The Comprehensive Guide to Native Advertising

A Vocus eBook

Native advertising – the purchasing of sponsored content on social networks and online websites – dominated digital marketing conversations the past year. Market research company BIA/Kelsey estimates that U.S. native ad spending on social sites might have reached $2.36 billion in 2013, or 38.9 percent of total U.S. paid social ad expenditures.

How can you effectively work native advertising into your marketing mix? This eBook highlights some techniques brands are using to do just that. It will show you the rich native advertising ecosystem of publishers, vendors, social networks and search engines that help companies create, manage and track content.

Finally, we’ll show you the ethical issues to avoid with sponsored content. The Federal Trade Commission (FTC) recently held a meeting with brands and publishers to discuss native advertising – and while some issues were highlighted, others were raised. Your brand can use this set of tools, as long as the ads disclose sponsorship so that consumers are better informed.

What is Native Advertising?

A survey from Online Publishers Association says native ads include “content integrated into the design of the publishers site, living in the same domain, as well as content either provided by, produced in conjunction with or created on behalf of our advertisers that runs within the editorial stream.” In native ads, there is a clear delineation, labeling the unit as ad content.

The Interactive Advertising Bureau defines six types of native ad units in its mustread, “Native Advertising Playbook“:

  • Social media in-feed units (such as Facebook’s ads with a social context)
  • Paid search
  • Recommendation widgets (often seen as “From Around the Web”)
  • Promoted listings
  • Standard ads with native elements (banner or box with text or placed at beginning of post)
  • Custom campaigns created with the client

This graphic shows an “in-feed” example, from Forbes’ homepage. It looks like other articles, but is clearly called out as a “Forbes BrandVoice.” The disclosure indicates sponsored content, in this case by Gyro, a B2B marketing firm.


 

In The New York Times example below, the post is clearly labeled as “Paid For and Posted by Dell.”


 

And Buzzfeed integrates their native advertising in the form of posts written by the brand, which is delineated as a “BuzzFeed Partner.”


 

Edelman Public Relations’ Chief Content Strategist Steve Rubel sums it up succinctly: “I’d define native advertising as taking that which is organic and flipping it around into advertising.1

Native ads aren’t unique to online publications like Forbes or Mashable. Facebook’s ads (and, for now, their “sponsored stories”2) and Twitter’s “Promoted Tweets” are examples of sponsored content appearing in social networks. Unlike the Facebook banner ads, content ads such as photo posts are paid promotions of actions that a user’s friends take on the platform, including check-ins, “likes” or RSVPs. They appear directly in the News Feed. Page owners can target ads via Facebook’s ad manager.

A brand may have their own account on Twitter, but much of their content is not seen because most people are not on Twitter at any given moment. A Promoted Tweet shows up in the stream for users who follow that account or are targeted based on the user’s expressed interests, geography or device. The Promoted Tweet is noted as “promoted,” but appears natural within the user’s stream, “integrated into the design” of the site.

Edelman PR’s Rubel says, “If you look at search content with paid search results, that’s the model. If you look at Tweets and Promoted Tweets, that’s the model. And it’s working.”

Content Marketing vs. Native Advertising

Currently, many firms are using “content marketing” to reach customers. Native advertising has a lot in common with content marketing; however, content marketing is typically text, video or other media that is intended to inform the customer, providing something of value.

Much of content marketing builds brand over time. This paper itself is an example of content marketing – a neutral point-of-view piece of content that is not selling a specific service or product, but educates marketers as a service from Vocus.

Alternately, native advertising is material that is sponsored. While it may offer valuable content, it is still an ad trying to offer a product, service or point of view. Often times, native advertising is used to expand the reach of content marketing – to get more eyes on the content
produced by a brand.

Forbes Chief Product Officer Lewis DVorkin reminds us that what we consider “content” is often marketing in disguise. The Michelin Guide for travel and accommodations was started to encourage travel (and inevitable tire replacement).

While debate on content marketing vs. advertising can go on all day, the form is considered native advertising, implying a payoff for the marketer as well as the consumer.

How Does Native Advertising Fit Into the Marketing Mix?

Many brands struggle with how native ads should fit within their larger marketing strategy. Native ads straddle several tactics, including social engagement, owned media, and of course, paid advertising. But how does it help a brand achieve its objectives?

“When we think about the distribution, amplification and ultimately, the engagement with content – that’s where we think about our client’s goals,” says Edelman Digital’s Executive VP of Emerging Media and Technology Adam Hirsch. Hirsch notes ways in which native advertising can assist a marketer at the top of their funnel with acquisition and brand awareness, as well as ways to generate leads and conversions.

Brand building and awareness are at the top of the traditional sales funnel. Creating articles that run in relevant publications can help make customers aware of your products, services and offerings. Publishing content in a Forbes, The New York Times, or BuzzFeed environment delivers lots of attention and possibly perception change or consideration regarding products or offerings.

Sponsored content can generate conversions and create leads. For example, social media in-stream ads can have similar targeting ability to email and marketing automation, according to Hirsch.

“Facebook amplification has been pretty great for us because you can optimize for engagement or conversions that you can track,” says Hirsch. “[Facebook offers] content that you’re able to amplify in a segmented and personalized way. Through first-party targeting with their ‘custom audiences’3 product, through third party use of pixels or retargeting, Facebook is providing the ability to target users on exclusive social segmentation sets based on what they’re talking about or what their interests are.”

Native ads can also help your brand with bottom of the funnel activity by converting existing and new customers. For example, a brand can create sponsored content ads directed specifically at Facebook users who are already customers. You can also target via “look-alike” audiences who share characteristics with your existing fans and customers.

The level of targeting is so sophisticated that, in Hirsch’s words, “You have an opportunity to share an article about your brand only to journalists who work at The New York Times and Wall Street Journal or whatever stakeholder audience you’re targeting.”

Facebook also allows retargeting via its Exchange product. If someone has come to your website to view a product or service, you can retarget them so that when they return to Facebook they receive an offer or message in the native News Feed stream. Many Facebook targeting functions are offered in the updated advertising manager interface, but some require working with third party Facebook Exchange partners.

Twitter has similar offerings. The company announced targeting based on interests in 2012 and recently launched the ability to retarget users, and is expected to offer a custom audience product similar to Facebook’s. For example, Twitter empowers restaurants to automatically suggest themselves to someone who is searching for dining recommendations.

How much should you be spending on native advertising? According to Edelman Digital’s Hirsch, it’s important to allocate a reasonable budget to test out and get the most impact out of native advertising.

“When it comes to content amplification, start with a $5,000-per-month budget minimum, no matter what size company you are,” says Hirsch. “You need enough money in the budget to start testing what’s working. So every month, optimize between networks, test on the networks themselves, and see what’s working to figure out your optimal media mix.

“In ‘old school lead’ generation, depending on industry and company, the cost of leads can range from a few dollars to thousands of dollars,” says Hirsch. “With hyper-targeted networks, psychographic targeting and retargeting, you can bring your cost-per-lead down significantly.” Measuring results and seeing what types of content resonate on which networks and platforms is an absolute must in native advertising, as “best practices” are not yet established.

The Ecosystem of Native Advertising Providers

The native ad ecosystem includes content creators, such as companies, brands and agencies, who create the content either alone or in conjunction with the publishers, as well as the search and social networks and vendors offering advertising space. This diagram shows how they work together.


 
 

Publishers

Publishers are considered the media sites that create online content, with regular publication schedules and sizeable audiences. Web properties such as The New York Times, Forbes, The Huffington Post, BuzzFeed and Mashable all have different ways of presenting and promoting native ad content to their audiences. The New York Times states that native ads will have a color bar and the words “Paid Post” prominently displayed.

Forbes shows native ads under the branding “BrandVoice” and the units can be seen on the lower portion of its homepage. Forbes BrandVoice partners use the masthead’s tools to publish content. Their headlines and their posts – the native ad content – flow though the content management system onto Forbes.com.

In anticipation of December 2013’s FTC hearing on native advertising, Forbes published specific statistics on its BrandVoice platform. DVorkin states, “1,100 total Brand-Voice posts generated 821,000 social shares. Those actions resulted in 565,000 social referrals to content [on the Forbes site]. Search referrals generated an additional 1.1 million visits.” Partners had as many as 13,500 views per post, with up to 120,000 monthly unique visitors to the content published on Forbes’ site.

How much does a native ad campaign cost? According to a Digiday report from June 2013, campaigns can range from as little as $5,000 for a post on Business Insider to as much as $100,000 for five posts on BuzzFeed. For example, The Huffington Post charges $40,000 for an article, but promotes it on their site for four days. Such a promotion would yield approximately 20 million impressions. However, it is not known how many audience members click through and read the content, nor what actions they take.

If publishing prices for top websites alarm you, there are alternatives. “Consider working with ‘mid-shelf sites,’ with publishers who are experimenting,” says Edelman PR’s Steve Rubel. “There are sites in the ‘mid-tail,’ below the ComScore 1000, and you can experiment in everything from newsletters to event co-branding.

“Webinars have a similar business model,” says Rubel. “If you’re looking to experiment on big sites with a lower budget, pick your spots with publishers that will drive some sort of meaningful brand-building within that platform. If you know that a BuzzFeed or Mashable is not going to cover you at length, you could use budget to create a one-time boost within that particular site.”

B2B and trade magazine sites are experimenting and you can get a lot of value. Some of them even have “studios” that will help you create content without the six-figure budget.

Content Platforms

Vendors are developing products to help brands place their content adjacent to high quality editorials. An Altimeter Group report on the native advertising landscape lists more than 40 vendors, including Outbrain, Taboola, AddThis, and Sharethrough.

There are two main types of content platforms – content distribution and recommendation, and native feed insertion.

Content distribution and recommendation platforms tend to show their content next to or below the main page content. They typically serve a widget that offers related content from within the site, as well as “From Around the Web.” Users are targeted via cookies and other mechanisms, and the content is personalized based on previous clicks and the context of the current page. Marketers bid on a cost-perclick basis and can analyze their traffic to optimize results.

Vendor Format Business Model
Outbrain “Additional Recommended Content” widgets on sites like CNN, Time, and Rolling Stone.
Personalized via individual’s browsing habits.Real-time analytics.
Websites are paid for referring traffic outbound.
Marketers pay on a cost-per-click basis, with a $10 minimum daily budget.
Taboola “Content You May Like” widgets on USA Today, TMZ and more. Video and text.
Targets users with content, uses A/B testing to improve ROI.
Websites generate revenue by hosting sponsored content.
Cost-per-click model, plus more premium platform with dedicated sales team.

These networks put content right into partners’ site feeds. Sharethrough’s Tom Channick, senior communications manager, claims this is the most effective way to reach people, especially on mobile. He suggests testing targeting with different pieces of content, and monitoring results to see what content works. The Sharethrough team has to approve all content, since Channick says the company doesn’t want their distribution platform to be sharing “belly fat” and “lower mortgage” ads.Native-feed insertion companies like Nativo and Sharethrough let marketers place content right in the organic areas of the website, in the feed or on the main page of a site.

Share – through Self-service ads show “in-feed” on mobile. Full service model guarantees impressions, on desktop and mobile.Targeting via DMA and Zip Geographic, behavioral/lifestyle, and contextual in verticals like business or entertainment. No minimum for self-service, CPM basis.Full service is a minimum $20,000 spend.
Nativo Self-service model. Targeting includes geography and device, control over placement, real time monitoring of time spent with content.
Placement into many major pubs, on desktop, mobile and within mobile apps.
Works with limited number of premium brands, primarily through agencies.
Cost-per-thousand buying, with a minimum spend around $20K. Includes engagement analytics.Text, images, slideshows and video content.

Nativo President Justin Choi says, “Native [ads] typically focus on the top of the funnel. There are great mechanisms on the Web for the bottom half of the funnel, but there aren’t great mechanisms for the top of the funnel, both in terms of creative that has impact and that’s scalable, and also is measurable.” Nativo offers the ability to drop a retargeting pixel, so companies can use their existing bottom-funnel mechanisms. Both vendors note that direct response can work if the content shared has a specific response call-to-action.

In addition to the platforms that help brands put their messages adjacent to or within the context of a publishing site, search engines and social networking sites provide a way to put brand content in the main context of the user experience. Most web users are already familiar with the sponsored search results that appear on the top and right sides of Google, Bing and Yahoo! search results pages. This is probably one of the earliest and most ubiquitous examples of native ads, as it appears “integrated into the design of the publishers site.”

Social networks have followed suit. From Facebook, Instagram and Twitter to LinkedIn, most of the major social networks have figured out a way to offer content from advertisers where users previously expected content from friends.

Platform & Content Unit How It Works Cost Model
Facebook ads with a social context (formerly “sponsored stories”)
  • Page owner promotes a fan’s actions taken on a page to amplify with the action-taker’s friends.
  • Works with likes, check-ins, use of a game, RSVP’ing to an event, or posting on page.
  • Extensive targeting.
Self-service via ad manager.
Instagram
  • Shows as a sponsored picture within the native stream.
Initially working only with brands that have extensive followings. See Burberry and Michael Kors as examples.
Twitter Promoted Tweets
  • Regular tweets, boosted to the top of stream, marked as promoted.
  • Recommended follows.
  • Targeted via interest, gender, geography, by device, and via audience similarity to existing followers.
Self-service via ad management interface.
LinkedIn Sponsored Updates and content ads
  • Promotes content shared via a company page to a wider audience, extensive targeting capabilities.
Via ad manager.

Rubel states, “For the social networks and search, this is their entire business model. It’s no longer display. Their model is effectively to integrate – to take the organic structure and flip it around to an ad.”

“LinkedIn is a huge opportunity, especially for specific types of companies or specific types of messages from those companies, whether it’s for a B2B or B2C audience,” says Hirsch. “There are a lot of key audiences you can target directly from LinkedIn for content amplification from company pages. Its usage is dramatically increasing across Edelman, with the product out only for the last three months or so. It’s a new ‘owned’ media channel for content amplification.”

Anyone can create ads on social networks, but smart brands leverage their existing presence. For example, don’t jump on Twitter and start promoting your Tweets if you have no followers. Sponsored stories can help grow a brand’s likes and followers, but only when the content resonates with users.

A sponsored story promoting a post that has little organic traction will probably do poorly. Promoting content that is already being shared to a wider audience is a recipe for success.4

Content is Still King

Native advertising requires quality content. Studies show that if sponsored content delivers context, people gladly embrace it as something worthwhile and useful. Furthermore, publications hold sponsored content to strict editorial standards. Not every message can
be a textual article featured on Forbes or Mashable, and creating content for both properties can cost a significant amount. At the same time, creating singular Cadillac pieces also exposes companies to risk of must-succeed situations.

“Instead of creating one gigantic piece of content, try several; use a PR post, link an article, post a Vine video, run them through the platform and see what works,” says Sharethrough’s Channick.

The media type also greatly affects how it is presented. “[Producers] put a can of Diet Coke on ‘American Idol’ and no one complains,” says Rubel. “Or a radio DJ gives away tickets to a concert and plugs it, no one complains. The closer you are to entertainment-based or lifestyle content, the more the lines get blurry and the deeper the topic can be integrated, provided it’s not a product review type of post.”

“I think that’s giving BuzzFeed the ability to really do that in earnest because a lot of the ways they integrate brands is through lifestyle content,” says Rubel. “Native ads get most disruptive the closer they are to being straight up advertorial in nature, and interruptive as opposed to additive. The efficacy of that remains to be seen.”

Creating great amounts of content often isn’t “native” to midsized companies or smaller brands. They may be used to creating brochures, posting blog posts or even sharing content on networks. But some of these new formats, along with the corresponding content types and targeting, will be unfamiliar.

Rebecca Lieb notes in the Altimeter Group report5 that education and training will be required. Marketers need to apply skillsets like strategy, content, media buying and a social component. For companies that don’t have the staff to handle content creation or who wish to outsource it, publishers like The Huffington Post provide “studios” to create content on behalf of advertisers. The company has staff separate from the journalists and video creators who work with brands and agencies.

“The native advertising space relies on catchy headlines, and it’s important [to] write content that people really want to access,” says Tom Chernaik, CEO of CMP.LY, a monitoring, measurement and insight tool company. Chernaik is also co-chair of the Member’s Ethics Advisory Panel at the Word of Mouth Marketing Association. “What’s driving all of this is that content gets shared by people. You want to make sure that it’s clear where the content comes from.”

Adding a social dimension of amplification to the content that’s being shared natively is another point made by Lieb, Rubel and Hirsch. Having content seen once is a benefit. Having it shared many times can reduce your overall cost of customer acquisition.

Disclosure and Challenges

“Consumers, overall, are responding very well to native ads, and that’s why it’s such an appealing area for advertisers,” says Chernaik. However, the FTC is asking questions to protect consumers.

The commission held a meeting in Washington, D.C. last December to explore these issues. “How clear do you need to make it, and when do you need to make it clear that something is actually sponsored content?” asks Chernaik. “Since there’s no standard way to disclose
it, or to present the information, it becomes challenging to know how much they need to disclose, and for consumers to understand how much an advertiser has played a role in presenting content to them.”

Some publications clearly denote content is sponsored. Other sites are less forthcoming. Another challenge, claims Chernaik, is that people use different words to describe the ad units, such as “sponsored” or “promoted” when they really mean “advertisement.” “The industry needs to step up, or a regulator needs to say ‘This is what we expect,’ and it’s often better if the industry steps up,” adds Chernaik.

Consider Forbes’ “BrandVoice,” which is marked at the top of articles and has a disclosure link that states, “Forbes BrandVoice™ allows marketers to connect directly with the Forbes audience by enabling them to create content – and participate in the conversation – on the Forbes digital publishing platform.” Will the FTC accept the phrasing “Connecting marketers to the Forbes audience” instead of “sponsored content?” It remains to be seen.

The previously mentioned “IAB Native Advertising Playbook” takes some of the first steps towards industry self-regulation by publishing disclosure principles, which state that “The disclosure must use language that conveys that the advertising has been paid for.” The FTC also states advertisements “must be large and visible enough for the consumer to notice it in the context of a given page and/or relative to the device the ad is being viewed on.”

Consumers should be able to distinguish between paid advertising and editorial content. The problems can extend to content when it leaves the publisher’s site.

Chernaik noted that if something is showing on a page, there may be disclosures, but in a feed or on someone’s timeline, it may not be clear to consumers, which is where the FTC may step in. He warns, “People are focusing on it as an ad medium, and you get tripped up when you look at it as ads. The component that makes it so compelling isn’t the ad component, it’s the word-of-mouth component. That wasn’t addressed in the FTC workshop. It’s the buzz that builds around the content that drives native advertising, not the content presentation.”

The FTC has not taken formal action yet, but since they’ve previously issued guidance on making blog and celebrity endorsements more clear, it is reasonable to think they will monitor the native ad ecosystem with similar vigilance.

“The real question,” says Edelman’s Rubel, “is ‘What does the reader want?’ I know what the technology vendors, publishers, and advertisers want from native advertising. I don’t necessarily know what the audience wants from this yet.”

Research shows the efficacy of native ads. According to a study by Interpublic Group’s IPG Media Lab and Sharethrough, consumers looked at sponsored content 52 percent more frequently than banner ads. Native ads generated 9 percent higher brand affinity lift and 18 percent higher purchase intent response than banners.



Conclusion

Consider how you can apply native ads to your larger marketing stream. Ask the right questions: Will they help convert sales? Or will you use them to amplify and build social brand and content marketing activities?

Once you decide, consider your options from the increasingly rich world of native advertising providers. Search and social networks may be the easiest entry points into sponsored content for brands. Many of these choices, from Facebook’s ads and Twitter’s Promoted Tweets to LinkedIn’s Sponsored Updates are self-service offerings. These social networks offer guides and case studies that explain best practices and walk marketers through the steps needed to execute a campaign. Native units are most helpful to brands that already have a presence on the networks and who know how their users respond to content.

Working with publishers can be a potentially expensive endeavor unless you find a site that’s willing to work with a smaller brand. Look for more midrange sites to offer sponsored content opportunities to attract first-time buyers. Most publications have or are planning an offering on their digital site.

Services like Outbrain, AddThis and others offer self-service ways to promote content in the context of large publisher’s sites without having to directly deal with the publishers and their budget minimums. Bid-based marketplaces encourage experimentation and give marketers a chance to hone their messages and content types while controlling spend. These services can help make an already popular post more widely shareable. Nativo, Sharethrough and others put brand content right into the feed on multiple publishers’ sites, with targeting and analytics to measure the results.

Using analytics and setting key performance indicators (KPIs) will help you evaluate all the offerings discussed.

As a marketer, it will be more important than ever to test multiple content formats. Will native advertising result in the promised payoff of higher engagement and interaction – as much as 39 percent higher in some cases? Only your own tests, metrics and KPIs will answer that question.

One thing is for sure – 2014 is definitely the year to try native advertising.