ANA.NET // 9

HOW PIONEERING MARKETERS

CAN NAVIGATE THE UNCHARTED

TERRAIN OF THE NATIVE AD.

AN INFORMATIVE ANALYSIS AND GUIDE

by edwin wong

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HAS BEEN ADVERTISING,

AS LONG

AS THERE

Similarly, advertisers in today’s rap-idly evolving digital world are up against a constant influx of emerging tools, tech-nologies, platforms, and formats that promise to help achieve greater results. But which ones to choose? And how soon after they’ve entered the market?

Researchers at the University of Cali-fornia at Berkeley have found that when the number of users of a new product is plotted over time, the resulting picture of diffusion (i.e., the curve that illustrates the rate of adoption) is typically S-shaped. Adoption of anything new is usually slow at first, accelerates as the product catches on, then slows down as it reaches a point of saturation. Sometimes a new technol-ogy replaces it and the process starts over.

To illustrate this point, look at the rise of the DVD. It swiftly replaced the VCR, then was supplanted just as quickly by streaming video. In fact, in 2012 Bloomberg

Business reported that more movies would be streamed in that year than would be watched on DVD. A year later, Bloomberg reported that pay-TV subscriptions like cable and satellite had declined for the first time ever. More recently, as reported by Flurry from Yahoo in 2014, mobile dis-placed TV as Amer ica’s first screen, based

on people’s average daily screen time by device. New digital platforms have been at the center of these adoption curves.

NATIVE’S TIPPING POINTThis shifting media landscape should put advertisers on alert. With people’s atten-tion moving to digital services and mobile devices, clearly that’s where advertisers’ focus should be as well. The dominant digital display ad format of the past de-cade, the banner, seems to be heading toward its own inflection point. What’s next? The native ad, an advertising meth-od in which the advertiser looks to engage an audience by providing messaging in the context of the user’s experience.

According to the 2014 “Native Adver-tising Report,” released by Advertiser Perceptions, publishers are embracing native advertising formats, with more than 72 percent currently offering native ads or planning to offer them within the next few years. And advertisers are re-sponding: a 2014 Mixpo survey reveals that 79 percent of advertisers plan to buy native ads in 2015, a 13 percent increase from 2014. (See Figure 1 on page 12.) Native is poised to be the fastest growing ad format of 2015.

This rapid adoption means that native is going to be a key part of most digital marketing strategies and a big business. According to reports from eMarketer, na-tive advertising will grow from a $4.3 bil-lion business in 2015 to about $7 billion by 2017, and will nearly double by 2018 to just shy of $9 billion. To help advertis-ers make this transition seamlessly, what follows is a native advertising primer, in-cluding an explanation of what it is, tips on how to implement it, and examples of how others are using it to great effect.

WHAT ARE NATIVE ADS?Recently, MediaPost contributor Eric Berry of TripleLift noted that “by virtue of its very nature, native is idiosyn-cratic.” This rings true, as native ads are not standardized across publishers, they’re molded to match each publisher’s content experience. Native ads can and should look different in different environ-ments. In-stream ads, content recom-mendation widgets, content marketing, and paid search are just a few native ad variations. What these variations have in common is they immerse a brand’s mes-sage naturally among content that con-sumers care about.

consumers have had to contend with enticing appeals to sample the latest this or the newest that and decide when — if ever — to give it a try. Today, tech enthusiasts seem to face this conundrum on a daily basis. From smartphones to wearables to other gadgets, there’s always something new vying for a consumer’s attention or looking for pioneers to help it take hold in the market.

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HAS BEEN ADVERTISING,To help marketers create winning native campaigns that match context, maximize engagement, and ultimately drive emotional recall and purchases, Yahoo partnered with the University of Pennsylvania’s Wharton Future of Ad-ver tising Program to identify, among other findings, three tenets brands can use to guide their native ad strategy.

1. Effective integration: An ad is integrated when it is presented in the same way as associated content, per-sonalized for the viewer, optimized for the device, and related to the con-text of the page or article. 2. Overt transparency: Transpar-ency occurs when an ad is recognized as sponsored content. Consumers should know an ad by demarcating it with a symbol or a sponsored label. 3. Aligned objectives: Consumer and advertiser objectives align if sponsored content is relevant and valuable. What’s important is that not

only the advertisers’ goals are consid-ered, but also the middle ground, where advertisers and consumers meet and value is exchanged.

When marketers create native cam-paigns with these tenets in mind, both advertisers and consumers benefit. The “State of Native Advertising 2014” re-port from Hexagram and Spada says that 67 percent of advertisers believe native ads provide a more relevant mes-sage, and 63 percent say that native ads generate more engagement. More importantly, consumers respond posi-tively, with 60 percent holding a favor-able view of native ads, according to the report.

Increased engagement and positive sentiment help native advertising deliver on marketers’ branding and perfor-mance goals, even on newer media plat-forms like mobile. For example, a native travel campaign in a mobile content

stream increased top-of-mind unaided awareness by 114 percent, according to a Yahoo study. On the performance side, a separate study across nine advertisers found that native ads generate 3.9 times the lift in advertiser site view-through than standard display ads, and 3.6 times the lift in branded search activity, com-pared to traditional display units.

BRAND AND PERFORMANCE ADVERTISER RESULTSNative ads drive measurable performance for advertisers in a number of categories. To dive even deeper into native ad effec-tiveness, Yahoo and BBDO measured key performance indicators (KPI) on brand sites following a native ad interaction and compared this KPI activity to a control group that did not see any ads. Both upper- and lower-purchase funnel consideration activities — actions like viewing product pages or adding a product to a shopping cart — were included.

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CASE STUDY

Lowe’s Enters the Native Ad GameLowe’s knew that consumers loved quick tips for home improvement, and the emergence of the Vine platform presented an opportunity to deliver these tips as six-second, stop-motion videos. The result-ing campaign, “#LowesFixinSix,” was an instant hit. To maximize its reach, the videos were promoted with native ads on Twitter and Facebook. These placements were well received, as they blended into the environment of these platforms by offering a useful piece of information in a bite-size form.

As the Vine technology evolved to allow external content capture beyond just a smartphone, #LowesFixinSix also evolved creatively and distribution scaled to reach a wider audience through in-stream native ads on Facebook and Twitter, and native Buzzfeed listicles. To date, the Buzzfeed listicles have generated more than 425,000 views, and since the campaign was launched in May 2013, the #LowesFixinSix Vines themselves have seen more than 34 million loops.

— Daniel Charness, BBDOLowe’s FixinSix gives quick tips over Vine.

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Advertisers were consulted to make sure each KPI made sense. For example, for automotive advertisers it was car configuration, for tax services it was lead generation, and for mobile providers it was the start of a service plan. Visitors to these advertiser pages who were ex-posed to native ads were more likely to transact on brand KPIs than visitors who arrived organically. For example, automotive sites saw a 1,412 percent lift in KPI activity if visitors were exposed to native ads. (See Figure 2 on page 13.)

As the results show, when people are exposed to native ads they transact and create material value for advertisers. The brands featured in native ads also come to mean more to consumers. Native ads move brand metrics, specifically on plat-forms like mobile. In a recent study with Kenshoo, Yahoo found that most mar-keters are starting to value mobile native ads for their ability to influence mid- funnel metrics. In one case study from a travel advertiser, a mobile native ad drove an 80 percent increase in aware-ness and a 33 percent boost in favorabil-ity. It’s also worth noting that there were statistically significant movements in softer metrics, such as to what degree one travel provider differentiated itself from the competition, and how well it was perceived to meet traveler needs versus its competitors.

BEST PRACTICES FOR NATIVE ADVERTISINGThe shift to native is undeniable, and its potential to provide value to both adver-tisers and consumers is a welcome change. For marketers preparing to ven-ture into this new frontier of advertising, these three tips will help navigate the terrain and maximize results.

1. Select the right platformIn a recent study with Added Value and Innerscope, Yahoo interviewed 30 agency executives and brand managers to get a

better understanding of the challenges they face when making media budget de-cisions. Balancing efficiency with engage-ment emerged as a primary issue.

Advertisers said that building relation-ships with consumers and presenting their brand within a premium environment was critical to success. Four key characteristics emerged that distinguished a media envi-ronment as premium:• Design: Modern, clean, and simple

palettes• Editorial: Respected experts with a

good consumer reputation• Ad formats: Innovative ad units that

offered something new• Native: Ads that blend seamlessly into

web pages and apps

To validate these findings, biometric research was conducted on a large group of consumers. One of the goals of this research was to identify any difference in response between participants who were exposed to content with native ads and those who saw content with traditional

standard display, both on PC and mobile. Using eye-tracking technology and mea-suring actual user attention, the research helped to create a visual heat map that compares a standard mobile banner (nor-mally placed at the bottom of a screen) to an in-stream native ad.

The transparent native ad was more aligned with consumer interests and, as a result, generated three times more atten-tion. People spent almost as much time looking at the native ad as they did the actual articles.

With the mobile banner, even though the ad is always visible at the bottom of the stream, people spent only 0.9 seconds looking at the ad unit. By comparison, participants fixated on the mobile native ad for an average of 3.2 seconds.

This engagement leads to action; par-ticipants were 1.8 times more likely to click on the native ad than on a banner in the non-premium environment. Ultimately, premium environments and native ads create a halo effect that drives greater en-gagement, something all advertisers want.

Figure 1: The Rise of Native, 2014–2015 What advertisers are planning to buy in 2015, compared to 2014

OTHER DIGITAL

DISPLAY87%87%

85%85%

85%

79%

78%77%

70% +13% CHANGE 79%

59%

26%27%

66%

82%

82%

MOBILE

VIDEO

SEARCH

NATIVE

STREAMING MUSIC

SOCIAL

2014 2015

Source: Native Advertising Report Perceptions & Trends, Advertiser Perceptions, July 2014

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2. Engage with content In a recent Forbes article, contributor Benjy Boxer of NewsCred, summed up many advertisers’ views, stating, “Con-tent is at the heart of native advertising.” Surveys back this up, with the Hexagram and Spada native advertising report showing that 53 percent of advertisers consider sponsored content a form of native advertising.

In a 2014 study conducted with Ipsos and Audience Theory, Yahoo asked users about their impression of sponsored con-tent and measured the impact of this native ad format. Millennials seem par-ticularly open to sponsored content. When discussing whether sponsorship would influence their likelihood to share content, one interviewee’s response was indicative of the Millennial point of view: “For me [when it comes] to sharing, if it said ‘Ford’ it wouldn’t be a big deal … it wouldn’t make or break whether I was going to share or not.”

Simply put, consumer and advertiser objectives align if sponsored content is

relevant and valuable. Another notable survey result quote: “Good content is good content; people are open to helpful information from brands.” This has been proven true on Yahoo Food as well, where 52 percent of users say promoted adver-tising content helped them learn more about cooking.

3. Be transparent Transparency in native advertising en-hances users’ perceptions of a campaign. When native ads are clearly denoted as advertising, they get better results. Yahoo recently had a brand sponsor content during a large sporting event. When ana-lyzing how engaged consumers were with the content, the ads appeared to be rele-vant, on point, and native to the experi-ence. Yahoo expected to see positive results, but test and control scores came back flat.

After taking a second look at the spon-sorship to understand what the issue might be, the researchers identified oppor-tunities to make adjustments. A second phase of testing was conducted, with two

test groups. In the first group, the brand’s logo was made more prominent. In the second group, the prominent logo was added and the headline was also changed to a stronger call to action.

The results showed that when a native campaign is transparent — the brand sponsoring the content is clearly and prominently identified — the advertiser benefits. The test, conducted by Yahoo and Ipsos, saw statistically significant lifts of four points in purchase intent for the image with the logo and eight points for the image with the logo and the new, stronger headline. Keep in mind that this was a leader brand with strong purchase intent benchmarked at approximately 70 percent. Corresponding metrics for awareness, recommendation, and favora-bility also went up significantly. After-ward, during a head-to-head comparison, people were asked to evaluate the origi-nal, minimally branded native test ad against the ad with a more prominent logo; consumers appreciated the trans-parency and were significantly less likely to feel misdirected. Of those surveyed, 66 percent said the native ad with promi-nent logo represented a great experience, with only 12 percent saying that the ad looked too much like an article. People who called it a great experience noted that the native format was better than other ads, was not disruptive, and was a natural fit within the experience.

The bottom line: native advertising isn’t just new advertising, it’s smart advertising. The growth of native is simply a result of ever-changing consumer needs, behav-iors, and preferences. To get ahead of the competition and embrace the next big innovation in digital marketing, remem-ber to think native, choose the right envi-ronment, be engaging, and be honest.

Edwin Wong is the senior director of research

and insights at Yahoo. Email him at edwinw@

yahoo-inc.com.

Figure 2: KPI Activity, Percent Lift (Control vs. Exposed)

128%

ENTERTAINMENTHEALTH AND WELLNESS

374%

TAX SERVICES

103%

QSR

319%135%

CREDIT CARD

1,337%

ONLINE AUTO SERVICE

1,412%

AUTO

539%

TECH & TELCO

471%

RETAIL

87%87%

85%85%

85%

+13% CHANGE

Source: Yahoo/Millward Brown Digital Behavioral Impact AdFx Study, May 2014Note: Lift is calculated between the control (not exposed) and those exposed to advertising