"Native Advertising" Providing New Channels for Growth

Ever notice those articles in your favorite magazines that have the small "Paid advertisement" label up in the top corner? Notice how these articles, or "native advertisements" as they're called, look exactly like normal content in the magazine? This is the new frontier of advertising in the digital age, what some industry experts are calling "a core part of the maturation of digital advertising." Native advertisements are basically ads disguised to look like regular content - with the idea being that users will engage with such ads more intimately, and advertisers will in turn pay more for these types of ads.

The new buzz surrounding "native or sponsored ads" comes amid reports of startling ad revenue growth among digital content companies driven by this new form of ad. The New York Times reported a 16.5% increase in digital ad revenue in the third quarter, driven mainly by the new ads; LinkedIn reported a 45% increase in ad revenue, with content ads now making up 31% of their ad revenue, up from only 7% the year before; Facebook reported a 64% increase, again driven by mobile content-like ads.

The growth is content ads, as I'll call them, is not entirely surprising given that traditional forms of digital advertisements - display chief among them - have not proven lucrative enough for digital content providers to sustain themselves meaningfully over the long-term (case in point: countless magazines and news orgs that have gone out of business trying to monetize digital as their print businesses fade). Here's where I have a theory - that content ads represent the melding of the pro's of print and the pro's of digital. 

Ever stop to wonder why advertisers still even buy print ads? The read is that print ads are still in demand, in fact, because they offer a non-intrusive form of advertising that simply works; they are there for the reader to engage at their leisure, and they have a history of successfully spurring purchase intent and raising awareness among consumers. Many digital d forms fail to resonate in a similarly timeless way. Content ads could represent the digital-equivalent; ad content that closely mirrors the content that users are used to, that conveys a message in an unobtrusive way, and that could command usage, engagement, and pricing premiums.

Some may argue that content ads are misleading attempts to bait consumers into consuming ads when they don't want to, but I actually see them as performing the opposite function - blurring the lines between ads and regular content makes ad content less intrusive and less offensive, and thus more engaging for users and more useful for advertisers. This could lead to a more sustainable, profitable, and engaging form of digital advertising for all consumers, advertises, and content providers alike.

Source: http://adage.com/article/media/media-companies-strike-gold-sponsored-content/295679/