How Native Advertising Is Evolving In 2016

April 04, 2016

Seeing the state of the online display advertising industry today, it begs a question for all of us:

“Do we want native advertising to follow the same path of display?”

Native advertising continues to be the bright spot for the media and publishing industry as it grows from $8 Billion last to $21 Billion by 2018 in the US market alone. I feel that we have hit a fork in the road (whether we are aware of it or not), as the industry decides what we want native advertising to be as it grows up.

There are two paths that native is evolving into: Premium Native and Programmatic Native.

How native advertising is evolving in 2016

Premium Native is focused on quality and really an execution of content marketing, which is a larger segment of the marketing industry. The Content Marketing Institute has published the following definition: “Content marketing is a strategic marketing approach focused on creating and distributing valuable, relevant, and consistent content to attract and retain a clearly-defined audience — and, ultimately, to drive profitable customer action.”. Premium Native is a clearly labelled promotional ad that drives a user to a piece of branded content, normally created by the publisher on behalf of a marketer.

Programmatic Native is focused on scale and is really a display adrepackaged into components and displayed in-feed. The main purpose of display ads are to deliver a brand message and bring users to a marketer’s website. Programmatic Native is following the same business model and technology approach that display advertising has adopted. As a result, it will also face the many challenges display is under, including low-quality advertising, ad blocking, viewability and fraud concerns.

The two are at odds with each other, as publishers have seen with display advertising, when using the same inventory to promote both premium native (branded content) and programmatic native (display ads that link offsite) effectively trains the audience to not engage.

Battle Royale: The Players

In 2016, we are going to see a battle royale as both Premium Native and Programmatic Native companies approach brands and agencies offering native solutions, fighting it out for access to rapidly growing content budgets.

How native advertising is evolving in 2016

Premium Native leaders are large publishers that have invested in building content studios and distribution services to drive meaningful engagement with high-quality branded content. Some examples of Premium Native players includeBuzzfeed, Huffington Post, Refinery29, New York Times, Economist, Telegraph, Wall Street Journal, Conde Nast, Washington Post and Slate.

Programmatic Native companies are either native ad networks, content recommendation networks or display exchanges, all of whom have a business model of aggregating publisher inventory and selling it in wholesales to agencies. Some examples of Programmatic Native players include Outbrain, Sharethrough, Taboola, Google, Appnexus, Triplelift, Nativo, Distroscale, PubMatic and Bidtellect.

“The battle that I’m seeing in the market is less about technology and more about business models.”

Content marketers now have options on how they choose to allocate investment.

7 attributes that make Premium Native and Programmatic Native a different experience

There are differences between Premium Native and Programmatic Native campaigns and here are 7 attributes that impact brands, audiences and publishers.

How native advertising is evolving in 2016

Premium Native is anchored on quality. Brands who have the need for quality content, trust in the audience they reach, desire for in-depth engagement and are willing to pay more for all of this, will align with Premium Native. As a result, they will continue to establish direct relationships with premium publishers who can offer the ability to create great content and credible and trusted distribution within their audiences.

Here is a Premium Native example from Slate and the University of California,“How climate change is igniting a revolution in winemaking”.

How native advertising is evolving in 2016

Programmatic Native is anchored on scale. Agencies who need to maximize reach for the lowest possible price will look to ad technology companies and networks to facilitate their needs. The campaigns are more transactional in nature, with the clear expectation for an action here-and-now. The risks of ad blocking, FTC regulation, user backlash and commoditization of inventory for both publishers and brands are higher with Programmatic Native.

Here is a Programmatic Native example courtesy of Outbrain and CNN.

How native advertising is evolving in 2016

Fast-forward a few steps

The continued evolution of native into Premium Native and Programmatic Native forces publishers to be deliberate about their strategy.

“Because we have a hybrid commercial model with subscribers, we’ve historically been concerned about belly-fat ads. We haven’t done [programmatic native] because we are sensitive to our subscribers.” said Andrew Saunders, CRO of The Globe and Mail, in a recent AdExchanger story.

“I don’t think branded content can ever run on an automated basis, because it will intrinsically lack the credibility you owe to your audience. I worry that programmatic content can’t really align with the tone and voice of a publication.” said Rich Antoniello, CEO of Complex Media in a Digiday story titled ‘is programmatic native an oxymoron’.

Native really evolves into Content Marketing (Premium Native) and Display Advertising (Programmatic Native). As a publisher thinks about the longevity and health of building a content business versus a display business, the strategy and plan will look quite different. My advice is to publishers is to be deliberate, thoughtful and strategic on developing a revenue growth strategy.

“Looking at the long-term health of a content business, it is clear to me that the paths of Premium Native and Programmatic Native lead to very different destinations.”

Kunal Gupta is the Founder & CEO of Polar and a Founding Member of Publisher 2020.  He leads a talented team transforming the media publishing industry with technology. Polar provides a technology platform that over 2,000 publishers around the world use to strengthen and grow their digital content marketing businesses. He is also passionate about leadership and finding focus and calm in a modern era. Connect with him on LinkedInMedium or Twitter.


JULY 2017

Polar’s Snapshot of Global Branded Content Performance presents the complete picture for major markets and publishers this past quarter.