The following piece is a guest post from Contently editor-in-chief Joe Lazauskas. Guest posts do not necessarily reflect the opinions of this publication. Read more about MediaShift guest posts here.
Five years ago, native advertising was a foreign term in most media and marketing circles. Unless you heard BuzzFeed founder Jonah Peretti give one of his prophetic keynotes, it was pretty easy to avoid it all together.
Today, native advertising is everywhere. In a short period of time, it’s become a favorite marketing tactic; 54 percent of marketers currently use native advertising, on par with display and video advertising, according to a Salesforce report featured on eMarketer.
This begs the question: Does native advertising actually work?
That’s a question we decided to tackle this fall when we launched an in-depth study of how consumers interpret native advertising with the Tow Knight Center for Entrepreneurial Journalism at CUNY. Through focus groups and an in-depth quantitative study of 1,212 consumers, we discovered some key ways that marketers and media folks can approach native advertising in a way that works.
Native advertising delivers ROI—but it comes with serious risks
At top publishers like The New York Times and BuzzFeed, the minimum spend for a native ad campaign is $100,000—exponentially more than you’d pay for a display campaign. Part of the pitch is the format: native ads resemble the editorial stories that run on those publishers sites.
The format of native ads, however, comes with potential downsides: Will consumers feel deceived? Will they be able to identify what brand sponsored the content they enjoyed?
The answer is complicated. More than half of consumers (54%) reported having felt deceived in the past upon realizing that a brand sponsored the content they read. Nonetheless, 31 percent of respondents said that they were more likely to purchase something from the sponsoring brand after reading a native ad.
As it turns out, there are a few key aspects that make a native advertising effective for both brands and publishers.
One of the starkest findings in our study was the impact of brand-publisher fit on reader trust. When a publisher featured a native ad sponsored by an untrustworthy brand, readers had a negative experience, and 43 percent lost trust in the publisher.
In other words, brand-publisher fit has a big impact. If an advertiser runs native ads on the site of a publisher whose audience doesn’t trust them, the consequences are grave for both the publisher and the advertiser.
Conversely, if an advertiser runs native ads on the site of a publisher whose audience doesn’t trust them, it has a positive impact, with 41 percent gaining trust in the brand.
Make it interesting
Not surprisingly, one of the biggest factors in whether a native ad drove increased purchase intent was whether the consumer actually found it interesting.
While viewing a native ad drove a lift in purchase intent for 31 percent of respondents overall, that number increased considerably if the respondent reported being interested in the native ad. Fifty-nine percent of consumers who were interested in a native ad claimed they were more likely to purchase from that brand as a result. This suggests native advertising can deliver a great lift in purchase intent if executed well.
Don’t shy away from giving native ads their own real estate, and label them with visual cues
Publishers and advertisers often talk about the importance of having native advertisers blend into the feed. However, that’s not what readers want. Fifty percent said that they should have a dedicated section on the page, with many others adding that native ads should include special borders, highlights, and fonts.
“I don’t like where they have the ads. I like it with the ads on the right and more of the published articles on the left-hand side,” said Lynn, a 60-year-old focus group respondent in our study.
In addition, brand logos are an afterthought in the FTC guidelines for native advertising, released last year, but they’re crucial. Seventy-four percent of respondents believe that including both brand names and logos is the clearest way to label native ads.
As our study makes clear, brands have little to lose if they push for clearer labeling. The New York Times native ad for Wendy’s was the most clearly labeled native ad we studied, with a prominent Wendy’s logo at the top of the page. Eighty-three percent of readers were able to identify Wendy’s as the sponsor, and 56 percent were still more likely to purchase Wendy’s after reading the promotional piece of content.
If a native ad comes out well, brands should want their names and logos clearly displayed atop it. Brands can push publishers to adopt better standards by insisting on the stricter labeling outlined in the sections above.
Don’t be afraid to target millennials
There’s a stereotype that millennials hate advertising, but as it turns out, they don’t hate native advertising—at least relative to other groups. As our study found, millennials are the most likely age demographic to trust native advertising (45 percent for millennials vs. 40 percent for Gen X vs. 34 percent for Boomers).
This is great news for Unilever, which has spent millions of dollars targeting BuzzFeed’s millennial audience.
There are a lot of reasons to wring your hands over native advertising, but it’s here to stay. It’s become such a popular format amongst advertisers that at companies like Slate, The Atlantic, and The Daily Beast, native ads now account for the majority of digital ad revenue.
But for the format to succeed, brands and publishers need to work together to adapt a better set of best practices. That means thinking strategically about brand-publisher fit, committing to creating content that’s actually interesting, and insisting on transparent, standardized labels that allow consumers to actually understand what they’re reading.
As our research shows, the rewards are great with native advertising, but so are the risks. If the industry doesn’t adapt a better set of best practices, native advertising may end up as obscure five years from now as it was at the start of the 2010s.
Joe Lazauskas is the Editor-in-Chief of Contently and The Content Strategist, winner of the 2016 Digiday Award for Best Brand Publication. A technology and marketing journalist, Joe is a regular contributor to Fast Company and has written for Mashable, Digiday, and Forbes, amongst other publications. He is the former editor-in-chief of The New York Egotist and The Faster Times.