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Depth Replaces Reach for Small Publishers

With the coming of  2017, expect native advertising to take a sharp turn to e-commerce. Buzzfeed rolled out its gift guide newsletter in late September, but now we expect all new product reviews to include ways to buy the product that’s reviewed. And actually, this kind of native advertising makes a lot of sense, because it doesn’t annoy the consumer. Presumably, if someone is reading a product review, they’re considering whether to buy the product, and if they decide to buy it, an affiliate link or a shopping cart might just simplify things. And both publishers and advertisers are looking for ways to stop consumers from blocking ads.

This Christmas is going to be the big “tell” for both mobile advertising and e-commerce. Not only will Buzzfeed, whose readership is primarily young women, use native ads to sell products on its site, it will go further into tailored newsletters, moving into verticals like medical, grammar, and even people whose vocabularies include curse words.

And Buzzfeed is not alone. Before Gawker Media was sold, Nick Denton admitted that he got about 25% of his revenue last year from e-commerce.

What does this mean for traditional advertising? Not much, because the percentage of ads that are amenable to e-commerce is limited. Most large advertising spends are focused on branding. However, what it means for publishing is another story.

It means every publisher doesn’t need to go to Facebook to find an audience. Small publishers who go deep into verticals with affinity groups can do very well with small audiences that are very faithful. Take Brian Lam, a former journalist who now publishes The Wirecutter and Sweet Home. The Wirecutter uses product reviews to drive sales. Here’s what Lam, who used to work for Wired and Gizmodo, says:

Everything we choose is an award-winner, and we don’t focus on presenting you with anything but the things we love.

Consider them billboards for electronics and everyday things. The point is to make it easier for you to buy some great gear quickly and get on with your life.

Lam is transparent about the fact that he gets an affiliate commission for every product he sells. While his business model wouldn’t support a large organization, it does fine for his small team, and it earns him a loyal following among gadget geeks.

And what’s at the top of his site? A single banner ad for an HP laptop. And on Sweet Home, a single ad for an air purifier. Nothing to turn readers off, and something the readers might also want. Everything else on both sites is a product review.

We think this represents the future of advertising. Fewer ads, well-targeted, not looking for gigantic reach, but for depth of targeting.

 

 

The New Rules for Native Advertising

As a publisher, now do you avoid sullying your brand with the “slew of sewage” most editorial writers think comes with native advertising, and yet keep some of the revenue that flows from native for yourself?  For the Times, known for over a century as “the gray lady,” the reputational damage of going native could have been disastrous, and yet the category has grown so quickly that there’s no way not to participate if it wants to survive.

So the Times jumped awkwardly into native, and now its agency had $35 million in revenue last year, and will create 100 campaigns this year. Yet, the Times does not have the feel or the reputation of Buzzfeed, whose branded content is often offensive to more sophisticated audiences. Its native content is still recognizable as being from the Times.

Here are some good tips that the New York Times has learned from experience that can be applied by other publishers.

1)First, if you establish an in-house creative unit to produce branded content that will run in your publication, give it a separate name: the Times’ unit is called T Brand Studio, and calls itself an agency.

2)Next, begin with an innovative campaign to run in the publication that showcases both the agency’s and the publication’s multimedia capabilities. In the case of the Times, a campaign for Netflix won over some of the wary Times newsroom occupants.

3)Match the quality of the branded content with the quality of the editorial content.

4)Bear in mind that advertisers don’t necessarily need publishers to get reach anymore, but if you have high levels of engagement from your readers, you can sell your advertising for higher prices.  Reach is going out of style in favor of engagement. The Times’ subscription model promotes reader engagement, and that helps the ad sales, too.

5)Do things that Facebook cannot do. Scale and data are Facebook’s purview, but narrow targeting is best at a publication.

6)Programmatic, video, and content-based ads are growth pillars, and display is not. Focus on the areas that grow. Mixed reality could come next.

7)Raise the bar on innovation in accordance with the specific KPI for the brand. What kind of NBDB (Never Been Done Before) campaign, will get the CMO on the cover of AdAge? Those are the kinds of KPIs brands come to an agency with.

8) Raise the bar on quality to match that of your publication.

9) Label it properly so if visitors choose to engage with it they know that they’re engaging with.

10) If a brand asks for creative that can be run elsewhere, you’ve hit the jackpot. You are then a fully-functioning agency, and can be an actual profit center.

 

 

 

Ten Top Trends in Digital Advertising for 2016

It’s fun at the end of every year to predict what will happen the following year, especially in an industry so prone to change as the online media industry. But this year, because consumers have announced that they’ll have a say in next year’s trends by turning on their ad blockers, some upcoming changes are less difficult to predict correctly than usual.  Assuming the publishing industry isn’t suicidal, for example:

1)publishers will take seriously the wishes of consumers to have less intrusive advertising by planning more native content campaigns with brands and selling fewer display ads at higher CPMS;

2)the creative department (or agency) will assume more importance than it has had in the past decade, because media buyers are coming to the conclusion that it’s not only a numbers game — it really matters what message is delivered to which customers. The most sophisticated brands are doing very customized creative based on information gleaned from their own databases so customers don’t receive irrelevant ads. Example: if you live in Florida, you won’t get the ad about how the car handles in ice and snow; you’ll get the one about its powerful air conditioning system;

3)Brands will expend more energy and money producing content consumers might actually want to watch and engage with, rather than just buying impressions for reach and frequency.  In fact, frequency caps will probably go down, as advertisers strive not to irritate consumers, and reach will be deeper, and not as wide;

4)Autoplay video with the audio turned on will probably go away, as will non-skippable preroll and other formats that irritate consumers such as pop- unders and interstitials. Advertising that blocks content from a site visitor will also go away;

5)Millennials and IT professionals, the most tech savvy segments of the online audience, will have to be reached with native advertising, in-app advertising, and direct mail, because these consumers are the heaviest users of ad blockers and will probably not willingly turn them off once they’re on;

6) As a result, native formats and contextual targeting will be the “new new thing,” which means the one thing that can’t go away is data. Both publishers and brands should invest heavily in their own databases, because trackers are also being blocked along with ads. Cookies have fallen out of favor;

7)As an industry, we shot ourselves in the foot over the past five years seeking scale, scale, scale. That meant we made many more consumers angry than those whose needs we satisfied. In 2016,  in order to wean consumers off their ad blockers, we’re going to have to make the user experience of the mobile web  better.  By better, we mean faster page load times for mobile browsing, which means using technologies like Google’s new AMP framework. It means buying ads on premium sites that have reduced their inventory to make their pages deliver a better user experience, and paying more per CPM. And it means reaching more of the RIGHT people, although fewer people overall;

8) In 2016, we will probably see a true supply and demand market, in which the supply is no longer infinite as advertisers refuse to pay for traffic generated by bots and publishers streamline their pages. Group M’s dictum that it will only pay for ads in which the experience is initiated by the user and the “chosen” ad is 100% in view, 50% completed, with the audio on for the entire time will take hold. This is a tough standard to meet, but MediaCom’s Steve Carbone argues that anything less than 100% viewable in any other medium would be considered a “make good.”

9) Ad exchanges will continue to struggle as agencies leave them for private marketplaces.

10) A plethora of working groups and industry committees will be convened to flesh out the new standards.

Happy Holidays and Happy Ever-changing New Year.

 

Formats Become Important in Native Advertising

As an industry, we’re still having trouble figuring out how to define native advertising, although we all know that it is trending and we all want to grab the most revenue we can from this trend. However, hopping on this trend requires almost an about face on the part of publishers. At first, publishers thought native was the same thing as “advertorial,” — advertising formatted and dressed up to look like editorial. They hated it and looked down on it, and fought for the Chinese wall between the advertising side and the publishing side. But ads you cannot tell apart from editorial is only part of native.

It’s the most familiar part, however, so let’s dispense with it first.  In this context, native can  be sponsored content, which is usually written by the editorial staff of the publication and paid for by a brand, or branded content, which is actually produced by the brand itself or its agency.   Many publications, including the New York Times, Forbes, and Vice, have developed or acquired in-house agencies to produce branded or sponsored content.

This is a huge opportunity for publishers. Now they can be more than creators of content, they can be the creators of ads that support their other content. Which gives them more editorial control than if they simply accepted ads submitted by brands or their outside agencies. It can raise the quality of the creative that appears on their sites, and be more acceptable to their visitors. In June, AOL opened Partner Studio, an in-house creative shop, and Huffpo, owned my AOL, has had one of its own for a while. Rather than being dismissed, native ads created by the in-house agencies of publishers are now being seen as desirable.

Thus a market shifts under our very noses. And here’s why:

Advertisers in the U.S. are expected to spend $4.3 billion this year on so-called “native” ads that emphasize an ad’s editorial-like content and, in some cases, disguise the spots to look like unpaid placements, according to eMarketer. That’s a 34% increase from what brands are projected to have spent on native ads last year.

But there’s another part of native, and it one that applies mostly to mobile. In this definition, “native” is a non-interruptive ad that follows the same format as the site whose feed the visitor is reading. In the future, this will become the most important element of native, because it has to be acceptable to a user on a mobile device. These native ads will appear not only on publisher sites, but on platforms like Facebook, SnapChat and Twitter — platforms where users are accustomed to seeing a certain kind of content, for example photos, videos, or disappearing content and don’t want to be interrupted by an ad in a non-native format.

We think the definition of native as a matter of format as well as content will become more and more important as advertising shifts primarily to mobile devices. We’re developing and experimenting with mobile native formats on an almost weekly basis to test what’s acceptable to visitors and get the best response for advertisers and rising CPMs for publishers.

When Brand Advertising Comes Back, Google Gets Eclipsed

The well-respected blogger Ben Thompson wrote quite a controversial post titled Peak Google after seeing Google’s Q3 earnings. While Google’s ad business obviously isn’t in serious trouble, the numbers led Ben to contemplate the fact that while Google has totally captured the search advertising business, search represents a scant 10% ($50 billion), of the $545 billion total online ad spend this year. And in the future, it might represent far less.

Where is the rest of that big spend going?  It’s going to brand advertising (through various media like TV and social), the kind of advertising Google taught us to disdain. Google has told us for a decade that we should value only direct response or performance ads. The result is the ridiculous metric of CTRs, which in no way represent the consumer’s entire response to an ad.

Especially on a mobile device.

On mobile, brand advertising is making a comeback.

…over the last few years a new type of advertising has emerged: native advertising. I’ve already made my defense of native advertising here, but just to be clear, I classify any sort of “in-stream” advertising as native advertising. Thus, for a news site, native advertising is advertising in article format; for Twitter, native advertising is a promoted tweet; for Facebook, native advertising is ads in your news feed; for Pinterest (a future giant) a promoted pin. These sorts of ads are proving to be massively more effective and engaging than banner advertisements – as they should be! In every medium (except, arguably, newspapers, which had geographic monopolies) native advertising is the norm simply because it’s more effective for advertisers and a better experience for users.

Thompson goes on to argue that TV commercials are mostly for brand advertising, as are jingles and magazine ads.

And all those are coming to mobile, in large part as digital video. All those brand advertising dollars from TV, flowing to mobile, has already caused the industry to examine potential new metrics for measuring an ad’s effectiveness, such as engagement (time spent with the ad) and video completion rates.

There’s no guarantee that Google will be able to win at this new game. Native advertising, and brand advertising in general, requires immersive content, and the social streams and Tier 1 publishers have most of that. As do some startups like Buzzfeed.

On the other hand, that’s not to say that Google will not continue to be profitable. Thompson compares it to IBM and Microsoft, each of which is still alive and profitable, although not the industry leader it was in the past. He says Google will not get “disrupted,” so much as it will get “eclipsed.”

 

What is Native Advertising and Why Might it Be Confusing?

It’s no surprise that native advertising is drawing the attention of the FTC, which  held hearings on the subject on December 4, although does not intend to regulate the industry at this time.. Not only is there the potential for confusion on the part of consumers, but advertisers and publishers are equally confused. According to Poynter,

“Native advertising is a paid placement that matches the editorial and design style of a given website. “Sponsored content” is a synonym, though other labels like “promoted by” may be used.  This is the digital descendant of the print advertorial, though some contend the potential for confusion is greater.

As long as native advertising is bought and sold direct, and advertisers know where their ads appear, we believe there will be little confusion on the publisher side of  the industry. The ads will have to match the site’s appearance and content, not detract from the user experience, and  will provide publishers with supplemental content that might be of interest to their readers anyway. Publishers have data to make sure this can happen.

On the advertiser side, there is always the danger of providing “marketing spin” rather than content a site’s visitors want to read, and that’s up to publishers to judge. Interestingly enough, this may require publishers to use editors in a way they haven’t been traditionally used — on the business side of the house.

All this can be solved in a direct transaction between advertisers and publisher. Where it could get dicey is when the ads are placed through a network or an exchange, or sold as remnant inventory through RTB. That’s when advertisers may not know what they’re buying, or publishers may find low-quality content appearing on their premium sites.

The FTC, however, doesn’t care about this aspect at all. Its job is to protect the consumer, and it wants to make sure that consumers will have a clear way of distinguishing between sponsored content and “journalism,” however that’s defined in this day and age.  If there are to be regulations, Poynter says they’d probably be around labeling sponsored content, the way an ad tech site like Digiday does when it labels an article “Sponsored” or a consumer site like  Buzzfeed does when it tags a post “Featured Partner.” These early adopters of native advertising, now a segment approaching $2.85b impact in the eyes of EMarketer, will likely have a seat at the table defining the rules.