By Kunal Gupta, CEO, Polar. A version of this post appeared on Venture Beat.
Recently I’ve been hosting roundtable discussions over dinner in New York and London with publishing executives who are betting big that native advertising will drive major revenue growth in 2015 for their businesses. We often end up debating what the biggest threats to the industry are, and there are four notable threats I wanted to share.
Readers reject native advertising
Those of us who are in the industry buy-in to why native advertising makes sense; However, when I explain what I do to friends outside the publishing industry, the first response is always “so you are basically tricking users into clicking on ads?”
Point being, perception matters. For example, John Oliver’s take on native advertising last month generated a lot of attention for our industry. It also served as a not-so-gentle, sobering reminder of the importance of disclosure and trust.
Earlier this summer, IAB and Edelman released new research on what consumers actually think of native ads. Results of that research showed that well-executed native advertising can boost the credibility of a publication’s site, and that site’s credibly can, in turn, boost the perceived credibility of sponsored content it features. More specifically, sites saw a 33 percent lift in perceived credibility of native ads when those ads appeared on news sites considered to have a high level of credibility. Also, 54 percent of respondents from the research stated that they look favorably on news sites if its sponsored content was relevant to the content they were already reading.
FTC may regulate native advertising
Likely the biggest threat native advertising faces for content marketers could be federal interference — such as the Federal Trade Commission (FTC) introducing a set of regulations for the industry. In December of 2013, the FTC hosted a workshop to discuss the impact of native ads, which produced some mixed results. They said some native ads are unlawful, which gives me reason to pause. This is a big reason for why self-regulation within the industry is so critical, and the IAB’s native ad playbook is a good place to start.
Let’s take a page out of the search marketing industry’s playbook. When Google released its first search ads over a decade ago, they were 100 percent native — meaning a user would not have been able to tell those ads apart from organic search results. What later happened in search advertising is that the big players (Google, Yahoo, Microsoft) have all self-regulated, and done so successfully. This strategy has avoided regulators from stepping in and bringing their industry to a grinding halt.
The lowest common denominator wins (again)
I have written at length about why I’m not building a native ad network as I think it’s the wrong move for the industry. “Advertisers we work with at Quartz are interested in having genuine impact with highly sophisticated audiences – there’s not necessarily a commodity solution to that equation,” says Jay Lauf, SVP Atlantic Media at Quartz. The threat remains, though, that as publishers become more desperate for revenue, they offer their highly-premium native inventory to networks that will generate a few bucks short-term but also commoditize that inventory forever.
What makes content marketing successful today is when clients and their agencies have a direct, one-to-one, relationship with the publisher. The best content programs are built based on the client’s objectives as well as what the publisher’s audience is receptive to. Every publisher’s site is different, or at least that’s the promise given to readers who spend hours consuming content. I think the moment the same sponsored content appears across multiple publishing sites, that site now risks to lose the trust and uniqueness they first touted when building their audience.
Publishers forget to invest in a distribution model
Every business needs a distribution model. Whether you are Samsung, Amazon, Wal-Mart, Coke, Apple or Polar (my business), everyone has a distribution model. VP of Gawker Media Erin Pettigrew puts it well when she says:
In a world where users are bombarded with information and can discover news through many channels, publishers can’t forget to invest in their own distribution model. At Gawker, we have successfully built a large audience that marketers are keen to engage with, frequently. This is thanks to a focus on distribution and developing unique approaches, ones that I expect will continue to evolve.
The last point she makes is key: the approaches and tactics will continue to change. How does this relate back to native advertising? Well, content marketers choose to work with premium publishers not only to create great content, but also to drive great distribution to it. Anthony DeMaio, associated publisher at Slate, often reminds clients that “content may be king, but distribution is queen”. Slate has served 100M native ads in the past month alone and is marrying strong content with strong distribution.
In closing, 2014 has been an exciting year for those of us in the publishing industry. My company in particular, Polar, has delivered 2 billion native ads alone for premium publishers. Those are impressive numbers that I hope will continue to accelerate, provided that together we can mitigate some of the threats facing our industry in the coming year.