Banner ads are dying.
Since their launch in 2000, banner ads have declined from a 9% click through rate (CTR) to .11% average CTR today. And each year that number falls.
Banner ads are now tiny billboards used as a support mechanism in online advertising and not the main show.
The future of online ad dollars is native advertising.
Native advertising is content as the ad, specifically content that would or could normally be native to the placement of the ad. [Tweet This]
The term native advertising has risen to prominence over the last couple years and there are varying definitions. We are going to focus on three main types of native ads.
First, let’s review a couple things that are NOT native advertising.
Search ads: Many have labeled Google’s search ads as the original native advertising, weaving paid search results into or above the organic results. This is true, but search ads stand apart as their own industry today and are not new. So we are excluding them from this breakdown.
Video ads: Most video ads are not native. They are pre-roll ads mostly and rarely take on the challenge of being relevant to their placement.
Paid Endorsements: Influencer marketing, blogger outreach, celebrity integrations, etc. While paid content deals can be a part of these agreements, these are less like native ads and more similar to traditional paid endorsements and spokesperson campaigns.
A native ad is a Facebook post that an advertiser paid to place into your news feed. It’s that Buzzfeed article that JetBlue paid to have written about fun places you should travel. And it’s that “read similar content” link at the bottom of an article that may or may not take you to an interesting article on another website.
1. Sponsored Articles
These are very similar to old school newspaper and magazine advertorials, but they are less promotional. The topic of an advertorial is usually the advertiser, their product, or their industry.
Sponsored articles, however, are more focused on reader engagement and lightly branded. These articles should be very close to articles that would normally be published on the site where it is being featured.
Buzzfeed has been one of the leaders of sponsored articles as it is their main revenue model. Of the top 18 articles featured on Buzzfeed right now, four of them are “Presented by” paid advertisers. And if we look just above the fold, you can see three ads on Buzzfeed.com (see below outlined in red).
If we take a closer look at the articles themselves, we will see what you would normally expect to see in a Buzzfeed article. Lots of images, animated gifs, their signature sense of humor, and of course almost always a list format.
Here is an example from Ford Sync. Notice the light branding and prominent link.
Advertisers trade in big branded banner ad billboards for a more rewarding consumer experience. The focus is on content, and quality content, that can be attached to the brand. Clicks can still easily be apart of the equation as well.
No one is really invested in sponsored articles as heavily as Buzzfeed, yet. But here are some other online publishers that are leading the way in offering native ad sponsored article opportunities including:
2. Sponsored Links
These native ads are previews of an article on another website, often including a headline, photo, and sometimes excerpt of the article being promoted. They might look like they are linking to articles on the same website, like on the top of Buzzfeed.
The above sponsored link example is a series of article links on top of Buzzfeed. All of them link to Buzzfeed articles or videos, except the “Partner” one on the far left that links to an outside publisher.
But in effect, these function more like a PPC ad than any other native ad format, because their goal is to get you to click through to the final article or landing page.
Sponsored links are quickly becoming the ugly stepchild of native ads. There are a ton of low quality ads being served in these “recommended reading” spots that plenty of “respected” online publishers seem to have no problem making money from.
Some go to articles or websites that have nothing to do with what the user originally clicked on. And many link to articles that are completely unrelated to the original article a reader was consuming or even the site as a whole.
These ads will usually show up on the homepage (Buzzfeed, Mashable), sidebar (Time), or footer below an article (CNN). Despite some of the dodgier sponsored posts out there, there are many respectable options for advertisers and publishers.
Here are a few publisher examples.
Mashable front page sponsored links blend in very nicely.
TechMeme, a site of only links to outside publishers, calls out sponsored links with color blocks.
Time has some pretty relevant ads in their sidebar, by Taboola, a sponsored link vendor.
CNN‘s article footer promotes sponsored articles using Outbrain, another sponsored link vendor.
Disqus is another interesting vendor in this space. The blog commenting system has the option to include sponsored links from “around the web” below each blog post (on the right below).
For all of the vendors in this space, the quality can have a range. And by quality I mean the relevance of the sponsored links to your article and site-wide content. This relevance can also be controlled by the publisher for some vendors.
3. Social Ads
Social advertising is in the middle of a huge growth spurt. That growth is being driven, largely by their version of native ads. These ads show up as promoted tweets on Twitter and sponsored posts on Facebook. The connection is that they all show up in the stream. Where users of social networks spend all their time.
Instagram ad example
Twitter was the first social network to experiment with native ads in the stream in 2010. Facebook quickly followed suit in 2011. And then more recently, this year, LinkedIn, Tumblr, Pinterest and Instagram ads have hopped on the band wagon with in stream ad products of their own. And Google recently changed their Terms of Service in a way that shows they will quickly join the other major social networks with their version of in stream ads.
Google ads included as bookmark reference. Please note Instagram ads were expected in 2014 a month ago, when this chart was created. Instagram ads are now live.
In stream ads on social networks are extremely effective. Especially on mobile. These ads exist where users eyeballs are already. And on mobile, one of these ads often takes up the majority of our smartphone or tablet screen, if not the whole screen. So click through and engagement rates are very high.
The Problem With Native Ads
With great power comes great responsibility. – Uncle Ben
Since native ads ARE content. They have to be content. Meaning, since you are taking up valuable real estate, your native advertising better damn well be good. Because if it isn’t there is a larger chance that consumers will react negatively.
Relevance becomes more important. Content that users will find useful and/or entertaining becomes more important. Branding becomes lighter.
We see this clearly when brands promote Facebook posts to large irrelevant audiences and they get a flood of negative comments back.
So please, go forth and create great content as native ads. But please, be wary. Your ads are now in the stream. Where consumers are keenly focused. They will not forgive you if you abuse this real estate.