Shaken & Stirred - Influential Brand Profiling and Positioning

The disruptive potential of native advertising / Felix Salmon

Andrew Rice delivers 6,000 words on BuzzFeed in the latest NY Mag, which means he has the space to tell a number of different stories.  By Felix Salmon

The one I’m interested in is the way that BuzzFeed CEO Jonah Peretti wants native advertising to disrupt banner advertising. I apologize for the long blockquote, but it’s a lot shorter than the article:

Peretti has talked of building “the agency of the future for a social world.” …

Watts and Peretti first set forth their theory in a co-authored 2007 Harvard Business Review article, “Viral Marketing for the Real World,” partly basing it on data from an experimental ad campaign at the Huffington Post. Watts has since continued to refine his research. His standard is that for every ten views an advertiser pays for when it buys a viral ad, it should get two shares. (“There is no free lunch,” Watts likes to say, “but maybe you can have a cheap snack.”) Peretti is convinced he can engineer a higher reproduction rate. “You can make money with that,” Watts says. “If they are predicting 20 percent of the variance and the competition is predicting 10 percent of the variance, they’re kicking ass.

Peretti’s formula for virality really adds up to a more mundane sales pitch: Buy lots of ad impressions and realize a modest, if unpredictable, viral bonus…

BuzzFeed has released some selective data about the fractional proportion of sharing it achieves—its so-called “lift”—and claims that for the median advertising post, ten paid views yield around three shares. Peretti adds that the brands that have embraced the format most enthusiastically have better results. Virgin Mobile’s ratio of shares to paid views is better than one to one…

Virgin Mobile’s posts received around 1.1 million views for the last week in March.Other campaigns running on the site during that period, however, showed smaller results: Geico, 140,000 views; GE, 65,000 views; Pepsi Next, 44,000 views. These numbers don’t quite match the hype around native advertising, which might be why ad agencies sound much less enthusiastic about the medium’s transformative potential than publishers do.

Peretti complains about “obstructionist agencies,” and when he looks at advertising—with its four dominant holding companies, rococo bureaucracies, and reliance on a lucrative television medium now threatened by ad-skipping technologies—he sees an industry ripe for disruption.

I think that Rice is missing a couple of very important points here. For one thing, he’s wrong that that native advertising is fundamentally “mundane”, and provides just a “modest” uplift to whatever you can achieve through more traditional channels. Native pageviews might hard to come by — but any smart brand would absolutely prefer a single native pageview to a dozen banner-ad impressions. The difference between the two isn’t something marginal, on the order of 20% or 30%: it’s huge — a good order of magnitude, at least.

That’s because a native ad is something that consumers read, interact with, even share — it fills up their attention space, for a certain period of time, in a way that banner ads never do.Rice does mention that the advertising industry is dominated by the television-ad market, but he doesn’t seem to understand why. Yes, TV ads have the kind of reach that no other medium can match. But they also have duration, and a storytelling arc: if you’re not ignoring them, they command attention, in the way that, well, TV shows do.

In that sense, TV ads are truly native; the way you consume a TV ad is the same as the way you consume a TV show. Similarly, long copy print ads are native, for the same reason. And the ultimate native ads are the glossy fashion ads in Vogue: in most cases, they’re better than the editorial, and as a result, readers spend as much time with the ads — if not more — as they do with the edit.

On the web, by contrast, the vast majority of ads are not native. Instead, they’re intrusive, annoying, unpleasant, and — in most cases — completely ignored. We’ve now been consuming content on the internet for 15 years; we all know how to do it, and we know what we like, and publishers, including BuzzFeed, have become very good at delivering exactly what we want.

In stark contrast to the increasing sophistication of web publishing, however, the overwhelming majority of web advertising is still based on standard IAB ad units which were introduced in 1996 and haven’t changed much since. We’ve all learned how to tune such things out, either mentally or technologically, with ad-blocker software. Banner ads are never engrossing, they’re never shareable, and insofar as they attract your attention they do so in an evil way, by animating or blinking or otherwise distracting you from whatever it is you are trying to read.


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