Editor’s note: Dan Greenberg is the founder & CEO of Sharethrough, the native video advertising company. Dan has been honored as an AdAge “Media Maven” and was recently named to the Forbes “30 under 30” list. You can find him on Twitter at @dgreenberg.
Five months ago, I published an article on TechCrunch that provided the first framework for the emerging Native Advertising market. At the time, “native advertising” (a term coined by Fred Wilson) was a new name for an old concept — monetization models that emerge from the underlying user experience of the site or app, integrated into the visual design and driven by content-based ads.
Native monetization is what underpins Google search advertising, and native monetization is what’s at the heart of why billions of dollars of ad revenue have shifted to closed platforms like Facebook (Sponsored Stories), Twitter (Promoted Tweets), and YouTube (TrueView Promoted Videos) over the past few years.
Ads that are native to a site don’t live in the corners and don’t interrupt the user; they exist in the stream of content, and when done well, they bring new value to the user experience of the site in the form of brand content — promoted videos, sponsored stories, relevant coupons, promoted posts. Indeed, the key to native advertising lives in the quality of the brand content, and as such, the future of the native ad industry lies in the hands of the creative agencies and marketers who produce the content itself (more on that to come). Like this amazing sponsored post from Adobe on The Onion for example. Or this magical Dikembe Mutumbo game from Old Spice, while we’re at it.
Over the past five months, I’ve documented the beginning of the second phase of the Native Ad market: native ads for the rest of the web.
While the first incarnation of native advertising allowed new platforms to build endemic ad models within their closed environments, now major publishers on the open web have followed up by introducing their own native ad models — sites like Forbes, The Atlantic, Gannet, AOL, WordPress, and many more.
It’s undeniable: the Native Ad Movement is in full swing.
In the midst of all the chatter and excitement, the conversation has shifted quite rapidly from broad perspectives on the market and the technology and platform opportunities presented by native, to a somewhat narrow discussion around scalability. This is a discussion associated largely with one form of native advertising on the open web: the “sponsored post” model embraced by sites like BuzzFeed, Forbes, and The Atlantic. As the argument goes, if brands need to make custom content to promote natively on each and every site they want to run ads on, how will that scale?
The argument about scalability is a red herring in the native ad discussion. Rather, we’re at a turning point where enlightened marketers have realized that there is no longer any choice — crappy ads are being phased out. Though maybe not as easy and mindless as “scalable” banners and prerolls: Creating brand content and distributing it through native ad formats is the way that world-class businesses now connect with their consumers. The world’s top marketers are taking a cue from Nike, Coke, Old Spice, Apple, Adobe, and GE and are investing in creating quality content to distribute scalably through native ad formats on Facebook, Twitter, Sharethrough, WordPress, and beyond.
This brand-content turning point has already come. Brand content is now of a high enough quality that even Mark Zuckerberg lets brands pay to inject content directly into users’ news feeds with Suggested Posts (even without a social connection to the brand or a friend who likes the brand page) purely based on the merit of the brand content. It’s a brave new world for brand marketers, and it’s going to be a lot more fun.
Let’s not forget that the brand content and native movement goes far beyond sponsored posts and advertorials. It’s about a fundamental re-thinking of the type of content that brands produce for advertising and a re-design of how that content gets integrated into websites. From promoted pages on Tumblr to promoted articles through Outbrain to promoted videos through Sharethrough, the era of brand content distributed through native advertising has begun.
As we head into 2013, it seems only appropriate to take a moment to think ahead to the next phase of this Native Ad Movement. From someone who is living, breathing, and building native advertising every day, here’s what I’m seeing on the horizon.
1. Native ads will scale to the rest of the web.
Quick context to shed light on where I’m coming from: My company Sharethrough is a native ad platform that brings sponsored stories to the rest of the web. We started Sharethrough five years ago with the vision to distribute brand content through native ads built for the newly designed web (feeds, galleries, posts, mobile), in partnership with sites like Forbes, WordPress, and Business Insider and brands like Coca-Cola, Adobe and Old Spice. Our point of view is that the future of advertising is about brand content integrated natively, not ads hidden in corners, and that this market will scale far past Twitter and Facebook.
It’s true that brands producing new and unique content for every publisher will be inherently difficult to scale. Today, the majority of custom-sponsored content only lives on the publisher sites that create it. In 2013, you’ll see more technology being introduced to solve the scalability problem: technology like Percolate, which helps brands create and curate content on scale; and technology like Sharethrough, Outbrain, Taboola and Disqus, which help marketers scale the distribution of their branded content beyond just the original sites it lives on through recommended content widgets and native ad placements across the web.
Next year you’ll also begin to see scalable buying platforms that will accelerate the shift in advertisers’ ability to buy native ads promoting their content across multiple platforms, starting first with “social demand-side platforms (DSPs)” like Adaptly, built to provide access to closed platforms like Facebook, Twitter, StumbleUpon, and LinkedIn. We will at some point see “native DSPs” emerge for the rest of the open web, or display ad DSPs like MediaMath, Turn, and Appnexus will offer access to native ads, but probably not in 2013.
2. Headlines and thumbnails are the new banner ads.
The beauty of using native advertising to distribute brand content is that there is no need to produce new ad units for each platform. Because native ads are integrated into the user experience and visual design of each site, the site itself defines the size, color, fonts, and layout of the ad unit; the advertiser just provides the content and context.
In 2013, I predict that headlines and thumbnails become the new banner ad, and the new kings of industry will be the publishers, marketers, agencies and tech companies that learn how to capture users’ attention and interest with human-readable headlines and stories, not sales pitches through banners. Pay attention to Upworthy, BuzzFeed, and BusinessInsider among others.
3. Native is the answer to the mobile ad problem.
While many media companies have begun to adopt feed, grid and gallery-based layouts that turn their sites into fluid content streams (see The Atlantic’s Quartz, and USA Today’s new site), many have also already begun moving in this direction when it comes to mobile content.
In 2013, you’ll see more media companies integrate Sponsored Stories-style content into their mobile experience – introducing opportunities to promoted sponsored posts as well as brand video content. This may be the No. 1 growth area for native advertising next year.
4. There will be a debate about quality vs. revenue for native ads.
In the early days of any new ad format, often the first marketers to flood the platform are performance advertisers who push the “spammy” boundaries until the new platform sets up quality controls. Even Facebook fell victim to the “Lose 40 pounds overnight! Hot dates! Teeth whitening!” ads in the early days of the platform, though they’ve since introduced quality controls and standards that have protected the system.
Twitter’s ad platform has been surprisingly pure, though as they grow demand and open up a long tail of advertisers through a self-serve model, they’ll have to approach the short-term revenue vs. long-term quality decision head on.
For native ads to take hold, publishers and platforms (Twitter and beyond) will have to take a stance on quality to preserve the integrity and lasting performance of the native ad model through standards and regulations. Hopefully, Outbrain’s recent decision to remove spammy content marketers from its recommended articles system is a sign of good things to come.
5. Samsung will introduce a native ad product into its AdHub Marketplace for Android-enabled Samsung devices.
As of Q3 2012, Samsung has a shocking 32 percent of the Android market. Some reports peg that market share as high as even 44 percent, more than the next seven Android vendors combined. With that in mind, earlier this year, Samsung announced a partnership with OpenX to open AdHub, Samsung’s competitor to Apple’s iAds and Google’s mobile-ad offerings. Though their ad exchange has begun with standard mobile banner ads, in 2013 I’d hope to see Samsung introduce a sponsored stories product as their entry point into the native ad movement spearheaded by Facebook and Twitter.
6. Yahoo will introduce a real native ad strategy.
Facebook is the No. 1 social website in the world, and Yahoo is the No. 1 content website in the world. Facebook’s monetization model is built from the point of view of content and native advertising. Yahoo’s is built on banners and boxes. I won’t be surprised if Yahoo introduces a native ad product next year, whether sponsored stories, promoted trends, promoted videos, or promoted images. Hint: Yahoo, here are some ideas!