Why Native Advertising is the Opposite of Porn

It's a do-over from the past 20 years of online advertising. It's a bold new path for brands and publishers. It's the hoary advertorial dressed up in 21st-century clothes.

Native advertising is at least some of these things. Top publishers and brands met in Washington, D.C., on Wednesday for an American Press Institute summit to determine whether it is also the industry's salvation.

Fittingly enough, the host of the event was Atlantic Media, whose flagship publication, The Atlantic, introduced the native-advertising industry's first scandal when it ran an article entitled "David Miscavige Leads Scientology to Milestone Year" on its site in January. Commissioned by the Church of Scientology, the article was labeled as advertising, but raised hackles among fans and critics. A day later, Atlantic Media issued a three-word apology: "We screwed up."

Kimberly Lau, vice-president and general manager for The Atlantic Digital, apologized again on Wednesday: "I personally got a little caught up in what was a transactional deal and labeling it correctly, and not on whether that was a message that was appropriate within our walls."

Lau said the native-advertising unit was offensive to readers for three reasons: Some took issue with the fact that the publication was doing business with the Church of Scientology; others were miffed that The Atlantic was dabbling in native advertising; another faction were mad at the execution, which read like warmed-over PR.

"Even if run in box ad or banner, we still would have had level of outrage," she added.

For some, the lesson was to offer a more polished piece of content next time around. As Stephanie Losee, managing editor at Dell, quipped, "Native advertising is not like porn: If it's done well, people don't know it when they see it."

Lau corrected her, saying, "No, if it's done well, they don't care."

There are many stories of native advertising doing well. BuzzFeed has more than 700 advertisers taking advantage of its native-ad units. Forbes touts that 20% of its revenues this year will come from its BrandVoice platform, which lets marketers publish their own content on the site with little editorial interference.

Native advertising is so new and hard to define that no one tracks it. However, display advertising in the U.S. is poised to overtake search in overall revenues by 2016, according to market-research company eMarketer. Much of that growth is due to programmatic buying — defined by Forbes as "automation of the buying and selling of desktop display, video, FBX and mobile ads using real-time-bidding" — which takes humans out of the process.

For publishers, a future ruled by bots is not a cheery one. Hence, the mania for native advertising. Steve Rubel, executive vice-president of global strategy and insights for Edelman said that based on his unscientific analysis, 90% of the push for native advertising is publisher-driven. Attendees at Wednesday's American Press Institute summit, many of whom are representatives from brands, didn't agree.

For instance, Losee said Dell's new program (it started in December) has not only driven traffic and earned media, but has netted sales leads for the company. While moving product is one way to measure the impact of native advertising, it's not always apt, particularly for marketers looking to achieve branding goals — such as awareness and purchase intent — rather than direct sales.

Todd Handy, vice-president of digital business development and advertising products at Deseret Digital Media, said there are four ways to measure native advertising success:

1. Story impressions: The number of times the story has been viewed online or in social media

2. Story reads: The number of people who have read the story

3. Display ad impressions

4. Time spent on the story (i.e. engagement)

Although far from an industry standard, these metrics are a start, and one way to address a major issue holding back adoption: wildly fluctuating ad rates.

Rubel said he's seen quotes as high as $100,000 for a post. Digiday reported that such a price will buy you four to five BuzzFeed posts, although you can get some for as low as $5,000 each. Forbes charges $50,000 to $75,000 a month for a minimum of three months, while The Huffington Post charges $40,000 per post, according to the report.

On a local level, Mike Orren, president of the Dallas Morning News' Speakeasy, said savvy buyers are wise to the fact that there's no standard for pricing. Orren recalled dealing with a car dealer — "a canny, very hard-boiled gentleman" — who confronted him on the issue. "He said, 'I know your industry has no clue what this stuff is worth yet,'" Orren said. "'I know y'all are just putting your finger up in the air.'"

Assuming the industry squares away the ethical and pricing issues, there's also the problem of scalability. As The Atlantic incident illustrates, it's not easy to do this stuff well. To work, native advertising needs to be executed by professionals; it can't be outsourced to bots. This issue will probably ensure that native advertising will remain a niche, but one on which some publishers can build a thriving business. (Disclosure: Mashable also sells native-ad units.)

If native advertising lives up to expectations, it may be the deus ex Machina that some are hoping for. Or, it could just be the flavor of the month.

In a hopeful sign, the Federal Trade Commission is now taking a closer look at native advertising. As Rebecca Lieb, an analyst at research and advisory firm Altimeter Group noted, search advertising and blogging both boomed in the past decade after the FTC took notice.

Readers, what's your take on native advertising? Sound off in the comments, below.

Image: iStockphoto, jgroup