When it comes to digital advertising, a “big four” have emerged: social ads, display ads, video ads, and native advertising. According to a Salesforce survey of 4,000 marketers, native advertising is currently the third-most popular tactic, tied with video.
Native advertising has come a long way since The Atlantic was shilling for Scientology and giving Jeff Jarvis a panic attack on Twitter. The New York Times—a late entrant into the native ad game in January 2014—has grown its native ad shop, T Brand Studio, into a 100-employee operation that pursues full-service agency deals. The Daily Beast now gets 90 percent of its ad revenue from native ads. Most brands have made native advertising a key part of their repertoire—even as the price tag goes up.
At top publishers like The New York Times and BuzzFeed, a native ad campaign costs at least $100,000, which begs the question: Are brands justifying their investment and doing native advertising right?
That was a key question we wanted to answer this fall when we conducted an in-depth study on native advertising with the Tow-Knight Center for Entrepreneurial Journalism at CUNY. Through focus groups and a survey of 1,212 consumers, we pinpointed some big problems with native content, but also discovered how it can deliver big benefits to advertisers.
Below are a few ways that brands can make their native advertising more effective in 2017.
1. Insist upon clear labeling
Although native advertising has an ancestor in the advertorials that ran decades ago in print magazines, the current ads that appear on publisher sites have a unique format. As the FTC’s native ad guidelines state: “In digital media, native ads often resemble the design, style, and functionality of the media in which they are disseminated.”
The fact that native ads often resemble the surrounding editorial presents potential downsides. Will consumers be able to identify the sponsor? Will they feel deceived? Will they still trust the publisher?
These concerns are legitimate. More than half of respondents felt deceived after figuring out they read content sponsored by a brand.
Some native advertising critics argue this is by design—brands stand to benefit the most from consumers who read a positive article about a company without realizing it’s sponsored. But as our study makes clear, brands have little to lose if they push for clearer labeling. For instance, the most clearly labeled native ad in our study—a New York Times paid post promoting the freshness of Wendy’s food—was also the most effective. Eighty-three percent of readers were able to identify Wendy’s as the sponsor, and 56 percent were more likely to purchase Wendy’s after reading the promotional content.
Clear labeling is just logical. If a native ad comes out well, brands should want their names and logos clearly displayed atop it.
2. Tell a story about your brand, as long as you tell it well
There’s a consensus out there that suggests consumers are averse to native content that focuses on the sponsor. Based on our results, that belief should be reexamined.
The New York Times native ad with Wendy’s was by far the most brand-centric and promotional of the four ads we tested. As the title, “Fresh Food Fast: From Farm to Fork,” suggests, the longform article is all about how Wendy’s uses fresh produce in its fast food. Yet, it was the native ad consumers were most interested in, and the one that had the biggest positive impact on purchase intent.
The reason why became clear in our focus groups.
“I really don’t go to Wendy’s, but Wendy’s has put it out there, let me know, ‘Okay, my products are fresh, this is how we pick them, this is what our restaurant workers do, this is how we pride ourselves on our stores, and keeping them clean and everything,’ Patricia, a 53-year-old respondent, told us. “So then you’re going to start thinking, ‘Huh, you know what? I’ll give it a shot.'”
In our survey, consumers said they appreciated native advertising that informed their purchase decisions. However, this doesn’t mean self-promotional content is the best approach. The opposite tactic can work as well.
A native ad that GE sponsored in Business Insider, for instance, interested 80 percent of consumers and did not mention GE at all. It delivered value to the reader via a report on the Internet of Things. Thirty-seven percent of people who read it claimed they were more likely to buy from GE in the future.
Lauren Reddy, director of audience development and insights for The New York Times, explained the promotional approach: “We’re collaborating with a brand partner to find the most interesting stories that they have to tell. Those are often stories that center at the heart of the brand, but they’re also stories that relate to themes that they care about, topics that they’re passionate about that may be aligned with brand themes or somewhat removed from brand themes. I think it’s depending on the objective of the advertiser on where we really see the strongest story.”
It seems that the future of native advertising may be content that more closely resembles TV commercials and other traditional advertising, in which the brand is the central focus and hero of the story, rather than content that resembles news and confuses readers.
3. Prioritize correct targeting for paid distribution
In the early days of native advertising, ads were primarily distributed to a publisher’s audience through promotional units on a homepage or article pages. Today, much of the traffic to native advertising comes through sponsored Facebook posts.
This appears to be a fine model since respondents in our study were better able to identify native content as advertising when they first encountered it on Facebook. This type of distribution also had no discernible impact on the native ad’s effectiveness.
As a result, publishers may also be able to achieve better CPCs when they promote content on Facebook on behalf of brands, as opposed to letting brands promote content on their own.
“If the media brand is truly valuable in the eyes of consumers, they’ll be more effective promoting content to their readers on Facebook than the advertiser would alone,” said Alex Magnin, CRO of Thought Catalog, in an interview earlier this year.
The risk here is that publishers will just purchase traffic from the cheapest audience possible, not the audience that the advertiser wants. That’s why advertisers should insist on publisher transparency and request data on audience targeting.
In our focus groups, respondents welcomed native ads that were tailored to their interests.
Patrick, a 22-year-old respondent, summed it up best: “I think [native advertising] works only if it’s relevant, only if this stuff actually makes sense.”
This is a modified excerpt from our latest report, “Fixing Native Advertising: What Consumers Want From Brands, Publishers, and the FTC.” Download your free copy of the full report by filling out the form below.