The potential for native advertising is enormous. For some publishers it’s already more than just potential — BuzzFeed draws all of its revenue from the model; and more than 50 percent of the Atlantic’s digital revenue is tied to native campaigns.
From the conversations at our summit we identified a few underlying reasons.
1. It fits better with news
Consumers operate in two different modes at different times, says Rebecca Davis, an executive vice president and group head at Ogilvy. One mode involves interaction and conversation. The other, she calls “direct response buying mode.”
News audiences tend to be in the interaction/conversation mode, and so sponsored content makes more sense to reach them than transaction-focused display ads.
In other words, if most people come a news site to learn and be entertained, then brands can better reach them with sponsored content that also educates and entertains, rather than a display ad trying to sell a product.
2. It solves the modern problems of brands
Brand publishing 1.0 was about companies learning to create their own websites and publish content there. They got good at it, but also realized that no one finds it.
Brand publishing 2.0 is now about working with mainstream publishers to craft and distribute the brand messages where the people are.
Brands have a “content glut,” says Sam Huxley, senior vice president of digital for PR giant FleishmanHillard. Brands are also increasingly driven by single missions and see themselves as having a story to tell, not just a product to sell. This is where sponsored content can be uniquely effective.
3. It works for mobile and small screens
Native advertising is a “silver bullet” for mobile revenue, says Erik Requidan, assistant director of sales for advertising firm Intermarkets. Sponsored content is much more effective on small-screen environments where you can’t stick ads next to content, the ads have to be part of the content.
Politico and The Atlantic among others both see native advertising as one of the key strategies to closing the “mobile revenue gap” — the difference between their large and growing mobile readership and their relatively small mobile revenue.
4. Exclusive, premium value
Sponsored content is a model that still highly values a premium publisher’s unique environment.
Unlike display ads, where all traffic across the web is commoditized and prices have fallen to the floor, sponsored content on a premium site is worth more than on a lesser website. Where display ads seek impressions and clicks in any context, sponsored content seeks to tap the unique value of one brand’s relationship with its audience.
This is part of the reason sponsored content commands higher prices and is more difficult to disrupt through mass-market competition.
Sponsored content may even help to reverse the slide of display advertising.
Representatives at the summit from the Atlantic and Huffington Post said they often sell the brand sponsoring the content all the display ad positions on that web page as well. The display ads can reinforce the brand identity and may push a more direct-response message to complement the soft-sell approach of the sponsored content.
These display ads get much more engagement than average display ads that aren’t paired with sponsored content.