Euromonitor Analyst Insight by Pavel Marceux – Contributing Analyst: Technology, Communications and Media
Online marketing is entering a new stage of development, as Internet users overexposed to display ads are rebelling against traditional online advertising formats. Native advertising, a form of discreet marketing that does not interfere with the user experience, is increasingly becoming a more palatable and acceptable alternative. In an Internet environment where consumers are inundated with marketing messages, competition for views and click-throughs is intense, especially in segments such as social media and video-sharing, which are almost entirely dependent on ad revenues. Implementing a lucrative ad strategy is a process that can either pay major dividends in opportunities or alienate users altogether.
Global Adspend Growth: 2008-2013
Source: Euromonitor International from World Association of Newspapers
Web Platforms Must Adapt to Cynical and Ad-Savvy Users
The global online adspend market has recorded remarkable expansion, growing by 72.6 percent in real terms over 2008-2013 to reach US$81.9 billion and far outpacing traditional mediums. One of the key drivers has been the ability of online content to adapt and evolve with Internet user trends quickly, much more proficiently than TV or print. However, Internet users have become more cynical and ad-savvy, with interruptions to their online experiences unlikely to be rewarded and more likely to be ignored. More difficult still is the transfer from a service with no ads to a sudden overexposure to advertising that leaves users frustrated. Traditional formats such as banners and pop-ups are becoming ineffective.
The solution increasingly rolled out by marketers and online services is native advertising, which at best engages with the user and at worst does not prove irritating, which could potentially damage a brand. Ultimately, it is a format that is specifically tailored to work alongside the product.
Successful cases of native advertising become an extension of the content the audience typically logs in to see:
Publisher HarperCollins launched a visual graphic titled ‘17 Problems Only Book Lovers Will Understand’ that went viral on social media platforms in August 2013. By January 2014, the campaign had an impressive 91 000 shares on Facebook, appealing to humour-appreciative social media users and tapping into the collective book-reading experience;
Technology firm IBM’s March 2014 advertorial in online magazine The Atlantic, titled ‘The Chief Data Officer’, matched the editorial and design style of the publisher (which focuses on political and economic issues), while clearly being labelled as sponsored content. Written by IBM’s CEO, the ad worked as a form of additional expertise aimed at the magazine’s knowledgeable readership.
Going Native is the Future, but not without Major Challenges
Micro-blogging platform Twitter underlined its intention to rollout native advertising by purchasing specialist in the segment Namo Media in June 2014, as the brand seeks a consumer-friendly transition to advertising content. Appealing to the world’s projected 2.9 billion Internet users in 2014 is paramount for any mass-market online product. Opportunities are considerable for online services to capture more users through native ads, while providing marketing agencies with another tool to deliver results. Trade sources forecast that US$3.0 billion will be annually invested in native advertising globally by 2016.
However, native strategies are inherently complex, balancing tactfulness with impact. For some forms of marketing, such as sales and discounts where the goal is to attract immediate attention, native offerings can be too nuanced. Consumers also face the risk of being duped into committing to content that is not clearly defined as sponsored, depending on the ethical execution of the publisher. Nonetheless, as users become more sophisticated, especially in increasingly digitalised and population-heavy emerging markets, more marketers and online platforms are set to go native.