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. 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.
Or maybe native ads are another in a long line of bad ideas, thought up by hucksters who wouldn't be able to come up with content worth paying for if their life depended on it. I read the linked nymag article- hardly inspires confidence when their most popular articles are a silly one about bored, college seniors and speculation about whether Weiner's wife recognized his wiener, but it was a solid piece- sounds like buzzfeed is throwing everything at the wall and hoping something sticks. While I've heard of buzzfeed, I've never been linked to or read anything on it, which I suppose makes sense since I don't use social media.
The real test here is whether the advertisers are making money from these native ads, I suspect not. And all these native ads do is trick readers by making them think a paid post is done by the site itself, though in the case of "best cat pictures" or whatever, who cares. In the case of The Atlantic and anyone else with real content, much bigger deal.
The endgame for content online is micropayments, which will kill off all ads, native or not, all this bullshit in the meantime is hilarious. :D
#1 Posted by Ajay, CJR on Thu 11 Apr 2013 at 04:40 AM
The most difficult part of the native advertising equation will be making sure that the content is high quality and relevant. The ads can’t be a product masquerading as “content”. Rejecting ads for poor quality content mean companies will have to leave instant money on the table. The user’s time and trust must be respected with these ad units – otherwise, users will begin to avoid these content ad units and will decay click through rates.
#2 Posted by Lisa Brown, CJR on Thu 18 Apr 2013 at 04:11 AM