May 30th, 2013

Scaling Native Advertising

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How will native advertising scale?

That’s the question on the mind of every brand advertiser, ad agency, and publisher.

Native advertising has emerged as a great hope for the future of advertising, to capture the billions of brand ad dollars expected to shift from TV, where mass audiences are finally collapsing, and from online display advertising, where already rock bottom prices, consumer attention, and effectiveness continue to plummet.  Native advertising is also a great hope for monetizing mobile, where display ads aren’t just dying but DOA and digital dimes have turned into pennies at best.

The hope for native advertising is based on its potential to create immense value for everyone involved:

Value for Consumers

At its best, native advertising gives consumers content that is genuinely interesting, engaging, and useful.  As BuzzFeed has pioneered, the best native ad content can be so engaging that consumers share it with their friends.

Native advertising is a stark contrast to the interruptive advertising model and to display ads that are so uninteresting, useless, and value destroying that “banner blindness” is now universal.

Native advertising truly is NATIVE when consumers can value the content the same way they value editorial content.

Value for Brands

Brands buy display ads because they know they have to follow consumers online, but they have always been skeptical of the value for branding (e.g. advertiser obsession with clicks when the campaign goal is supposed to be branding).

Brands want to be the center of attention, to command consumer engagement. Brands don’t want to be stuck in the sidebar.  And even when the display ad takes over the page, smart brands know that this kind of hostile action doesn’t create positive brand associations.

Pissing off consumers is not how you build brands.

Native advertising enables brands to effectively leverage the consumer attention that publishers still command, with content that can engage those consumers as much as (or, holy grail, even more than) the publisher’s own editorial content.  That’s the kind of value-creating engagement that builds brands.

Value for Publishers

Native advertising gives publishers a golden opportunity to correct the true “original sin” of online publishing — display advertising.

Native advertising has such huge potential for publishers precisely because, unlike display advertising, it can create real value for consumers and advertisers.  When value is aligned for consumers and advertisers, publishers win.

But native advertising can also enable publishers to overcome the most destructive aspect of online display advertising, which is that display ad networks can target a publisher’s premium audience via cookies when that audience goes elsewhere (i.e. when they visit less expensive sites).  The Atlantic’s Alexis Madrigal explored this problem in great depth, and sums it up like this:

“Now you can buy the audience without the publication.”

With native advertising, the value shifts back to the *publication* itself, to the premium native *context* that publishers create and which can’t be reproduced and sold at lower cost elsewhere.  Native ad content can only be *native* to a publication, and get the lift from the publisher’s brand, on the publisher’s own site.

Native advertising could also solve the huge problem publishers have with mobile, which is that they would go out of business tomorrow if their audience went 100% mobile, due to the abjectly poor monetization.  Twitter’s native ad format, Promoted Tweets, has shown exceptional performance in mobile. Native ads in mobile could be the perfect alignment of value for consumers, brands, and publisher.

For newspapers, there’s an additional opportunity — run native ads in print. Magazines have been doing it for years with advertorials and have made it kosher with proper labeling. Newspapers can’t afford to overlook an opportunity to generate more revenue from print, given the fixed cost, if it can be done in a way that creates real value for consumers.

So much potential, and yet…

To be valuable to brand advertisers, native advertising must SCALE.  Brand advertising needs *reach*, and without scale, there’s no reach.

Native advertising faces two huge barriers to scale:

1. Scaling Content Creation

Madison Avenue is structured to produce “creative”, not content in the editorial sense, which is required for native advertising to be effective.

BuzzFeed is at the forefront of creating a scalable model for native ad content creation. They aren’t just creating content for brands that is similar to their editorial content — it’s literally the same.  That’s what makes it truly NATIVE.

The BuzzFeed team that creates native ad content for advertisers is not some watered down version of the editorial team appended to some marketing department.  It’s fully equivalent.  They create content that is indistinguishable from BuzzFeed’s editorial content in terms of quality, consumer engagement and social distribution.  It just happens to be paid for by a brand.

BuzzFeed CEO Jonah Paretti is the first to admit that creating great content that will actually engage consumers does not scale in the traditional Silicon Valley sense.  But BuzzFeed is taking a fundamentally human process and optimizing it for scale. One key is training agencies to use BuzzFeed’s content creation platform, which could transform agencies into a scalable network of native ad content creators.

Who Employs the Ad Content Creators?

The irony is that the advantage in scaling native ad content creation will go to whoever employs the most journalists.   PR firms are very well positioned — they have been hiring journalists for years. They could pivot their niche digital content and microsite business into scalable content machines.

Of course, news organizations are arguably best positioned. Instead of laying off journalists and sending them to off to PR firms, they could re-employ them to create native ad content.  Dallas Morning News, for example, created Speakeasy, a joint venture with a local agency, that creates content for local businesses, which could be used to scale native advertising for local.  Forbes hired a team of writers and editors to help brands produce content for their BrandVoice native ad platform.

The advantage will likely go to whoever can combine the best content creators with the best content creation platform technology.

2. Scaling Content Distribution

The second barrier to native advertising scale is distribution — achieving the “reach” that  brand advertising demands.  No individual publisher will be able to deliver this kind of reach alone.  That’s why BuzzFeed is building a native ad network. It’s why Google launched AdSense once they perfected AdWords on their own property. Given the inherent fragmentation of the web, you need a network to scale distribution.

As Buzzfeed President Jon Steinberg explains it:

“We always wanted the business not to be limited by the scale of our site,” Mr. Steinberg said. “That means figuring out places to what we do other than on”

Algorithms are Too Risky

Everyone is assuming that native advertising will scale distribution the same way that search and display advertising did — through algorithms and automation.  But native ads can’t scale that way because of the risk of damaging both the advertiser’s and publisher’s brand is so high.

The brank risk for advertisers can be overcome to some degree by giving them control over which publications their ads appear in.  Since a native ad is the primary content on a page, inappropriate content adjacency is not as significant a concern.  If brands have a feed of content (e.g. from a blog), they will also need to control what content is made available as a native ad, since all content in a given feed might not be appropriate.

The brand risk for publishers, however, is much more difficult to overcome.  After the Scientology debacle, which has become a cautionary tale for the risk that native advertising poses to publishers, The Atlantic said that “native ads will go through a two-part review.” This was a rational response, given the need to protect their high value brand.

But such a review process is a huge barrier to scale.

Existing Display Ad Tech Won’t Work

And that’s why existing ad tech won’t work for native advertising.  Ad tech designed to scale based on semantic targeting and automated placements would create huge brand risk.  There’s a lot more at risk when a poorly targeted ad appears in the main content stream than when it appears off to the side where consumers ignore it anyway.

For example, a Pepsi-sponsored video of Beyonce’s new dance routine, while high quality and valuable content, is not a brand fit with BoingBoing.  Cleaning tips from Cottonelle is not a brand fit with a business news site.

What makes ad content “native” is much more than just making it appear like editorial content on a site — that’s just a superficial styling trick, which is commodity technology.  What makes the ad native is how well the topic, voice, and substance fit with the publisher’s brand, so that it flows with the editorial content, not sticks out like a sore thumb.  To achieve that kind of brand fit and relevancy requires human editorial judgment.

Native Ad Platform Must Scale Editorial Judgement

To scale distribution, native advertising needs an ad platform that can scale human editorial judgement and provide an efficient interface for publishers and brands to control the flow of native ad content.

Brands need to be able to choose the publications and curate content best suited to appear natively on those sites.

Publishers, then, need to be able to curate the native ad content available from those advertisers. Publishers need to apply editorial standards, which only human judgment can do, and optimize content selection for relevance and brand fit.  A native ad platform needs to enable publishers and editors to do what they do best — create the best content package for consumers.

That’s the kind of deep content integration, beyond superficial styling, that native advertising needs to succeed and create real value at scale, and an algorithm can’t do it. But technology-enabled editors can do it, at scale.

A native ad platform could achieve even greater scale through network effects, by sharing editorial judgment across the network.  Brands should be able to see which publishers and editors are publishing their content, and publishers should be able to share judgments about which native ad content is highest quality and most trustworthy.   Platforms ranging from Digg to Twitter have shown that network effects are the key to scaling editorial judgment.

Google’s AdWords/AdSense brilliantly combined relevancy, as determined principally by an ad’s clickthrough rate, with the cost-per-click bid.  A native ad platform needs to similarly combine  human quality judgment with a cost bid to create a liquid marketplace.

Native Ad Platform Must Be a CONTENT Platform

Lastly, a scalable native ad platform needs to be designed to handle content.  Native ad content needs to be optimized so that it appears native in each publication, to give advertiser the full brand lift of the publication’s brand.

A truly native advertising network can’t be a “link economy,” it needs to optimize the user experience by publishing the brand’s content directly into the publication, natively, right alongside the publication’s editorial content. Especially in mobile, it’s a essential to create a continuous content experience that seamlessly combines editorial and native ad content, without bouncing users out of the app or responsive site. Quartz has done a great job creating that kind of optimized mobile experience for native ads. On the other end of the platform spectrum, imagine flowing native ad content into a print editorial system.

But all that heavy duty content optimization and integrated publishing is not what display ad tech was designed to do. A platform for native advertising must be, at its core, a content platform.

AdWords + AdSense Equivalent for Native Ads

It’s instructive to remember that Google actually copied the pay-per-click search advertising model from Overture, but Google ultimately won because they first achieved scale for AdWords on their own search property. This gave them a pivotal advantage over Overture’s pure ad network model, because Google grew a much larger base of advertisers and ads via AdWords, which they were able to scale across the AdSense network.

Publishers like BuzzFeed, Forbes, Quartz, and Yahoo have the advantage of using their own sites to perfect their content creation platforms for native advertising.  Whoever perfects that native advertising equivalent of AdWords will then need the platform equivalent of Applied Semantics, the company Google acquired to create AdSense.  The Applied Semantics of native advertising will be the platform that makes editorial judgment scalable for distribution.

Success in native advertising will be about technology-enabling human editorial work, on both the supply side and the demand side, at network scale.

The allocation of ad budgets to native advertising will likely be dramatic and disruptive. The question is, when the money flows, which content creation and distribution platforms for native advertising can scale to capture those dollars?

May 9th, 2011

How to Fix RSS Redux

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Five years ago, I wrote a post about How to Fix RSS (which was my first post to appear at the top of Techmeme). The technology and media landscape has dramatically changed since then, so I’ve updated the simple three-step program, with a particular focus on news organizations.

RSS is NOT dead… it just needs to be reborn:

  1. Take down the partial text RSS feeds from your website — they are useless, and nobody uses them.  (Refer the four people still using them to 2 or 3 below.)
  2. Post your best content to Twitter and Facebook — they are infinitely more user-friendly, mainstream, and social than RSS readers, making them infinitely more useful and valuable.  And keep that old, reliable email newsletter… email will outlive us all.
  3. Create full text RSS feeds for B2B syndication and partnerships (content sharing, new platform like Flipborad, Ongo, Zite etc.).  Rather than hand everyone raw RSS feeds, distribute them through a platform that can provide:
    • Tracking and metrics
    • Control over distribution to partners
    • Control over terms of use
    • Support for web syndication (e.g. automate hard-coded links back, add Google syndication-source meta tag)
    • Support for all of your business models (without co-opting them)

Lastly, here’s a still relevant (dare I say prescient) excerpt from my original post:

But remember — PEOPLE ARE LAZY. They don’t have the time to put these packages together themselves. The real competition in New Media will be among content remixers. We used to call these editors — the only difference is that remixers will have a nearly infinite diversity of content at their disposal.

May 9th, 2011

Publish2 Update: Network Growth and New Business Model

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From the Publish2 Blog:

Many people have reached out to us recently and asked, “How’s Publish2 doing? You guys have been very quiet for the last few months.” That’s because we’ve had our heads down rolling out the full content distribution service that we announced last summer and launched in beta last fall. And… we’ve successfully launched our business model.

So it’s time for an update on the growth of our content distribution network and our new software-as-a-service licensing business.

Network Growth

The value of any network grows exponentially with the number of participants. So we’re excited to report the our network now includes over 200 news organizations that are actively distributing and acquiring content through Publish2.

See who’s in the Publish2 network.

We’ve found the key to network growth is members “inviting their friends,” just like on Facebook, which in our case means news organizations inviting their partners. When all of your partners, and news orgs that you want to partner with, are on the network, it’s easy to see the value in joining.

More on the Publish2 Blog.

January 2nd, 2011

Disrupting the Traditional News Syndication Model

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Originally published on Nieman Journalism Lab

Clay Shirky predicts that in 2011 traditional news syndication will see widespread disruption. I couldn’t agree more. But I don’t think the disruption will happen the way Clay describes it.

Clay’s prediction assumes that news consumption will continue its shift from traditional media to the traditional desktop web, where the hyperlink rules and news consumers bounce from hyperlinked page to hyperlinked page and from site to site to site. I think that assumption is wrong. In 2011, we’ll see open acknowledgement of what has long been understood about the traditional desktop web as a platform for consuming news content — it sucks.

The desktop web has been a revolutionary platform in terms of access to information, the democratization of publishing, and the socialization of media. But as a medium for consuming news content, from a user interface and user experience perspective, it’s problematic at best and downright awful at worst. News consumption has begun a major shift from the traditional desktop web to apps for touch tablets for a simple reason — the user experience and user interface are so much better, as the recent RJI survey of iPad users reflects. Consumers are choosing tablet apps over the traditional desktop web based on the quality of the user experience and the overall content “package.”

News organizations are already shifting their strategies to take advantage of that consumer shift. But few have thought about the role of syndication in news apps. With the immersive, hands-on experience of a tablet news app, the value of syndication changes entirely. Apps that deliver nothing but one news organization’s content will not compare favorably with the content richness of the web, no matter how good the UI is. And apps that bounce users around from site to site with an in-app browser, mimicking the traditional desktop web model, will fail for precisely the reason why users chose the app in the first place.

But news apps that can deliver full content, curated from a wide range of sources, within a cohesive, optimized — even breakthrough — UI for news consumption, will win because users will have the best of both worlds. Syndication in news apps will not be about republishing news that everyone else has. It will be about combining curated news with original content in order to create consumer packages that are deeply engaging and in many cases worth paying for. With this shift, news organizations will stop ceding to aggregators the huge value creation of curating and packaging news. Instead, news organizations will start defining their editorial brands as curators as much as they define them as original content creators.
Continue reading…

June 7th, 2010

The Content Graph and the Future of Brands

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Yesterday, two stories from Aol’s DailyFinance appeared in the Sunday print edition of the Daily Telegram, a newspaper in southern Michigan. These stories appeared on a business page that would otherwise have been produced almost entirely with stories from the Associated Press. The Daily Telegram got permission to publish these Aol stories not through a big corporate content deal, but directly through a peer-to-peer relationship — The Daily Telegram simply subscribed to DailyFinance’s newswire in Publish2’s News Exchange.

Now I’m going to tell you why what you see on this page of the Daily Telegram could play a decisive role in the race between Aol, Demand Media, and Yahoo to win the prize of big brand advertising on the web, and why it is also pivotal to the future of news.

It’s about a big idea that I introduced at TechCrunch DisruptThe Content Graph — an analogue to the Social Graph, where high quality content brands create a large scale distribution network that could rival search and social media as a distributor of content.

In the Social Graph, you’re defined by your friends. In the Content Graph, a content brand is defined by its distribution relationships with other content brands.

The Content Graph is about leveraging the brand equity and consumer trust that is the greatest asset of every traditional media company. It’s about building a content brand’s reputation through distribution.

The news industry’s business model broke after it lost control over the distribution of news, with news brands suffering one wave of disintermediation after another.

The Content Graph puts news brands back in the game, but not as a return to monolithic monopolies, rather through the power of networks — a network of content brands. (This network includes independent journalists who cultivate their own personal brands.)

Ultimately, the Content Graph could be a map for brand advertising on the web, that enables advertisers to tap into a network of high quality content brands, at scale.

Sound interesting? Let’s dig deeper.
Continue reading…

May 25th, 2010

The New Associated Press for the 21st Century

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This week, at TechCrunch Disrupt, we’re announcing the launch of Publish2 News Exchange, a platform aimed at disrupting the Associated Press monopoly over content distribution to newspapers. With Publish2 News Exchange, newspapers can replace the AP’s obsolete cooperative with direct content sharing and replace the AP’s commodity content with both free, high-quality content from the Web and content from any paid source.

With Publish2 News Exchange, we’ve created what the AP should have become, but can’t because of a classic Innovator’s Dilemma. The New AP is an open, efficient, scalable news distribution platform. We’re enabling newspapers to benefit for the first time from the disruptive power of the Web, and from the efficiency of content production on the Web.

Read more about the New AP at the Publish2 Blog now.

October 26th, 2009

High-End Brand Publishers Need to Sell Scalable Premium Ad Solutions, Not Commodity Ad Space

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Newspaper online advertising has not benefited greatly from the recent upswing in online ad spending, according to the New York Times and most of the recent newspaper company quarterly results. This is no surprise because most newspaper websites sell SPACE for commodity advertising — display ads and classifieds — and thus are hard pressed to compete with ad networks that specialize in selling commodity ad space by the megaton (or giving it away for free, in the case of Craigslist).

Back when newspapers where the only game in town for ad space, they could charge whatever they wanted. Now the web has near infinite ad space, and newspapers find themselves playing the wrong game. They’ve got ad sales staff that specialize in commodity order fulfillment and not premium advertising solutions.

So what distinguishes a premium ad solution from commodity ad space? It’s a premium solution if not every site can deliver the value. Any site can slap a display ad on a page — that’s what makes it a commodity. High-end brand publishers like newspapers  really have only one way to distinguish themselves from every other web publisher on the planet — their ability to create high quality content that attracts a targeted, high quality audience.

Continue reading…

September 16th, 2009

Content Doesn’t Matter Without the Package

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In response to the launch of Google’s Fast Flip, I observed that Google is correctly focused on creating a new user interface for news, when most media companies are not. A lot of people responded that Fast Flip is not an innovative or effective UI for news — which may be true, but that misses the point entirely.

It doesn’t matter so much whether Google succeeds or fails with this particular experiment. What matters is that they are trying to solve the right problem.

The challenge for media companies is not to figure out what to do with their content — content in and of itself doesn’t matter. It never has.

It’s all about the package.

Newspaper articles don’t matter without a newspaper. Magazine articles don’t matter without a magazine. TV shows don’t matter without a broadcast or cable channel.

Continue reading…


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