During a lunch meeting with Business Standard last month, Gurmit Singh, Yahoo! India's managing director, said that the company was betting heavily on native advertising as part of its growth strategy. The placement of such ads and their design, which resembles the unpaid content that draws visitors to websites like Yahoo!, have made them a hit among media buyers. In some instances, and as long as they were contextually relevant, he said, Yahoo!'s native ads performed better than the conventional display ads. And that its decision to acquire mobile ad network and analytics firm Flurry, which runs ads in third-party developers' mobile apps, tied in perfectly with this strategy.
In general, I've been sceptical about native advertising because I am not sure whether consumers are always able to distinguish them from editorial content. Singh rubbished my fears, saying that transparency actually improved the performance of native advertising. Apparently, more than 50 per cent of the consumers react positively about native ads.
It is not Yahoo! alone. I would go as far as to say there's no hotter buzzword in the advertising world right now. According to an eMarketer forecast, native ad spending will grow from $3.2 billion in 2014 to $8.8 billion by 2018, on the back of above-average consumer engagement with this format. And Business Insider estimates that social-native - that is, embedded ads on social platforms - will draw a majority of native ad revenue between 2013 and 2018.
The trend of integrating brand-sponsored content seamlessly into social platforms, such as Instagram and Facebook, and news-related websites has picked up in the last few years, primarily because they seem to perform better when compared with traditional online advertising tools such as banner ads. Now that publishers are partnering with advertisers in the production process - with tips on how to write, edit and jazz them up - advertisers are getting better at it.
Indeed, one reason they perform better than display ads is that native is not "salesy". They typically take the form of blog posts, data points or videos that try to inform and entertain browsers without pushing a product. Like Jabong founder Praveen Sinha explained, if a banner ad from Jabong or a clothing retailer listed on its website promotes its new summer collection, a native ad from the same advertising would discuss fashion trends for the season instead. Typically, native ads carry a disclaimer - such as "sponsored content" or "promoted by" - so, I guess it's time to review my initial fears that they mislead consumers.
Mind you, native is not really a new kid in the advertising landscape - advertorials in print and product placements in films, television and radio have been around, whether the consumers spotted them or not. But it is growing on the back of increasing mobile penetration. Imagine the potential! According to a report, The Mobile Economy: 2015, at the end of 2014, there were over 3.6 billion unique mobile users with over 6.8 billion mobile devices sold. The number will increase to 4.6 billion by 2020, increasing by four per cent per year (CAGR) over this period. By 2020, almost 60 per cent of the global population will subscribe to mobile services, up from half of the population at the end of 2014. The report highlights a rapid migration to 3G/4G mobile broadband networks and rising smartphone adoption, which is fuelling growth in new mobile data services and applications.
While the number of mobile subscribers is growing by leaps and bounds, the return on investment on traditional banner advertising is slipping dramatically. And full-screen interstitial ads are... well... annoying, to put it mildly. In this scenario, native advertising offers a way to reach the mobile audience in a more impactful, yet less disruptive, manner, say analysts.
But will native advertising overtake traditional ads anytime soon? Analysts say while the novelty factor has helped generate significant buzz in their favour, the analytics supporting native ad approaches haven't matured, so audience targeting isn't refined, at least now. In any case, the trend is yet to catch on in India. The industry is still struggling to understand how to create "quality" native campaigns and figure out how to properly segregate native ads from organic content so they don't mislead, which would lead to problems of another kind.
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
