s that “read similar content” link at the bottom of an article that may or may not take you to an interesting article on another website.

1. Sponsored Articles

These are very similar to old school newspaper and magazine advertorials, but they are less promotional. The topic of an advertorial is usually the advertiser, their product, or their industry.

Sponsored articles, however, are more focused on reader engagement and lightly branded. These articles should be very close to articles that would normally be published on the site where it is being featured.

Buzzfeed has been one of the leaders of sponsored articles as it is their main revenue model. Of the top 18 articles featured on Buzzfeed right now, four of them are “Presented by” paid advertisers. And if we look just above the fold, you can see three ads on Buzzfeed.com (see below outlined in red).

BuzzFeed ads

If we take a closer look at the articles themselves, we will see what you would normally expect to see in a Buzzfeed article. Lots of images, animated gifs, their signature sense of humor, and of course almost always a list format.

Here is an example from Ford Sync. Notice the light branding and prominent link.

buzzfeed ford sync article

Advertisers trade in big branded banner ad billboards for a more rewarding consumer experience. The focus is on content, and quality content, that can be attached to the brand. Clicks can still easily be apart of the equation as well.

No one is really invested in sponsored articles as heavily as Buzzfeed, yet. But here are some other online publishers that are leading the way in offering native ad sponsored article opportunities including:

Forbes

forbes native ad article

Business Insider

business insider native ad article

The Atlantic

atlantic native ad article

2. Sponsored Links

These native ads are previews of an article on another website, often including a headline, photo, and sometimes excerpt of the article being promoted. They might look like they are linking to articles on the same website, like on the top of Buzzfeed.

BuzzFeed ads

The above sponsored link example is a series of article links on top of Buzzfeed. All of them link to Buzzfeed articles or videos, except the “Partner” one on the far left that links to an outside publisher.

But in effect, these function more like a PPC ad than any other native ad format, because their goal is to get you to click through to the final article or landing page.

Sponsored links are quickly becoming the ugly stepchild of native ads. There are a ton of low quality ads being served in these “recommended reading” spots that plenty of “respected” online publishers seem to have no problem making money from.

Some go to articles or websites that have nothing to do with what the user originally clicked on. And many link to articles that are completely unrelated to the original article a reader was consuming or even the site as a whole.

These ads will usually show up on the homepage (Buzzfeed, Mashable), sidebar (Time), or footer below an article (CNN). Despite some of the dodgier sponsored posts out there, there are many respectable options for advertisers and publishers.

Here are a few publisher examples.

Mashable front page sponsored links blend in very nicely.

mashabe native ad link

TechMeme, a site of only links to outside publishers, calls out sponsored links with color blocks.

techmeme native ad link

Time has some pretty relevant ads in their sidebar, by Taboola, a sponsored link vendor.

time native ad link

CNN‘s article footer promotes sponsored articles using Outbrain, another sponsored link vendor.

cnn native ad link

Disqus is another interesting vendor in this space. The blog commenting system has the option to include sponsored links from “around the web” below each blog post (on the right below).

disqus native ad sponsored links

For all of the vendors in this space, the quality can have a range. And by quality I mean the relevance of the sponsored links to your article and site-wide content. This relevance can also be controlled by the publisher for some vendors.

3. Social Ads

Social advertising is in the middle of a huge growth spurt. That growth is being driven, largely by their version of native ads. These ads show up as promoted tweets on Twitter and sponsored posts on Facebook. The connection is that they all show up in the stream. Where users of social networks spend all their time.

instagram ads

Instagram ad example

Twitter was the first social network to experiment with native ads in the stream in 2010. Facebook quickly followed suit in 2011. And then more recently, this year, LinkedIn, Tumblr, Pinterest and Instagram ads have hopped on the band wagon with in stream ad products of their own. And Google recently changed their Terms of Service in a way that shows they will quickly join the other major social networks with their version of in stream ads.

social-ad-history

Google ads included as bookmark reference. Please note Instagram ads were expected in 2014 a month ago, when this chart was created. Instagram ads are now live.

In stream ads on social networks are extremely effective. Especially on mobile. These ads exist where users eyeballs are already. And on mobile, one of these ads often takes up the majority of our smartphone or tablet screen, if not the whole screen. So click through and engagement rates are very high.

The Problem With Native Ads

With great power comes great responsibility. – Uncle Ben

Since native ads ARE content. They have to be content. Meaning, since you are taking up valuable real estate, your native advertising better damn well be good. Because if it isn’t there is a larger chance that consumers will react negatively.

Relevance becomes more important. Content that users will find useful and/or entertaining becomes more important. Branding becomes lighter.

We see this clearly when brands promote Facebook posts to large irrelevant audiences and they get a flood of negative comments back.

So please, go forth and create great content as native ads. But please, be wary. Your ads are now in the stream. Where consumers are keenly focused. They will not forgive you if you abuse this real estate.

Post Author

CEO and founder of Social Fresh, the social media education company. Jason is a social media consultant, a social media speaker and industry analyst. He consults with corporations and agencies on social media strategy, building community, and influencer...

  • deanrblack

    Very informative article Jason. Thanks for keeping us up to date on the latest trends. I am reminded of Gary Vaynerchuks “rant” the other day that we are all media companies and we need to be producing relevant content in order to succeed.

  • http://socialfresh.com/blog Jason Keath

    Thanks Dean, it goes hand in hand with that for sure. To do native advertising right you really should have a clear grasp on the content marketing that works for your brand.

  • Arron George

    Thanks for a great article Jason. Advertising is definitely changing. Just wondered, what do you think is the first step into ‘native’ advertising for a small business? Social ads?

  • http://socialfresh.com/blog Jason Keath

    Depends on budget. I think Facebook ads (and Twitter, LinkedIn) are your best bet for an easy entre into the space. Disqus ads, if you have a couple thousand to test with.

    And you can also look at custom deals with bloggers. Doing it on smaller scale on your own. Just make sure the blogs have a clear benefit, clear audience tie to business goals. And make sure the “sponsored” label is clear and visible.

  • http://blog.wishpond.com/ Adella @ Wishpond

    Hi Jason. I agree about a few issues of native advertising mentioned at the end of your article. To avoid these mistakes, just be honest! You don’t have to make efforts to trick your target audience to interact with your brand. If you are not sure what to do, just learn from the best practices who do this well like Target or Urban Outfitters! Any tips that you’d like to share with us?

  • http://socialfresh.com/blog Jason Keath

    Thanks for your comment Adella. I definitely don’t think any brands should be trying to trick their audience. I think the best advice is to simply make the most amazing content you can.

  • http://blog.wishpond.com/ Adella @ Wishpond

    Very true :) Content is the king!

  • http://www.alessiocarciofi.com/ Alessio Carciofi

    Great post Jason: thanks

  • http://socialfresh.com/blog Jason Keath

    Thanks for reading Alessio.

  • Cision NA

    Great breakdown, Jason! We remind our audience that native advertising should be a seamless transition for consumers, both in design and content. It’s available in so many forms now and it’s important to focus less on product tie-in and more on adding value for the reader. Love the quote and the comprehensive list!

    Hope you’re well :)
    Best,
    Lisa

  • Gunjan

    Hi Jason.

    That’s a good break up of things. But the way google is going banning sites with any hint of doing any kind of native advertising, do you think there’s a future to this industry? Google basically might be seeing the native advertising as a threat to their own in house adwords revenues. I

    In a way they are trying to manipulate the market & they seem to getting successful at that by forcing business to solely depend upon Google adwords for advertising.

  • http://socialfresh.com/blog Jason Keath

    Google is not banning sites with Native Advertising. They have guidelines for paid links, etc. Most of these sites if not all of them follow the google guidelines very well. There is little to no risk. The risk comes when you post content for a fee or links for a fee and do not disclose it in your content or in your code.

    Also, Google adwords is only 25% of Google’s revenue. They have no need to force people to this one product. They have plenty of ad products.

  • http://socialfresh.com/blog Jason Keath

    Thanks so much for your comment Lisa. Agreed on all points. You guys are a great leader for your clients.