EMarketer Native Advertising Roundup

8/10/2019 EMarketer Native Advertising Roundup

1/14

October 2014

presented by

Native advertising, which some marketers, publishers and readers

see as little different than the old advertorial concept, is still nascent

enough that its difficult for many to defineand has different definitions

depending on who you ask. To help you stay on top of the latest trends in

native advertising, eMarketer has curated a roundup of some of our latest

coverage, including statistics, insights and interviews.

NATIVE ADVERTISING ROUNDUP
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2/14

Native Advertising Roundup Copyright 2014 eMarketer, Inc. All rights reserved. 2

NATIVE ADVERTISING ROUNDUP

Overview

Native advertising, which some marketers,

publishers and readers see as little different than

the old advertorial concept, is still nascentenough that its difficult for many to defineand

has different definitions depending on who

you ask.

Market research firm Mintel defined native ads as paid

media where the ad experience follows that natural

form and function of the user experience in which it is

placed, and estimated that spending would rise more than

sevenfold between 2013 and 2018.

And media buyers agree: While nearly three-quarters

already employ native advertising, two-thirds said they

planned to use them more in the future. Just 7% of US

media buyers surveyed by TripleLift and Digital Media

Review said they would not be using native ads in

the future.

About two in five of these media buyers also said they

thought it was possible to bid programmatically on native

advertising, though a majority were skeptical of this activity.

Respondents said their top priority when evaluating media

for native ads was the audience, and that editorial content,

followed by images and user-generated content, were the

most compelling content types to use for native ads.

The benefits of native advertising are clear to many

advertisers, and include, according to research from

Advertiser Perceptions and Purch, increased brand

awareness, the opportunity to tell a product story and

increased awareness of specific products or services.

But obstacles remain, and they can seem bigger than the

benefits. The same survey found that insufficient reportingand ROI metrics were a problem for 46% of US advertising

decision-marketersfar more than the 31% who enjoyed

increased brand awareness. There were also problems

aligning campaigns with marketing objectives for 38% of

respondents. Just 13% said nothing was standing between

them and the perfect native ad campaign.

billionsUS Native Ad Spending, 2013 & 2018

2013

$1.3

2018

$9.4

Note: defined as a form of paid media where the ad experience follows thnatural form and function of the user experience in which it is placed;CAGR (2013-2018)=48.5%Source: Mintel as cited in press release; eMarketer calculations, Aug 5,2014

177800 www.eMarketer.com

% of respondents

Current vs. Future Plans to Employ Native AdvertisingAccording to US Media Buyers, May 2014

Source: TripleLift and Digital Media Review (DMR), "Digital Media Buyers GeNative: How Agency Executives Are Leveraging Native Advertising toConnect with Customers," June 23, 2014


Currently employ Plan to employ morein the future

No27%

Yes73%

No7%

Same26%

Yes67%


3/14


Paid Social Ads Convert More Customers

Nearly nine in 10 social content interactions are in the middle of the pathto purchase

The digital marketing world has been abuzz

for months about Facebooks dialing-down oforganic brand content in the average users

newsfeedand the declining importance of

the like or page follow in its wake. But Q1

2014 research by Convertro and AOL Platforms

suggests that even if Facebook is doing what

it can to push brands from an earned into a

paid media model, paid ads on social networks

do have better conversion rates than

organic content.

On Facebook, the jump in conversion rates among

Convertro platform users worldwide was just 0.1

percentage point, but on Twitter, ads were more than twice

as likely as organic tweets to convert users. On Pinterest,

the situation was reversed, but overall, brands using

Convertro saw around a 25% lift in conversions with paid

social ads vs. organic social content.

For the most part, though, social media is not the last

or only touch for consumers on the path to purchase.

According to Convertros figures, 87% of interactions withsocial content were a middle touch, while just over one

interaction in 10 was either the last or only touchpoint.

Still, some social venues are more geared toward

conversion than others. YouTube stood out in Convertro

and AOLs research as the most likely social media property

by far to turn a prospect immediately into a customer

likely because video content like that hosted on YouTube

can provide 100% of the information an online shopper

needs to make a purchase decision.

The distance between a social touchpoint and a conversion

also depended on the type of product being purchased.

The research found that more impulsive purchasessuch as

subscriptions to services like Birchbox or Dollar Shave Club,

personal care items and local serviceswere more likely to

appear as social ads and lead immediately to a conversion,

as the last or only touchpoint on a consumers journey.

Conversion Rates for Paid vs. Organic Social NetworkAdvertising Worldwide, by Site, Q1 2014

Twitter

3.9%

1.5%

Facebook

3.1%

3.0%

Pinterest

0.2%

1.1%

Total

2.8%

2.3%

Paid Organic

Note: represents data on the Convertro platform, broader industry metricsmay vary; among clients who have invested in paid social mediaSource: Convertro and AOL Platforms, "Myth-Busting Social MediaAdvertising," Sep 4, 2014


% of total among Convertro clients

Stage of the Path to Purchase During WhichCustomers Worldwide Are Most Likely to Interactwith Social Network Advertising, by Site, Q1 2014

YouTube

18% 54% 14% 14%

Facebook11% 69% 10% 10%

Google+

7% 76% 10% 7%

First touch Middle touch Last touch Only touch

Note: represents data on the Convertro platform, broader industry metricsmay vary; includes both paid and organic; numbers may not add up to100% due to roundingSource: Convertro and AOL Platforms, "Myth-Busting Social MediaAdvertising," Sep 4, 2014


Pinterest

6% 83% 8%

2%

Tumblr

5% 89% 5%

1%

Twitter

2% 92% 4%

1%

LinkedIn

11% 86% 2%

2%


4/14


Whats Next for Native Ads?

Social networks, media publishers see huge potential in native ads

Native advertising is flourishing across social

media, content portals, news properties, video-

sharing sites and streaming services. Increasedmobile use of these venues has fueled much

of the growth, since native ads work best in the

content streams that people tend to access on

smartphones and tablets, according to a new

eMarketer report, Native Advertising: Difficult to

Define, but Definitely Growing.

Perceptions about what constitutes native advertising are

as varied as the ads themselves and the places where they

appear. Theres still disagreement over basic terminologysuch as native advertising, sponsored content and

branded content. Some make distinctions among those

terms, while others use them interchangeably.

However, perceived effectiveness is fueling marketer

investment in native advertising. In December 2013, BIA/

Kelsey estimated native ad spending on social media

alone would grow from $3.1 billion this year to $5.0 billion

in 2017. As a percentage of total social ad spending, it

projected native would rise from 38.8% in 2014 to 42.4%

in 2017.

For media publishers, native advertising represents an

opportunity to reverse the tide of flat or declining revenues.

eMarketer estimates US print ad spending will decline from

$32.16 billion in 2014 to $31.29 billion in 2018. Digital ad

spending on newspapers and magazines will increase to

$8.41 billion by 2018, from $7.48 billion in 2014, but these

gains will still leave the industry essentially flat for the

forecast period. With these numbers as a backdrop, its

easy to see why media companies are so eager to create

new revenue streams through native ads.

Brand marketers and agencies do not have the same

urgency as publishers, but they are just as eager to gain an

edge over their competitorsand native offers a way to do

that. In an August 2013 Sharethrough study, awareness was

the top marketing objective for native mobile ads among

US digital marketing professionals. Other leading objectives

included branding and brand affinity. Purchase intent and

lead generation were further down the scale, indicating

that native ads (at least on mobile) are more a branding

play than a direct-sales driver.

These findings are in line with what marketers and other

ad industry experts say is one of the qualities that makes

native advertising especially appealing: its ability to engage

the user.

billions and % changeUS Social Media Ad Spending, by Type, 2012-2017

Display spending

% change

Native* spending

% change

2012

$2.9

-

$1.4

-

2013

$4.3

48.3%

$2.4

71.4%

2014

$4.9

14.0%

$3.1

29.2%

2015

$5.5

12.2%

$3.7

19.4%

2016

$6.1

10.9%

$4.4

18.9%

2017

$6.8

11.5%

$5.0

13.6%

Note: includes desktop and mobile platforms and local and nationalspending; excludes social marketing/measurement platforms and servicessocial commerce and virtual currency; *branded content integrateddirectly within a social network experienceSource: BIA/Kelsey, "Annual US Local Media Forecast: Social Local Media2012-2017 (Mid-Year Update)"; eMarketer calculations, Dec 18, 2013


% of respondents

Leading Marketing Objectives for Native Mobile Adsccording to US Digital Advertising Professionals,ug 2013

Awareness 84.4%

Branding 67.5%

Brand affinity 53.2%

Purchase intent 33.8%

Customer acquisition24.7%

Thought leadership24.7%

Lead generation16.9%

Loyalty 16.9%

Note: includes tablet adsSource: Sharethrough, "2013 Native Media Survey Results," Sep 16, 2013



5/14


Lenovo Joins Forces with NFL and The Onion for Video Series

Kevin Berman

Director, Advertising and Marketing Services

Lenovo

Having a clearly defined brand is essential for

marketing objectives, and digital video is no

exception. Kevin Berman, director of advertising

and marketing services at computer and

consumer electronics manufacturer Lenovo,

spoke to eMarketers Danielle Drolet about best

practices for digital video advertising.

eMarketer:What is Lenovos audience target for itsvideo advertising?

Kevin Berman:Lenovo defines itself as the brand

for those who do. We work to understand where our

audience is spending much of what we have defined as

their do timethe time that they spend on work, projects

and passions that are really important to them.

For millennials, in particular, the work day is 9am to 5pm,

but their do time is often after that. Our objective is to

understand and reach people in those moments thatmatter to them, and using video is at the heart of reaching

and engaging millennials during their do time.

eMarketer:What levels of the funnel do you focus on to

reach your audience?

Berman:We have different kinds of digital video programs

for different parts of the funnel.

In the fall of 2013, we launched a web series called Tough

Season in partnership with The Onion and DigitasLBi. It

was a mockumentary-style web series that was also alove letter to fantasy football. It featured several prominent

NFL players as guest stars, and a never-before-seen level

of real-time social engagement between a brand, series

characters, NFL players and teams and fans. This was an

upper-funnel program.

eMarketer:What were the objectives of the campaign?

Berman:Fantasy football players are some of the biggest

doers out theretheyre incredibly passionate and

engaged about the sport. There were a couple of different

objectives here: to engage with as many millennials aspossible, but to also cast a wide net for audience. Also, to

increase Lenovo brand recognition and association as the

official computer sponsor of the NFL.

While the audience recognizes that

advertisers are going to pay to reach them,

you can do it in a way that feels more organic

to what content they normally consume.

Ultimately, the series was a success. The episodes and

additional social video content garnered over 13 million

views, and weve renewed it for season two.

eMarketer:What have you done for mid-to-lower funnel?

Berman:An example would be some of our product-led

videos. We use those videos when we run on comparison-

shopping engines like CNET, PC World, etc., in addition to

Lenovo.com, email and our social channels.

In terms of best practices, you need to have well-thought-

out messaging and product strategy so that you can

dynamically update and refresh content ... in unison withwhat your direct-response teams are doing. You dont want

there to be a disconnect in your brands voice.

eMarketer:What is most important when it comes to the

creative and storytelling in video ads?

Berman:When we created Tough Season with The

Onion, authenticity was the most important best practice.

If youre working with a publishing partner on your story,

you have to really think about the tone, and make sure that

it matches what the audience has come to expect from

that publisher.

Your content should feel native to that partner. That way,

while the audience recognizes that advertisers are going

to pay to reach them, you can do it in a way that feels

more organic to what content they normally consume.

And itll drive a higher likelihood of engagement and more

positive reception.


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7/14


Media and Entertainment Ad Spending 2014: CBS on Its InteractiveNative Ad Program

Christy Tanner

Senior Vice President and GM,Media Group

CBS Interactive

Content and brand marketing helps CBS

Interactive advertisers create more curated

experiences for consumers. Christy Tanner, senior

vice president and general manager of Media

Group at CBS Interactive, spoke with eMarketers

Rimma Kats about the rise of native advertising

and what marketing channels its advertisers tend

to choose.

eMarketer: How does native advertising and content

marketing fit into the media and entertainment ad mix?

Christy Tanner:I see native advertising and content

marketing as two different things. One of the challenges

we face in the industry right now is that the definitions

of those terms are different from company to company

and brand to brand. The brands that I oversee are mostly

entertainment-related, and in the entertainment space,

the line between what is content and what is advertising is

inherently blurred.

Content marketing has always been part of the ad mix in

the entertainment space and what were seeing now is

that something thats an organic and integral part of the

entertainment industry is expanding to other verticals.

We sold over 200 Watch List native adcampaigns in the last two years and we

have resold them to the same advertisers

because theyre very effective ads forthose marketers.

eMarketer:Is CBS Interactive investing in

native advertising?

Tanner:We offer native advertising on TV Guide, including

on our mobile apps. The native ad units allow users to

add television shows, movies, sports teams or actors to a

favorites list that we call the Watch List. We sold over 200

Watch List native ad campaigns in the last two years andwe have resold them to the same advertisers because

theyre very effective ads for those marketers.

The dollar that the marketers spend on a Watch List native

ad unit is a dollar that they will see a return on for the life o

that movie or TV show. When somebody has a call to action

to add that show to their Watch List, it will stay on their

Watch List until they take it off.

eMarketer:What is the mix between branding and direct

response advertising in media and entertainment?

Tanner:Most of the campaigns within CBS Interactive fall

more in the category of branding than direct response, and

we certainly have tons of data throughout the company

that demonstrates how those branded campaigns

drive sales.

eMarketer:In terms of mobile, are advertisers turning to

smartphones more than tablets to run their campaigns?

Tanner:Our users are increasingly on multiple devices.

The percentage breakdown of smartphones to tablet to

website is pretty similar to what were seeing on the wider

industry trend.

A soda brand that wants to target 18- to

24-year-olds can curate a channel of TVshows and full episodes that appeal tothat demographic.

Our smartphone and tablet apps are very similar products,

and the ad mix, in terms of the mix between native ad

offerings and more standard or rich media offerings, is

more or less the same between smartphones and tablets.

eMarketer:What video advertising opportunities do you

offer advertisers?

Tanner:TV Guide has produced a mix of editorial videos

for years and we allow advertisers to buy pre-roll on TV


8/14


Media and Entertainment Ad Spending 2014: CBS on Its Interactive Native AdProgram (continued)

Guide-produced videos, but we also allow advertisers to

curate channels within TV Guide.

For example, a soda brand that wants to target 18- to

24-year-olds can curate a channel of TV shows and fullepisodes that appeal to that demographic. We also curate a

channel of a marketers own branded content. Weve done

a curated channel for AT&T, which features ads starring

Will Arnett.

There are other ways to do it as well. State Farm Insurance

wanted to sponsor movie trailers for Oscar-nominated

movies and we created a channel of Oscar-nominated

movie trailers sponsored and brought to you by State

Farm. There are lots of ways that weve incorporated

advertisers into the mix and upgraded organic, entertaining

experiences for consumers in doing so.


9/14


MEDIA VOICES: HuffPost Offers Unique Mix of Native Formatsfor Partners

Tessa Gould

Director of Native Advertising andHuffPost Partner Studio

The Huffington Post Media Group

To AOLs Huffington Post, native advertising

is the next generation of content marketing.

Tessa Gould, director of native ad product for

The Huffington Post Media Group, spoke to

eMarketers Danielle Drolet about the online

publications variety of ad units, and natives

advantage over display.

eMarketer: Youve been involved in native advertising for

some time. How did it start?

Tessa Gould:Before I joined the team, back in 2010,

Huffington Post launched a dedicated hub in partnership

with IBM called Smarter Ideas. We still have that

partnership with IBM, where we feature relevant editorial

content on breaking developments in technology. In

addition, we supplement that hub with custom native ads

that we create for IBM, allowing them to align themselves

more directly with the topics of interest. This can be blogs

from thought leaders at IBM or their partners on cloud

computing, healthcare, green initiatives, etc.

eMarketer:Whats your approach today?

Gould:The core of our approach to native remains

unchanged, that is, to create quality content experiences

that are brand-aligned, fit with our editorial voice and

resonate with our readers. We have innovated along

the way, adding new formats and enhanced targeting

capabilities, and expanding the team. Earlier this year, werolled out a cross-platform offering to ensure that not only

the sponsors native content, but also their surrounding

ads, reach the relevant readers across all screens.

eMarketer:In what ways is your native ad program

different from your competitors?

Gould:One of our key points of differentiation is our

diverse product suite. We have 15 native content formats

available for advertisers and will work with brands directlyto determine the best format to convey the particular

storybe it an interactive infographic, a feature article, a

quiz, a debate or a commerce-driven LookBookthe list

goes on.

Technology is another major point of differentiation. Unlike

many of our competitors, we serve our native content

through our ad server. This means were better able to

control delivery and ensure that the content reaches

its intended audience by applying the same targeting

capabilities that we utilize for our display ads to our native

content. Ultimately this leads to better engagement.

We also pair our native content with display. Not because

we have to, but because we have found that the

combination of native content and display ads (from the

relevant sponsor) on the same page leads to much greater

lifts, 2 to 3.5 times higher for key brand metrics such as

brand recall, favorability and intent to purchase vs. native

content alone or display alone.

eMarketer: Who produces the native advertising content

that runs on your platform?

Gould:The HuffPost Partner Studio is a mix of content

strategists and ad people with editorial backgroundsa

number of them have come directly from The Huffington

Post newsroom. We also have social media strategists and

are currently looking for a dedicated marketing specialist.

We have a designer and are looking to add a video expert.

Theyre all creative. Were essentially an in-house creative

agency, geared to help brands play on that platform.

eMarketer:By what metrics are your advertisers gaugingthe success of native ad campaigns on your properties?

Gould:The No. 1 [key performance indicator] that were

looking for with the native content is engagement. Many

engagement metrics that we use are the very same

metrics that generalists in our newsroom use in their

own content.


10/14


MEDIA VOICES: HuffPost Offers Unique Mix of Native Formats for Partners(continued)

The best-case scenario is that you want someone to read

the copy and then take it into multiple social actions.

Some people share content without reading it. But, for the

advertiser to really see improvements in brand favorability,

the reader needs to be actually reading and consuming the

content, as well as sharing it.

The HuffPost Partner Studio is a mix ofcontent strategists and ad people witheditorial backgroundsa number of themhave come directly from The Huffington

Post newsroom.

eMarketer: In December, you estimated that native

advertising revenue in 2013 would rise by 47% over 2012.

Did you hit the target?

Gould:We did hit that target. Q4 actually ended up being

our largest quarter since we launched native in 2010. Not

only did we see growth in revenue, but we also witnessed

strong growth in both the average deal size and the

number of native campaigns soldup 63% year over year.

eMarketer:Many people have expressed skepticism

about native advertising because it blurs the lines between

advertising and editorial. Whats your take on this so-called

slippery slope?

Gould:This highlights the importance of labeling and

disclosure because that protects both the brand and the

publisher, and combats against this so-called slippery slope.

Ultimately, at the end of the day, if the content is labeled

and disclosed and its good, people are going to consume

it like they would any other content. The fact that its

sponsored should hopefully not make a difference.

eMarketer:The US Federal Trade Commission (FTC) is

looking into the possibility of regulating native advertising

to avoid misleading consumers. What do you make ofthis effort, and in general of the role of the government in

regulating advertising?

Gould:The FTCs focus has been on making sure that the

native ad is clearly disclosed and labeled. The Huffington

Post and many others in the industry are clearly disclosing

this, not only for legal reasons, but to maintain the trust

and editorial integrity.

The industry has been doing a great job at setting forth itsown native advertising guidelines, including the Interactive

Advertising Bureaus native advertising playbook. Today,

the industry is in a really great position to know what works

for its platforms and for users, while the FTC has a really

important role in regulating advertising.

The FTCs focus has been on making surethat the native ad is clearly disclosedand labeled.

I attended the FTC native ad workshop in December2013, and it was a great forum for discussing the issues

surrounding native advertising. The FTC is doing its job, but

its not sure whether additional guidance in this area would

be helpful. Its a bit of a wait-and-see area, but publications

and players are taking responsibility for their own content.

eMarketer: What wording do you use in your native ads to

convey that theyre not editorial content?

Gould:With our promotional or article preview units we

will say, Presented by, such as Presented by Chipotle,

Presented by Chanel or Presented by Bravo.

Then, when you click into the article page, that same

language appears at the top of the article. The advertisers

ads will appear around the content, and then, depending

on the content or the advertiser, there may be additional

messagingeither within the content or perhaps in a

social wayand we may integrate a campaign hashtag

or brand.


11/14


12/14


SAP Sees Native Ad Space as the Industrys Kumbaya Moment (continued)

Id like to think that the clickthroughs thatwe get on stories that we publish are reallythe new clickthroughs of banner ads.

Those things make sense and theyre good enough. If too

much regulation happens it might spoil some of thesegreat collaborative conversations that are taking place right

now. Advertisers, marketers, publishers and writers are

convening together. Were all singing Kumbaya together

now. Its all blending. I dont think thats such a bad thing.

eMarketer:Why does native advertising seem to be more

effective than display or banner ads?

Clark:Id like to think that the clickthroughs that we get

on stories that we publish are really the new clickthroughs

of banner ads. Those are what you want. You want the

engagement. This has been happening for a while.

Many of the static banner ads that you see, for whatever

reason, dont work anymore. They could be perceived as

a little old school, or even distracting. Its really about the

story, the people reading and clicking, commenting on

them, even going to the call to action at the end of the

blog, to download a white paper or whatever it is youre

trying to accomplish. Thats what you want anyway. Why

not do more of that?

eMarketer:Whats your outlook for this form of

advertising for SAP and the advertising industry asa whole?

Clark:Its happening now, and is going to become a more

regular part of the media landscape. From my perspective,

its very effective and everybody wins. You cant ignore

those types of things, especially if the publishing industry

is looking for new revenue streams and looking to revamp

their business models.

Business is one great way to do that. There are some

regulation concerns and people are wondering whether

[native advertising] is from an advertiser or not. There

probably could be more scrutiny [for some of this content].

But if youre working with a partner like Forbes, there are

no issues as far as SAP is concerned.


13/14
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EMarketer Native Advertising Roundup

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