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Native Digital Advertising: Will New FTC Rules Restrict Revenue?

For magazine publishers, native digital advertising offers a legitimate way to battle ad blocking and generate some much-needed bucks, but some experts believe it has reached its peak

For some publishers, native digital advertising is the next big thing, while others have been perfecting it for years. Still, many have steered clear altogether, and there are more who aren’t sure how to best pull it off to begin with.

Regardless, the native digital advertising backlash has already begun after 2015 saw a huge spike in sponsored content and the early headlines in 2016 are pointing to possibly an even bigger year. But with the FTC’s recent update to native advertising rules and regulations and studies that show many consumers can be easily confused by branded content, some observers – Digiday among them – are saying the ad medium may have peaked.

But should native’s success be sustainable – and in some form or another, we believe it will be, since it’s just another phase in the evolution of advertorial – digital publishers will still have to clean up their acts when it comes to presentation. However, it’s the self-same Digiday that sings the praises of Time Out’s native strategy and successful monetization.

Let’s start there this week!

Has Native Digital Advertising Outworn Its Welcome Already?

Native digital advertising will hit a wall in 2016, Digiday says.

“According to MediaRadar, which tracks ads across media, the number of native advertisers jumped 136 percent from January to 1,595 in November, its most recent complete month of data. The advertisers ran across 218 U.S. publisher sites. No wonder, then, that some wonder if native will eventually suffer its own form of banner blindness. Data from TrackMaven, a marketing analysis firm, suggests most brand content isn’t having an impact; it found that while brand output increased 78 percent from 2013 to 2014, interactions with that content (such as likes, shares, comments, retweets) declined 60 percent,” Lucia Moses writes.

“Apart from problems of scale, measurement and cost of execution, consumer trust is an issue, too. Nearly half (48 percent) of respondents of a Contently survey from September 2015 said that they felt deceived upon realizing a piece of content was sponsored by a brand.”

Consumers are telling us loud and clear what they want—are you listening? How much would you pay for that information? Download a copy of our 2018 Mequoda Magazine Consumer Study for FREE instead, to find out how you can improve your digital magazine rapport with subscribers.

How New FTC Native Advertising Rules and Regulations Might Impact Some Digital Publishers …

BuzzFeed, The New York Post, Elite Daily, Cosmo and others may need to adjust their native content presentation based on the FTC’s updated policy, Digiday reports.

“Only 30 percent of publishers are in compliance with the FTC’s new guidelines that address how ads are labeled, visibility of sponsor name and prominence of the label, said Todd Krizelman, co-founder and CEO of MediaRadar, which tracks and analyzes ad data. Fully 26 percent of websites run native without mention of the sponsor at all, his data shows,” Moses writes.

“For starters, virtually no publishers use the word ‘advertisement’ in their labeling. A review of 63 publishers’ native ads by native ad firm Nudge shows the most common terms were ‘sponsored,’ used by 12.7 percent; ‘presented by’ (9.5 percent); and ‘sponsor story’ or ‘sponsored story’ (7.9 percent). … The biggest offenders of the guidelines are going to be the content recommendation engines like Outbrain and Taboola, said Kunal Gupta, founder and CEO of Polar, a native ad platform.”

… And How Others Are Making the Most of Native Advertising Content

Time Out is doing things just right, though, Digiday reports.

“Like most publishers, its in-house content shop has created editorial-mimicking ad formats for years, but in the last six months it has carved a totally new direction for creating commercial content and distributing it. Experimenting with new ad units which offer a richer creative experience while focusing on just serving contextually relevant native ads has seen client campaign results ‘rocket,’ said Adam Harris, international creative director at Time Out. In the process, the publication has opened a promising new revenue stream for the business,” Jessica Davies writes.

“The publisher claims it can now charge premium rates and is predicting half its digital ad revenues will come from native advertising in 2016, up from 33 percent in 2015.”

Is native digital advertising becoming a reliable source of revenue for you? Tell us about your experiences in the comments!

To read more about native digital advertising in the news, visit Digiday.

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