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InContext / An inside look at the business of digital content

How sponsored content can strengthen revenue in a downturn

November 16, 2022 | By Jason Kalin, Chief Business Officer – Nativo @Nativo

Amid growing uncertainty about the economic environment, it is wise for publishers to consider how to thrive and strengthen their revenue during the potential downturn. With economic uncertainty ahead, it is vital to understand how brands look to invest in marketing during 2023 to build a portfolio of offerings that support these strategies.

The situation

Typically marketing budgets decrease during an economic downturn. However, based on research done by Deloitte earlier this year, marketing spend has grown substantially over the last year. And, despite uncertainty at present, some bright spots stand out.

In the same Deloitte study, marketers stated they plan to increase their spending on DEI initiatives by 10.8% on average. And Hubspot reports that 83% of marketers are investing in higher-quality content. They also report that 80% of marketers expect to maintain or grow their budget for various inbound marketing activities – including content marketing, SEO, social media, and more – to reach and influence consumers at every stage of the buyer’s journey.

This data shows us that publishers would be wise to strengthen their content offering. These can include native advertising, sponsored content and even contextual targeting, all of which are ideal to help brands deliver their stories across publisher channels to reach these audiences.

The consumer perspective

Even at a potential downturn, brands seek opportunities to attract, delight, and engage. Therefore, it is essential to consider the reader and consumer preferences to support these efforts. So we must ask ourselves: what do consumers prefer? Ultimately they want to focus on the content they are trying to consume. 

According to an eMarketer report, over 40% of American adults think online ads seem to be aggressively following them. And this has led consumers to take control of their digital experience, with close to 47% of internet users now using ad blockers because they think there are too many ads online, according to GlobalWebIndex

However, according to a survey by Time Inc, close to 90% of younger internet audiences from Gen Z, millennials, and Gen X say that they prefer custom content, including native ads online, instead of traditional ads. This is an opportunity. 

This data shows that consumers are actively seeking ways to improve their web browsing experience and limit the distractions from the content they are seeking. We believe this will lead advertisers to start looking for strategies that do not distract from the reader experience to reach these consumers and improve campaign performance. 

A crisis of trust

Unfortunately, these days display ads just aren’t that effective: click-through rates are at just 0.05% across all platforms. This decline started years ago, and it is because consumers have lost trust in display; in fact, over 54% of users say that they don’t click banner ads due to a lack of trust.

Now, let’s look at social media. One reason that platforms like Facebook have come to dominate digital advertising is that they are able to provide advertising experiences that are seamlessly integrated into the consumers’ content. They offer opportunities for long-form editorial engagements, lower funnel activities like click-to-download, and short-form top-of-funnel branding executions, such as Instagram stories. 

But the reviews of social channels are not all bright either. Consumers increasingly distrust social platforms. According to Statista, 66% of consumers express concern about the accuracy of the content they see on social media. 

Even with this in mind, however, marketers are looking to invest more in short-form content. Hubspot found that 33% of B2C Marketers already invest in short-form content. While another 33% have yet to, but plan to do so for the first time in 2022.

What we see is that there is an appetite for this content. And, given growing distrust in social media, brands may be actively seeking ways to scale their efforts on the open web.

What do publishers offer to the industry? Trust

Publishers have built a robust ecosystem and relationship with their audiences. As we have said before, this trust can be utilized as a point of differentiation, especially when competing against programmatic offerings. When ad dollars are invested into more strategic initiatives, publishers must lean into the inherent trust they have built with their user base.

In a study by OpenX, 77% of people say they trust articles they see on open web websites more than those they read on social media channels. Pair this with the fact that 70% of consumers prefer to learn about new products and services through content rather than traditional advertising, publishers have the winning formula to provide high-value solutions to advertisers.

The winning formula

To thrive during any potential downturn, publishers need to create offerings that support the strategies brands are investing in for 2023. At the same time, they must maintain the inherent trust they have built with their audiences. To do that publishers must consider the following:

Privacy First 

Focus on solutions that don’t rely on third-party targeting. Rather than using invasive data practices, use content to attract, delight, and engage. This allows you to provide contextually relevant advertising solutions so brands meet their customers where they are in the purchasing journey.

Prioritize Premium 

Brands will look for unique ways to reach their customers, break through the noise, and remove the blindfolds of banner blindness. For digital publishers, that could mean leaning heavier on executions, such as sponsored content that allows brands to tell their stories, from new products to use cases and any DEI initiatives. Give brands the ability to scale their story beyond their audience and benefit from the trust publishers have built with their readers.

Integrate Short-form Content

As mentioned above, brands seek to invest in short-form content. To build a diverse revenue portfolio, publishers can offer solutions to run executions similar to Facebook and Instagram stories or TikTok’s short-form videos. This will allow advertisers to scale these strategies outside social channels within trusted environments.

With a downturn ahead, or not, aligning to meet brands where they are seeking to invest in 2023, will result in a win for publishers. Understand that content moves the needle for consumers. Advertising that places quality messages within trusted content will rise above the clutter. In particular, short form content offerings will allow publishers to integrate the social environment brands are seeking into the publisher site experience. 

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