October 31, 2016

Native advertising already accounts for 11 percent of ad revenues at news media companies, according to a new report, and will rise to 25 percent in 2018.

The study, done jointly by the International News Media Association and the Native Advertising Institute, is based of a survey of 156 publishers worldwide, most of them at newspaper companies.

I’m guessing that those who chose to respond may have skewed to outfits heavily into native advertising, but the result is still testimony to the fast rise and strong prospects of the format.

The survey, conducted in late summer, found that 48 percent of newspaper media are doing some form of native ads. Another 39 percent expect to add it as an option.

The group rated native the most promising new advertising format, just ahead of programmatic.

Part of the allure of native ads is that they command higher rates than traditional formats. But the report observes that while that ratio may have run as high as six times “in the early days,” it is coming down as the market becomes more saturated.

The survey found a mix of practices on executing native ads, reminiscent of old controversies over advertorials:

Forty-two percent use editorial teams for native advertising, 33 percent use their own native advertising studio, 28 percent use a separate native advertising team, and 26 percent use an external agency partner.

The fact that publishers already have general editorial expertise is considered by 66 percent to be the top strength for native advertising at their companies.

Yet 38 percent say the lack of separation of the editorial and commercial sides of the business is a threat to proper execution of native advertising.

That relates to the biggest remaining hurdle to the format — getting potential marketers to understand it and produce real stories.

Another finding was that 60 percent prefer “sponsored content” as a label, though that has flunked Federal Trade Commission guidelines, which instead recommend a label of “advertising” or “paid content” or both.

My takeaway is that the format, hardly a new thing anymore remains unsettled even as its popularity grows. My hometown Tampa Bay Times introduced native ads earlier this month with the “sponsored content” label and a display format virtually indistinguishable from news articles.

Also, a New York Times story today focused on the related phenomenon of “around the web” or “promoted stories” placements from the likes of Outbrain and Taboola.

These generate substantial audience and revenue at otherwise respectable sites, by steering attention to trashy clickbait content.

With intense pressure for newspaper organizations to generate new digital ad revenue as print craters, I don’t see either format going away soon.

The report was written by consultant Jasper Lauren, founder of the Denmark-based Native Advertising Institute, and Martha Stone, an international media consultant. It is free to INMA members and available for purchase to others.

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Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years. His commentary on…
Rick Edmonds

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