By Joe Kukura
There is an understandable beeline being made among publishers and advertisers to produce, post and propagate native advertising — the increasingly common ad format wherein the advertisement itself includes editorial or other content that matches the publisher’s existing page content. Native ad revenue is exploding, expecting to reach $21 billion by 2018 according to Business Intelligence. Native click-through rates are vastly higher than for banner advertising, and native ads perform magnificently on mobile devices. The gravy train is chugging generously for every sector of the native ad industry. But are there any downsides to betting your budget on native advertising? And if so, what tactics can savvy advertisers and publishers use to avoid these downsides?
A new study from the Penn State University College of Communications does find a downside, noting that native advertising “may create negative perceptions of media outlets.” The study’s preliminary abstract deserves a full read, as does a follow-up interview with the researchers on MediaPost Publications. (American Behavioral Scientist is slated to post the full findings soon.) The abstract concludes, “Readers held a lower opinion of the media outlet [the native ad] was published in. However, the reputation of the company being promoted was not affected.”
I’m not here to dispute the study’s results, as they are peer-reviewed and almost certainly correct. What I would like to note are some creative and proven-effective methods that can help media outlets and advertisers avoid the potential trust gap that could result from consumers who might feel duped by native ads masquerading as news or featured content.
First, an important distinction. The study notes that it examines “native advertising, often known as sponsored content or promoted posts.” This is like comparing apples and oranges and bulldozers. There is a difference between native advertising and sponsored content, and promoted posts on social media are a whole other thing entirely. Coauthor Mu Wu told MediaPost, “We defined native advertising as sponsored content, which features content that is similar and consistent with publishers’ content.” So the findings of this study relates rather specifically to sponsored content rather than the entire spectrum of native advertising.
That said, native ads and sponsored content often work together, and many publishers use both at the same time. For example, let’s take a look at a Gawker webpage documenting the infamous John Oliver diatribe against native advertising (yes, we can laugh at ourselves). In the lower part of the page to beneath the comments, you’ll see a whole bunch of “Read on Gawker” links, with rectangular pictures to their left.
These are native ads, meant to drive traffic. But also notice that some of these native ads are not “Read on Gawker” links, plainly labeled as directing to other sites. As you can probably infer, these are promotional articles or sponsored content. The two formats often work together in a content marketing campaign, and native ads are often used to drive traffic to pieces of sponsored content.
For publishers who place these native ads on webpages, there are several best practices that not only help click-through rates but also avoid losing consumer trust. For instance, a Yahoo study found that inserting the advertising brand’s logo into the native ad display increased consumers’ favorability sentiment and their intent to purchase the product. An additional study by native ad publisher Polar found that applying light background shading and using differently colored fonts on the native ads also increased click-through rates as well as positive sentiment.
The bottom line for publishers, it seems, is that consumers appreciate having native ads labeled very clearly as such. But if you’re the advertiser or brand, the risks appear to be low. The Penn State study found that the media outlet suffered reputational risk, but advertising brands did not. “People see that the company is just doing what it’s supposed to, promoting itself,” coauthor Wu noted.
It’s worth noting that there were limitations to this study, in addition to the lack of distinction between native advertising and sponsored content. Test subjects saw only two variable publishers and two variable advertisers, creating a limited number of possible outcomes. Furthermore, researchers did not test a wide variety of native ad types. But their findings do acknowledge a possible risk in the nascent field of native ads.
As they’re fond of saying in academia, “More research is needed.”
Joe Kukura is a Silicon Valley writer with nine years of experience covering tech, startups and the occasional basketball game with NBC Bay Area, the SF Weekly and the Daily Dot. He’s written content marketing for major IT companies, automobile brands and sports venues, and his work has appeared in the New York Times and Wall Street Journal.
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