Native Advertising: Growth and future ahead

Advertising has gone through many transformations, from print media and billboards to television and radio. However, a big drawback of the traditional means of advertising is the lack of metrics for the measurement of their reach.

With the advent of the internet, the marketers have been provided with a new medium to reach the consumer, thereby giving a means for the new age advertising. So here the marketers used e-mail advertisement, banner ads, search engine marketing and so on. Also, social media advertising is a method that is unavoidable.

These changes portray that the marketer has to promote his product or service where the consumer is and also find a way to measure the return on investments in advertising. This is where web advertising has an advantage, as it provides metrics like traffic, impression and clicks to measure how much effective advertising has been.

Shift of Traditional advertising to Internet advertising

According to report by Interactive Advertising Bureau (IAB), the internet accounted for USD 7.2 billion or 3.03% of the total U.S Advertising spending in the year 2001. Another report by the organization, released in 2005, revealed that spending on internet increased to USD 12.4 billion or 4.7% of the total U.S Advertising spending.

Also, in 2010, Internet surpassed spending on newspaper spending and in 2013 the spending on internet advertising was highest and accounted for USD 42.8 billion.

This shows that from traditional methods, advertising is shifting to the web – search and display, account for a large share and mobile advertising is gaining speed.

Native Advertising

Web advertising started by display advertisements (banner ads) and email advertisements is now being given competition by native advertising.

Offline Advertising

One must have seen judges drinking from coca cola glasses on American idol, Nike self tying sneakers in Back to the future trilogy, the samsung oscar selfie which had the highest retweets, Fedex boxes in the movie castaway to Phil Dunphy sporting an iPad on Modern Family.

This is the form in which native advertising has been existing in the offline medium.

Native advertising in the online world

As defined, Native advertising is the form of advertising where the advertisement is visually designed in the form of the content in which the platform publishes. Like suggested post on facebook, promoted tweets on twitter, promoted pins on pinterest and so on.

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Simply put, a user on a particular platform expects that the content would be depicted in a particular format, an advertisement in that format does not seem distracting to the user as compared to banner ads.

How does Native Advertising work ?

The Altimeter group defines,” Native Advertising as a form converged media that combines paid and owned media into a form of commercial messaging that is fully integrated into , and often unique to,a specific platform.”

  • Company(brand) owns and controls the media. It creates the content to be advertised.
  • The platform provides a medium. The content is shaped by the company in the format of the platform it wants to publish the content.
  • The company can measure the reach of these advertisements by the metrics provided by the platform.

It is worth noting that social sharing which is analogous to word of mouth promotion is not native advertising.

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Native Advertising is of two types – closed and open.

Closed Native Advertising

In this method the company’s advertisement is created in the form in which existing platforms publishes. For example creating facebook profiles and pages, youtube videos – they are promoted the same way the rest of the content is promoted.

Open Native Advertising

Here the company designs the content irrespective of the platform. A third party player then moulds the content according to different platforms on the behalf of the company. Nativo, appssavvy, Sharethrough and many more offer these services.

Performance of Display advertisement 

According to a report by emarketer, the spending on display advertisement is going to increase in the coming years.

According to a report by IAB, percentage share of display/banner advertisements has been declining in the United states. In Q4 2012, it accounted for 21% of display-related advertising and in Q4 2013, it had reduced to 19%.

Why is the ROI from display advertising declining ?

  1. Display ads are considered to be a nuisance by the consumers.
  2. The average ctr has fallen to 0.10% in march 2013.

Display Ads V/S Native Ads

Display ads have been an important part of the marketers’ arsenal in the world of online advertising. With its popularity going down, advertising is gradually shifting to native advertising.

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Intrusive: As compared to banner advertisements, native advertisements are less intrusive to the user.

Blocking: Banner advertisements can be blocked by the user, but since native advertisements come in the same format of the platform they cannot be blocked.

Engagement: Native advertisements provide an opportunity for the company to interact with the user on the platform whereas banner advertisements just direct the user to the website of the company.

Contextual: Again native advertisement have an upper hand, they provide the user with contextually and personally relevant content thus increasing the chances of click and conversion.

Responsive: Banner advertisements are not responsive whereas native advertisements are.

Devices: The landscape of electronic gadgets is changing continuously. Earlier advertisements were rolled out on Television and radio, from there they have gone to computers and mobiles. With the proliferation of use of wearable tech, the marketer has to go there as well.

Imagine a situation when you are walking down the street wearing google glass or samsung gear glass and a banner ad flashes. Here the banner advertisement would serve as a distraction and the user would not want to use it. Banner advertisements won’t work for a samsung galaxy gear watch as well.

Another example would be Apple’s CarPlay, a person would not want to see flashing banner advertisements on the dashboard of his car.

Future of Internet Advertising

According to BiaKelsey forecasts, U.S. social advertising revenues would grow from USD 4.7 billion in 2012 to USD 11 billion in 2017.

The spending on native in 2012 was USD 1.63 billion and would increase to USD 4.57 billion.

The user has become immune to display ads. He knows that on the right hand side of the page an advertisement is running, it might even flash but still the human mind has adapted to ignoring it.

Though Native advertisement is better than banner advertisement in many ways, there is opposition to it. The argument that the opponents raise is that it crosses the ethical line and is a way of tricking the consumer.

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