Photo: The Atlantic Wire
Native monetization is a fast growing form of digital advertising that is changing the complexion of the advertising industry in New York.Native advertising refers to ad strategies that allow brands to promote their content into the endemic experience of a site in a non-interruptive, integrated way.
From Twitter’s Promoted Tweets, to Facebook’s Sponsored Stories, to YouTube’s TrueView Video Ads, the major social platforms have doubled down on native ad formats.
Dozens of traditional and upstart publishers, such as Forbes, The Awl, Thought catalogue, and The Huffington Post are following suit. The growth of this form of advertising has affected all corners of the advertising ecosystem in New York ranging from creative and media agencies, to publishers, to startups and investors.
Native ads are attractive to brands because they allow their content to become part of the fabric of a website or app. For example, the main use of Twitter is to read and create Tweets, so to create an advertising experience that is native to the experience of their platform they built “Promoted Tweets.” This allows brands to be part of the main use case of the site, rather force brands to put their ads in easily ignored display ads sitting to the right of their Tweet stream or interruptive mediums like interstitials and video pre-roll ads that force a user to see them before being able to use the site.
Native ads are fundamentally different from traditional online marketing mediums like display and pre-roll, as they are driven more by original brand content instead of traditional commercials, and by voluntary engagement and sharing instead of interruption.
As a result of the industry-wide shift to native monetization, creative and media agencies are creating new departments and roles to help brands create, distribute, and measure native content; New York publishers are rolling out their own native ad models; brands are aggressively experimenting with native ad campaigns; and investors are backing startups built on the native advertising vision.
Here are a few ways different NYC industries are being transformed by native advertising:
1) Creative Agencies –Because native ad formats do away with many of the limitations of earlier ad formats – such as time constraints for pre-roll video ads, and size or content constraints on display and banner ads – creative agencies have been freed up to produce a vast new array of brand content. New York creative agencies like Mother, SS+K, TBWA, and Droga5, are continually producing creative that transcends the traditional commercial spot that people are forced to watch to standalone content that people actively choose to experience and share.
2) Media Agencies – Native ad budgets won’t grow unless media agencies can measure their impact on brand reach, loyalty, and conversion. Facebook Likes, Re-Tweets and YouTube Views already pose a challenge for traditional media ROI analysis, and as new platforms emerge with native ad products, such as Twitter and Spotify, media agencies will have to further expand their research and analysis teams. To get ahead of this new morass of media complexity, many media agencies are re-structuring their organisations around social media and are deploying new tools and metrics to bring transparent buying and measurability to native advertising. Digitally-focused media agencies like Horizon, Razorfish and MEC, which recently announced a new proprietary tool called Crossmedia to improve their measurement capabilities across multi-media campaigns, are examples of agencies that are moving aggressively to evolve their organisations to be able to harness the complexity of social media measurement and maximise the opportunity of native ads.
3) Venture Capitalists – As Microsoft’s recent multi-billion dollar writedown of aQuantive suggests, there are serious concerns about the future of traditional display advertising and investors are in turn going to take a hard look at any future investments that rely on display ad revenue. Conversely, investors like Fred Wilson, Partner at New York’s Union Square Ventures and one of the earliest proponents of native monetization, are invested in native ad platforms like Twitter and Foursquare.
4) Startups – The New York startup scene is white hot. Native advertising is one of the biggest drivers of this growth, leading to huge acquisitions like Buddy Media, a social enterprise software company recently acquired by Salesforce for $689 million, and promising new companies like Percolate, a content marketing platform focused squarely on helping brands create content for the social web. Startups based in New York have a unique opportunity to work right around the corner from the heart of the advertising industry at a time when brands and agencies are hungry for new tools and ideas to help them maximise the opportunity with native ads. Both advertisers and publishers are looking for new partners to create new scalable advertising experiences that will make a genuine impact for their brands and bottom line, so expect to see more native ad-focused startups emerge in the next year.
5) Publishers – Social content publishers are re-thinking the design of their sites and monetization models to be more native to their content experience. Hugely popular New York-based social publishers like The Cheezburger Network, Thought catalogue, The Awl, and Gawker have all been very active in experimenting with new forms of native ad formats. To execute this evolution requires new site designers, editorial teams that can innovate and re-define the sponsored post model, and sales teams trained in selling native placement. As these companies continue to grow their audiences, innovate on the native ad model and come up with native ad solutions that can scale, much larger traditional media companies like Hearst, Time and Conde Nast are likely to take notice and explore native ad formats across their portfolio sites.
Dan Greenberg is the founder & CEO of Sharethrough, the native video advertising company. Dan has been honored as an AdAge “Media Maven” and was recently named to the Forbes “30 under 30″ list. You can find him on Twitter at @dgreenberg.
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