Yahoo’s Native Ads Have an Image Problem

Yahoo, perpetually a step behind in recent years, was late to the native ad rush. Now, it’s trying to play catch-up.

Visitors to Yahoo’s sites are used to being greeted by both content and advertising, but the two are beginning to blur. The stream of content on the site’s homepage increasingly features paid links to advertisers’ sites, styled to look like its regular editorial content, thanks to its new “Stream Ads” product.

But so far, the units have failed to impress. They’ve been dominated by direct-response marketers, as opposed to the type of big-brand advertisers the digital media world is desperate to attract, and agencies admit they’re not yet sure how best to use them. Others across the industry have dismissed them as an attempt by Yahoo to jump on the “native” bandwagon, describing them as “glorified text ads” and even complaining that they’re filled with content from “ghetto buyers.” The product was launched in May, and it already has an image problem.

“I hesitate to call these units native; I think they’re ‘contextual,'” qualified Aegis Media president Angela Courtin. “But what’s happening is a flood of direct-response advertisers is degrading the perceived quality of this type of new opportunity.”

A glance at the Yahoo site is immediately revealing. Stream ads for credit cards, mortgages, insurance, loans and coupon sites litter its homepage. More often than not, those ads point to sign-up pages or lead-generation forms. They’re rarely used to distribute anything resembling “content.” It’s a far cry from the type of big-brand advertisers that once bought homepage takeovers on Yahoo for $500,000 a day.

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That doesn’t mean stream ads aren’t working. Agencies say the units have been performing well from a direct-response perspective. The fact that they’re embedded among editorial content means users are more likely to click or tap on them, they suggest.

But they’re less convinced the units can be used for branding purposes, and that might prove problematic for Yahoo. If it can’t sell its stream ads to major brands, Yahoo risks alienating users by serving them what some consider spammy text ads. Platforms such as Facebook and Twitter are doing a better job of providing both DR and branding opportunities with their respective in-stream offerings, buyers say. That’s important for brands and user perception.

“The Facebook newsfeed placement is unique because it works well from a branding and a DR perspective because of the size of the image, the placement and the reach,” said Megan Pagliuca, vp of media at Merkle. “I think the Yahoo stream ad is a wannabe newsfeed ad. It’s the same idea, but it fell apart in the execution,” she added.

Courtin agreed but admitted agencies have a large part to play in figuring out how best to take advantage of new formats. They’re as responsible as publishers for ensuring the right content is delivered in the right environments, she said. And when it comes to attracting the attention of big-brand advertisers, an Oreo Super Bowl-like moment might help.

Yahoo appears to be placing a lot of its eggs in the stream-ads basket. Back in June, Yahoo ad chief Henrique de Castro described the native unit as a critical part of its “twinning” ad strategy to pair typical display with such new units.

From a business perspective, it’s easy to see why. Like similar offerings from Facebook, Twitter and, of course, Google, the ads are easily sold through a self-service platform, and they work well across all devices.

“There needs to be more examples to point to of brands getting this right,” Courtin said. “If that starts happening on Yahoo, I think more publishers will follow with this type of unit.”

Image via Shutterstock

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