The popularity of native advertising is well documented, but as the practice matures, it’s also shifting its form. In other words, not all native advertising is the same any more.
MediaRadar has closely tracked the rise of native advertising over the last 12 months. By the end of last year we identified 4,600 advertisers who had jumped in to test out this new media unit. Could what Forbes, BuzzFeed and Mashable do so well become a codified, scalable business model for every media company? The answer seems to be yes, but it is a little like watching a roller coaster beginning its steep ascent. A January Association of National Advertisers’ (ANA) poll revealed a whopping two-thirds of their 640-member organization said they plan to try native advertising in 2015.
But here’s where the native ad takes a twist. Being in the business of tracking native ads is like observing the expanding Mandelbrot number set: it’s a kaleidoscope. I’m amazed just how much the concept of native advertising has already shifted and stretched. It was once assumed that native advertising was always paired with editorial content either written by, for or influenced by the advertiser, but now we see an increasing number of native ads with no editorial component at all. The native ad stands alone, detached. At MediaRadar we call this “Native Lite.”
An example of this Native Lite trend can be seen in the Wayfair ads on Yahoo that look like editorial. Although the creative is placed in the editorial feed, it directly clicks through to Wayfair’s website.
To be clear: There’s nothing off script with what Wayfair is buying. The IAB’s official “Native Playbook” released in 2013 included this detached type of native ad in its definition. IAB standards say a native ad is “a linked, in-feed ad that is in a publisher’s normal content well; is a promotional ad; links off of the site to content, editorial content, or brand’s landing page.”
But while this type of ad may indeed be part of the overall native advertising definition, it is a broad interpretation. We believe this edit-less native is something materially different than native paired with editorial.
Why does this matter? Media companies are trying to position native advertising as the high-CPM, high-engagement alternative to programmatic purchase of display ads. For example, native is supposed to be at the high CPM end of AOL’s so-called barbell strategy. Yet, if sellers dilute the value of native, the CPM will fall. Already we know some clients who now call their version of native advertising “Premium Native” in order to separate it from native ads lacking editorial. More than one publisher has said that native is in risk of becoming the advertising industry’s form of “click-bait,” a faux editorial simply linking to an advertiser’s website.
I recently read Fast Company’s behind-the-scenes look into Yahoo’s rapid ascent in native advertising. The company started with $100 million in native sales in 2013 and catapulted to $300 million by the following year, according to the article. Some of this revenue comes from Native Lite, demonstrating this type of ad does perform well and has its place. Yahoo!’s success was large enough that it was prominently discussed in their latest 10K filed in February. They wrote that “Native ad units represented approximately 37 percent of total Ads Sold for the year ended December 31, 2014.” Native Lite is not yet widespread, however. Out of 203 DCN member websites, just 15 were selling Native Lite in March, or 7%. In contrast, 45% of DCN members were selling natives ads in April 2015.
Moving forward, we as an industry should differentiate between “premium” native advertising, which is part of editorial, and “lite” native, which is not. This transparent distinction will benefit the industry and help maintain the health of native advertising as a whole.
Todd Krizelman is Co-Founder and CEO of MediaRadar. Growing up near the epicenter of technological innovation in Palo Alto, California encouraged him to become an entrepreneur and co-found of one of the world’s first social media sites, theGlobe.com. Krizelman also held leadership positions at Bertelsmann’s Gruner + Jahr and Random House.
With his expertise in ad sales and innovation, Krizelman joined veteran web architect, Jesse Keller, to found MediaRadar in 2007. After years of thorough research, development, and data collection, MediaRadar is now the most comprehensive data company focused on the ad sales market. Krizelman is a graduate of Cornell University and Harvard Business School.