Going native in search of an online ad antidote

The online advertising industry is in desperate need of an enhanced ad format to replace the banner. 'Native advertising' may be that answer.

They say that for change to occur in an industry or an organisation three things must happen. 

One, the organisation or industry must be dissatisfied with the current conditions. Two, an appropriate alternative must exist. Three, the organisation or industry must believe in their capabilities to implement this alternative.

You get the feeling at the moment there is a want within the digital advertising world to fundamentally change its core advertising currency, the banner. If you read a lot of the trade press, there could be a case to say that many are indeed unsatisfied with the current conditions.

Look at this from trade publication DigiDay, or this from noted blogger The Ad Contrarian, and this report from Comscore suggesting over half of banner impressions were never seen – all three paint relatively grim pictures of the efficacy of the banner as an advertising medium. This one, also from DigiDay, suggests online publishing is in a death spiral. It’s all very dramatic.

Truth be told, an advertising format is generally only as good as the creative and the messaging contained within. The problem with banners is the creative is generally lousy – it’s more often than not a hybrid of print, outdoor and TV that is generally completely at odds with the needs of the user. I honestly think no publisher believes the banner to be a particularly strong ad format – the issue is the complete lack of an alternative when it comes to monetising digital publishing properties.

No publisher would be completely satisfied with the big number/little number conundrum of banners: Big numbers meaning the tens or hundreds of millions of impressions and pageviews trumpeted as signs of effectiveness, with the little numbers being the tiny fractions of a percent that constitute the response rate (more often than not lower than 0.1 per cent). They are all looking for a better way – larger ad units, custom formats, more aggressive and interruptive formats – the issue is in most cases it adds more noise to clutter levels already deafening. For many publishers, their efforts to work closer with advertisers to tailor creative for their audiences is met with a swift refusal.

The capital raising success of BuzzFeed, coupled with its impressive user numbers, is causing some to believe that an alternative exists. Its name is native advertising. It feels and looks very similar to ‘advertiser content’ but it has a ‘social layer’. The assumption is if the ‘advertiser content’ is interesting and relevant people will share it, exposing the advertiser (who plays a relatively passive role) to a wider audience and also attaching the brand to the power of the recommendation. It is an interesting area but a very new one. Nonetheless, it is an alternative … and in this current climate of lowering ad yield and increased competition, any alternative to the commoditised and much maligned banner is one most want to consider.

The other benefit of native advertising is it is hard for a third party to sell. The majority of inventory sold online is sold via third party networks and exchanges, not the content creators themselves. This is fine for a small international blog with limited resource, but it causes problems for large media companies who have built their empires on creating content and using their own sales resource to sell it at a high yield. Native is absolutely an attempt for publishers to wrestle back some control over their own destiny by creating a product that can’t be commoditised and traded. It’s also a way for traditional content publishers to show advertisers something that excites them, after advertisers have been told for the past few years that advertising around content and context is irrelevant and that audience and targeting is the most important thing online.

So we have an acknowledgement by many for a need to change and, rightly or wrongly, in native advertising a new great hope. That leaves the final step, belief in the capability to make the change.

For all the talk about the problems with banners, the display banner industry globally is worth close to $40 billion. In Australia its worth more than $1 billion. Banner ad spend has grown non-stop for the past 10 years. For all its troubles, the banner is delivering a lot of money to a lot of people. Despite the low yield, concerns around performance and creative limitations, the banner is an astonishingly successful form of advertising if you consider its revenue performance and growth over the past decade. Like it or not, the digital publishing industry is more or less built on the banner. It provides the livelihood for most people involved in the wide world of digital advertising – from publishers to creative to media agencies, as well as the countless intermediaries. This makes any change a potentially expensive exercise for not only the companies involved, but for the people involved.

So for a format to replace banners there needs to be real belief that this format can deliver the industry, and those who rely on it, the sort of revenue the banner currently provides. In Australia it’s a $1 billion-plus bet. It takes a lot of self belief to back yourself with that scale of potential cost if you get it wrong.

Ben Shepherd is a media and technology consultant. He can be found on LinkedIn and on Twitter.