But this is a way in which ‘native advertising’ – a term that first appeared barely two years ago – stands out from many of the latest digital trends: it’s remarkably simple to grasp. Not that this should be in any way surprising. In fact, a cynic would say it’s just ‘advertorial’ resurrected in a digital world with an intriguing new name.

Indeed, native advertising is no wondrous innovation, resting on some form of mystical, proprietary technology such as Google’s search algorithm or Facebook’s social platform. Its origins are humble – and transparent. They lie in every digital publisher’s aims to reverse the downward spiral of banner ad CPMs (a result of heightened competition as well as format standardization) by introducing bespoke advertising propositions to maintain a direct sales relationship with agencies and brands (at a time where the rise of programmatic transactions threatens access) and to shift effectiveness metrics from (often dreadful) click-through rates to more ‘editorial’ indices such as page views or time spent.

At the same time, publishers (think they) are addressing advertisers’ chronic concern about ‘banner blindness’ and ad blockers, as well as brands’ perennial wish to be ever more closely associated with journalistic content. Finally, more by accident and less by design, native advertising is a ‘platform agnostic’ format, in the sense that, unlike banners, it migrates seamlessly to mobile (either in a responsive design or m-optimized approach), which is where an increasing portion of publishers’ audience is moving.

Advertisers appear to be increasingly considering or endorsing the ‘native’ approach – OPA/Radar Research data show that 32% of Chief Marketing Officers have bought or are planning to buy native in the next six months – and yet the fundamental questions remain unanswered. Will native advertising prove to be a tectonic shift in online brand marketing or will it be no more than a fad, a practice soon to revert to the niche market share of the advertorial? And if it does indeed flourish and continue to rise, who will benefit most and what can publishers do to develop and sustain a competitive advantage?

The simple truth is that native advertising is still beset by scale issues which at best can be considered teething problems. First, despite encouraging steps by the Interactive Advertising Bureau, there isn’t yet any substantial or extensive standardization of formats, with the gamut running from grand custom productions at one end to simple, almost rudimentary ‘newsfeed’ offerings at the other. Second, no uniformity (or, sometimes, transparency) in pricing exists, whether this concerns fixed or variable (e.g. per article views) rates or a scale element depending on article length and/or use of multimedia. Finally, there are no commonly accepted appraisal metrics, making it difficult for advertisers to justify a major investment in an activity that they don’t know how to measure effectively.

Still, elements of native’s value are becoming increasingly apparent, especially on the consumer side. IDG Media research found that consumers viewed native ads 52% more often than banner ads (specifically, 4.1 times per session vs 2.7) and a quarter more of consumers look at in-feed native ads rather than standard banners (25% versus 20%). At the same time, one in three said that they would share a native ad with a friend versus one in five that would do the same with a banner ad.  Findings such as these make most pundits conclude that the issues native advertising faces in its embryonic stage are reminiscent of the early days of the banner ad about two decades ago. Just like native today, banner ads then did not have standardized formats, were priced in various (frequently inconsistent) ways, were often built by the publisher to assist the digitally-curious advertiser and had no real effectiveness metrics to be appraised against.

And yet, the fact that all this was resolved as the industry developed and matured is not the main factor pointing to native’s potential. What emerges as critical is the simple fact that the giants of social media, Facebook and Twitter, have endorsed and amplified it – particularly in their mobile offerings – to the point that it is the dominant format, absorbing more than US$1.5 billion last year. In fact, the fundamental point here is that an entire new generation of internet users – those that predominantly have these social media platforms as ‘home pages’ from which they snack content, play games and communicate with their friends – are getting accustomed to this form of (often targeted) advertising and consider it increasingly a natural part or extension of their user experience.

However, if all of the above point to native advertising being a substantial trend, they do not necessarily clarify who – beyond Facebook, Twitter et al – can benefit from it. Nor do they point to a specific ‘best practice’ policy framework for publishers to implement and profit from, and that is indeed a pity as native advertising is an area where publishers could have a relative edge, given their wealth of content and the quality of their brands. In fact, an optimist may argue that, in particular, context-based native advertising could prove to be premium publishers’ answer to search advertising:  a well-placed commercial message blending naturally with an express user preference (targeted editorial content, e.g. a specific article, on the one hand, a keyword on the other).

The first steps towards introducing native advertising rest on three main pillars. But note that any native ad strategy should be based on an initial low-key, scalable approach. Not only because native, despite current trends, may not prove to be the game-changer that some predict, but also due to the fact that it is a practice that can be ratcheted up as demand evolves. The other critical precondition would be a clear, consistent and transparent policy with regards to (conspicuous) labelling: not only is this an absolute necessity in terms of respecting one’s readers but it also addresses criticisms about ‘grey’ advertising. Having assured this, besides sales and marketing, starting with a design and front-end developer as well as a couple of digitally-savvy journalists will do.  Once (or if) advertisers are queuing outside the publisher’s offices, then a ‘Content Studio’ à la NYT or WSJ is the next logical step – but not before.

The principal pillar for native advertising is a segmentation of the sales proposition into three broad offerings, namely:

• A standard ‘newsfeed’ offer, available in (a maximum of) three formats and priced transparently either on article length/features (e.g. photo material), on the time that the story resides on the home page or even article views – though the latter would be less advisable as it puts unfair onus on the publisher for the native ad’s performance. This offer should be marketed heavily in cases where mobile is appealing to the advertiser (e.g. if the product concerned aims at a younger demographic, as they tend to have mobile as their medium of choice) as it migrates into handheld devices in the most seamless manner.
• A ‘reverse engineering’ offer – such as Forbes’s BrandVoice – that provides advertisers with their own editorial page to which they can upload clearly labelled, relevant content under the publisher’s masthead. Not all publishers have the clout to convince brands of the benefits of publishing on their sites, nevertheless it is a highly lucrative approach as it scales perfectly, requires very few resources and is usually priced on a monthly (and often hefty) flat fee.
• A ‘customized’ offer whereby brands are presented with, or ask for, creative ideas as well as execution from the publisher. This is mainly where the aforementioned digitally-savvy journalists come in, usually with a background in ‘brand-friendly’ consumer magazines, to deliver premium propositions that are showcases of high value. These customized solutions can be generators of significant income for the publisher, especially if video material is part of the offer and the ‘native’ piece is pushed (again, clearly labelled) to the social media fan and follower bases of the editorial brand.

A second pillar in getting started with native is a clear segmentation of the advertiser market so that different offers cater to distinctly different communication needs and preferences. This should be centered on two clusters:

• Companies that have a regular flow of press releases to distribute to media, e.g. banks, insurance and telcos. These companies usually hire PR agencies to do the spinning or ‘persuading’ of journalists, usually (regrettably) successfully given the shrinking editorial budgets most newspapers have had to cope with. The ‘newsfeed’ offering alleviates such commercial pressures while bringing transparency and revenues to the publisher.
• Companies that would like to engage more deeply in content marketing. This is where the larger, bespoke productions can be most effective for the brand – and lucrative for the publisher. The publisher’s specific targets would depend on its audience and editorial context, e.g. fast-moving consumer goods and entertainment for the younger demographic, or fashion/beauty for female readers, or health for the older demographic.  However, the prime candidates for such projects are companies involved in major Corporate Social Responsibility activities, as these endeavours often have a content dimension and, at the same time, are particularly difficult to convey through a simple advertisement.

The final cornerstone in terms of an initial publishing strategy on native advertising may prove to be the trickiest and most elusive: alliances. Publishers have a horrid record of coming together (be it in a joint operating agreement or a full-blown joint venture) in business enterprises to try to address a common threat or opportunity, usually to create scale which, especially in digital marketplaces, can prove critical. Finding successful shared publishing endeavours is more the exception than the rule. However, in the case of native advertising, it may well emerge as an imperative: large portals (e.g. Yahoo!) are also starting to invest in native and, at the same time, firms such as Simple Reach, Native Lift and Nativo are coming to the fore as placement networks. There is thus a real risk that scale and the inevitable standardization will lead to commoditization and therefore loss of pricing power, whereby reach will again be the strongest asset.

What can publishers do, at least at a national level, to avoid such a scenario? Their pre-emptive response should be three pronged. To begin with, they should be the first to pursue the ‘race to scale’ and, possibly via industry bodies, take the initiative to set format standards (particularly for the ‘newsfeed’ offering) before portals and aggregators do. An ‘ethics’ corollary of this would be standardized disclaimers, concerning separation of editorial from commercial messages. Second, they should actively engage with advertisers – again, more likely than not at industry level – so that performance metrics are agreed upon and these express also the publishers’ viewpoint, often ignored in a buyers’ market like online display advertising. Finally, they should undertake a joint research effort that aims to prove that native advertising is much more effective when residing on original content sites, rather than any content page. The UK’s Association of Online Publishers (AOP) did just that two years ago by contrasting branding metrics for campaigns that run on premium content sites versus those that rely only on social media.  Findings ranged from encouraging to impressive and there is no reason to think that they would be different in the case of native.

In short, publishers are particularly well-placed to take advantage of the growth of native advertising. Indeed, it’s bound to come as a relief to the industry that finally a form of digital advertising has emerged that values the quality of the brand, its tradition, heritage and news values, as well as the original content that is being created on a daily basis. In addition, the first steps to get a functioning native advertising operation going are not too complex or expensive.

It would be an immense pity if the chronic fragmentation – which is often a euphemism for divisive bickering – of the publishing industry again proved to be the main culprit for another missed opportunity. There won’t be many more.

This would be quite a calamity, as what has truly hampered news publishers’ ability to innovate and reposition is not so much the need to restructure their business model for the digital era but, rather, the fact that this era is forcing on key industry players ever shorter cycles of disruption.

Take the printed press. It had decades to accustom itself to a multi-channel TV media environment and then a dozen years or so to adjust to the desktop internet, whereas today it barely has a year or two to be fully ready for the ‘mobile internet’ – let alone futuristic- sounding concepts like the gradually emerging ‘Internet of Things’.

In the past, content providers from less mature markets (from, say, the European periphery or Latin America) could take heart from the fact that they could learn from the successes and errors of pioneers, as publishers in the USA or the larger European markets would inevitably be – it is indeed a rare privilege to have constantly, through peer experience, a crystal ball at one’s disposal. But probably not this time: as ‘second tier’ digital economies go through a leapfrogging process, with swathes of new users coming online directly via mobile (having never gone through the, possibly intermediary, stage of the desktop or laptop), most news providers have to start with a slate that is unnervingly clean.

Still, sceptics of the mobile revolution abound – not so much with regards to the medium’s usage proliferation but its potential for advertising sales.  Indeed, with the percentage of mobile visitors to news sites rising inexorably – a current estimate would put it at an average of one in three – it is hard to dispute the prognosis that, in the near future, close to half (or more) of website visitors will be accessing content and services through a smartphone. Which means that publishers will need to find a coherent and sustainable strategy for monetizing the mobile half of their audience – and this is where things get complicated.

Any monetization strategy will rest on one fundamental parameter: the size and form of mobile advertising.  Unfortunately for publishers, this remains a major question mark.  Most pundits predict that the ‘time spent/dollars spent’ gap will narrow, as it did for the desktop internet over the last ten years – i.e., the fact that users spend more than 10% of their media consumption time on mobile devices yet only 1% or so of ad revenue is directed at this channel is unsustainable and will converge, possibly quite rapidly. Though there have been dissenting voices claiming that mobile will never be a branding medium (and absorb those big budgets) and so never become a leading marketing solution, the consensus – as outlined recently by eMarketer – is that mobile advertising will grow at an annual rate of 50% over the next two years, while desktop ad spending will remain broadly stable. Indeed, in 2017 mobile advertising is predicted to overtake desktop spending.

In theory, this would be welcome news for news providers worldwide as it highlights the key growth area while also underlining the potential weight of the different components; again, eMarketer considers video to be the strongest category, with rich media and native advertising a close second. However, a closer look at the current state of the mobile market can only be a cause of major concern: Google, Facebook and Twitter are absolutely dominant, leaving less than 20% of budgets to be contested by other providers. In short, publishers will struggle to gain what, in the end, may prove to be petty cash.  Indeed, in many ways the writing’s on the wall: mobile banner advertising tends to command lower CPMs and, even worse, is often sold on a CPC basis; ad networks often represent news brands, yet treat this inventory in a purely quantitative rather than qualitative manner. And while the most advanced digital markets count on the emergence of video ads and better creative (such as the IAB’s “mobile rising stars”) to reclaim the branding promise and increase value – and thus price – to the advertiser, at present the picture remains fairly grim.

Does that mean that charging users for content and services will be a sustainable strategy for most news providers? Probably not. Unless a publisher can provide truly unique content (if, for instance, it is the only news provider in the local community or offers some ultra-niche thematic content), it’s clear that the ‘drift to free’ that dominated the desktop web for years is replicated in the mobile environment. This is not to say that all mobile content and services will be free – rather, paid content is going to be more the exception than the rule and it is going to represent only a fraction of overall revenues for publishers. Indeed, as is the case already today with leading news brands, paid content on mobile is going to be part of a broader ‘one subscription’ (probably freemium) scheme that encompasses print, desktop, mobile and tablet.

So, if mobile advertising is mainly going to the global giants and, in addition, user revenues are not enough to sustain a quality news provider, what strategy can improve in the near term a news publisher’s position, especially those not at the very forefront of the mobile transformation? Possibly one that rests on three fundamental pillars, namely:

• A content mix that does not replicate the entire gamut of print or web content but that recognizes the particularities of the platform and the way it is consumed, i.e. during commute times or as a ‘snacking’ medium. This translates to a tailored product with an emphasis on the (latest) news stream – including (even bare bones) live coverage of events, particularly sport, as well as practical, often ‘static’, location-based information (e.g. where is the nearest XYZ?).  Based on examples of major news brands, two extra points need to be borne in mind. First, it may at first appear counter-intuitive given screen size, but short-form video content also scores very highly in user preferences, though its monetization is often problematic as pre-roll ads need to be edited down to be proportionate with, say, a 30-second clip. Second, for publishers active in app publishing, push notifications appear to be a key element in user satisfaction, leading to better affinity metrics and repeat visits – thus either to greater advertising inventory or improved chances to charge for some content or service.
• A marketing strategy that is heavily skewed towards social media, particularly Facebook and Twitter. This does not refer to advertising solutions that these two platforms offer, but to an active posting/tweeting policy. Simply put: research from all regions finds that Facebook and/or Twitter are the new ‘home pages’, also for news, particularly for younger demographic groups. What this new form of aggregation means for the news industry is that publishers seeking to build their mobile audiences should be present at the news streams/feeds of their fans and followers in order to maximize referral traffic. They should also fine tune their specific editorial policies to each platform’s profile and consumption patterns. As things stand, it appears that Twitter is used for ‘harder’ news and Facebook for ‘softer’, and that Twitter works best on weekdays and Facebook on weekends.  Finally, it should come as no surprise that multimedia material, especially video, performs much better than straight text/photo articles.
• A commercial approach that does not rest on ineffective mini-banners, often sold through ad networks which means that revenues are only a fraction of a CPM that is already low, but relies on two principal elements. First, a drive for sponsorships, particularly for native apps, possibly as part of a cross-media deal, that gives maximum visibility to one partner through intrusive creative such as launch ads or interstitials – making a brand ‘co-own’ mobile content is one of the few ways to deliver value and raise noteworthy revenue, at least in less mature digital markets. Second, and more importantly in the medium term, a native advertising offering – with clear rules in terms of layout/notification, pricing and frequency – whereby branded content appearing in the publisher’s news stream is likely to yield positive results. It is hardly a coincidence that Facebook and Twitter’s meteoric rise has rested on varying forms of native advertising.

Will such an approach resolve all questions related to mobile strategy? Does it address all opportunities and threats portable devices pose to digital news publishing? Certainly not. However, it does provide content providers with a solid and scalable first step that does not require a massive investment in capital, human resources or technology in both a challenging macroeconomic environment and an uncertain emerging media ecosystem.

Finally, it brings further to the fore publishers’ key asset: news. Either as a main thrust of mobile content or as a critical ‘social promotion’ tool or as a way to present (clearly labelled) advertising, it is refreshing and encouraging to see that the newest of digital media may rely anew on our industry’s timeless core mission.