Digital’s Newest ‘Shiny Object’ is Native Advertising

Gabe Rogol is vp of media sales at Demandbase.

Digital marketing’s detriment is the way marketers often focus on “shiny new objects.” Think QR codes and check-in services like Gowalla and Foursquare. The latest shiny object is native advertising, a tactic that has been oversold as a potential solution to display’s performance problem.

The obsession with native advertising stems from the false belief among marketers that display advertising does not perform. Rather than a performance problem, display has a metrics problem. Many marketers still judge display advertising performance by click-through rate, a fundamental problem in our industry. Comparing CTRs across placements and sites is indicative of audience interest but is by no means a comprehensive measure of impact. The reality is that 99 percent of people will never click on a display ad; try to remember the last time you clicked on an ad.

When marketers abandon their fixation on CTR and explore new technologies to measure impact, display advertising goes from impossible to justify to becoming a critical piece of marketing. With better display targeting techniques (using first- and third-party data sources) and Web analytics (view-through, engagement and more sophisticated lift metrics) marketers can break free from click-throughs by measuring traffic and conversions that came from users seeing display campaigns — even if those users never clicked on an ad. Display advertising works. We just need to set up the tools to properly measure its impact.

Native advertising has become a necessary publisher strategy because real estate and editorial voice are the last assets available for publishers to exploit. Audiences, the traditional lifeblood of publishers, can now be more efficiently and accurately reached through combinations of first- and third-party data and through programmatic buying, which only tangentially intersect with publisher sites. Therefore, changing page layouts, interrupting editorial, and creating custom formats are the only tactics left for publishers to create unique brand experiences.

This new spin on ad integration will not be a boon for the majority of publishers. We’ve seen this show before: Paid user revenue was replaced with decreasing print advertising yields, which were then replaced with decreasing online yields, which are now being further eroded with mobile and programmatic buying. The premium ground available to publishers continues to shrink, and publishers are focusing on using their voice and site real estate to create value for advertisers through native experiences.

The focus on native advertising by publishers will not decrease display spending, it will just speed the flow of dollars to those companies who are delivering effective display targeting. Native advertising will continue to be an important strategy for big brands but is not scalable enough to completely erode display budgets. In the end, display will emerge as key because targeting measurement continues to improve.

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