The lines between the media, brands, agencies, new media, social media and search engines are blurring fast. The need, desire and promise of native advertising are major factors in this blurring. Everyone is trying to get a piece of the action. Recently, these facts have been covered by Chad Pollitt, VP of Audience, both at Social Media Today and on Mark Schaefer’s blog.
The blurred lines occur because of the world’s voracious appetite for content. Many traditional media outlets are cutting back, while brands and ‘new media’ properties are filling the void. At the same time, media are building marketing agencies and brands are building real publications or buying them.
All the players are trying to profit from native advertising, trying to position themselves at the trough. Ultimately, the media is in the driver’s seat of the native advertising arms race and the reasons why are quite simple, according to Chad Pollitt.
The combatants of native advertising
1. Traditional Publishers
Print media is on life support. As a result, many of them have built robust or specialty niche audiences online. With the amount of content on the Internet, expected to grow by 500 percent by 2020, access to these audiences will be even more desirable by brands. Search engines can’t possible provide visibility for 500x more content, so only one other scalable content distribution channel exists – native advertising with publishers.
2. New media
By now, website only publications like the Huffington Post, Mashable, Buzzfeed, Upworthy and ViralNova have proven business models that are insulated from the unprofitability of traditional media models. Many new media outlets were early adopters of native advertising and have the revenues to prove it. As publishers, most new media “get it” that they don’t need third parties skimming their native profits. That’s why many of them have full-fledged agencies poised to sell, build, run and report on campaigns.
3. Content distribution networks
Tools like Taboola, Adblade and Outbrain fall into this category. And there are dozens more. These networks are all growing, but they have one fatal flaw. They need publishers to deliver native advertising. If publishers decide to do their own native campaigns, the content distribution networks won’t be necessary.
4. Social Media
Many of the major social networks are offering native in-feed advertising now. This is undoubtedly a plan to pilferage even more revenue from the media. Again, the fatal flaw here is that they need the media to make this happen. The media doesn’t need them.
5. Search engines
Yahoo, AOL and Google are positioning themselves to massively profit off of native advertising. However, without publishers, Yahoo and AOL are stuck distributing content on their own publications and Google can’t do native at all.
Just like content recommendation engines, agencies will act as third parties through the native era, connecting publishers with the brands they represent. This will likely prove to be profoundly profitable and valuable in the near-term for all parties involved. However, as the media’s internal agencies start to ramp up and get good at selling their services, expect traditional external agencies to do less and less native advertising. The media doesn’t really need external agencies to deliver native advertising.
Many brands are investing in building their own organic audiences today (brands like Intel, HubSpot, Ben & Jerry’s, Netflix, GE, AARP, Ford, American Express and many, many others), and they’re also looking to grow their audiences through native advertising. Brands that are successful at building their own media outlets may begin to compete with traditional and new media by offering native advertising, too. Adobe’s CMO.com could do it today, if it wanted to. Until that happens, look to brands to fund this new native arms race. In the process, brands might in fact end up being the stakeholder deciding, who the lasting winners will be.
Who will become the main gatekeepers of audiences?
According to Chad Pollitt in Social Media Today, the story above about the native advertising arms race – no matter the combatants – is about a ‘war’ between parties that all want to be main gatekeepers of audiences in the future. With 5x more content expected online, these gatekeepers stand to rake in billions of dollars. Right now, it’s still search engines and social media.
Ultimately, online publications command more combined audience share than search and social. This means that online media has an incredible opportunity to be more profitable than what it has been in decades. And in the process, dimmer the native aspirations of the search engines, third-party connectors, social media and agencies.