• by Lindsay O'Gorman , March 17, 2014

The fact that there could be news relating to such a nascent advertising format as native advertising seems a little premature, but this fast-moving new genre has attracted incredible attention and interest from publishers and advertisers alike that it’s not altogether surprising. The news that Yahoo has launched its own marketplace for mobile search and native advertising, called Yahoo Gemini, is just the latest launch in a line of media owners adopting the format and making strides to sell it at a premium cost.

If you've ever followed BuzzFeed or Upworthy on a social platform, you'll know that those clickable, shareable pieces of content are a huge temptation. Between Upworthy’s vague headlines that make you want to read more, and BuzzFeed’s love for the listicle, they’ve figured out how to hook and engage their audience with both content and advertising.

Publishers have a vested interest in making native advertising work for them, since they can charge more for placements that are complementary to editorial. The excitement among publishers is quite real, but making this model pay is a much more complex exercise than originally imagined. The cautious approach adopted by the New York Times — which unveiled its first native ad units at the start of 2014 alongside existing display units — will hopefully pay off in time.

This is a publisher whose strategic approach to exploring new revenue streams worked well for them at the end of 2013 when it announced a year on year profit growth from $35.4m in Q4 2012 to $68.9m a year later. The reason for the financial successes was in large part down to the rewarding paywall model, and now that a captive audience has been secured, it could be said that the next step for the NYT this year will be to focus on that age-old issue of how to push up advertising CPMs.

Native advertising is essentially an integration of commercial and editorial enterprises, so scaling up an operation that requires an editorial eye to sign off on a piece of ad copy limits publishers to how fast an editor can read. Taken at first glance, it may seem impossible to trade native advertising space using a real-time bidding (RTB) auction model, which offers a fast, efficient method of buying and selling ad space.

To marry this up with editorial requirements, publishers will need to start taking into account that, theoretically, the more relevant your advertising is to the story being reported, the more attention it should get from readers. The consumer acceptance of native is obvious: research by Sharethrough and IPG found that users engaged with native ads 53% more often than they did with traditional display ads, with 32% of their survey respondents also saying they would share a native ad with someone they know. This kind of engagement indicates that much more semantic metrics are required to measure a native ad’s effectiveness.

To make sure that the pricing of native ads within an RTB auction model is suitably adapted to the medium, we need to consider elements like the bounce rate – the percentage of users who “bounced” off the site at the first page they entered, as opposed to staying and engaging longer with the content – and the dwell time, or the amount of time a user stopped on a page to read, which is completely different from how today’s ad spots are measured and priced up.

This year, media owners will be keeping a hawk eye on the progress of the New York Times’ native operation, since they have emerged as the newest beacon of hope to publishers. There will no doubt be charlatans who emerge from the woodwork, offering up native ad spots which aren’t optimised effectively and in places advertisers don't want them.

As with most ad formats, brand safety is a key consideration, as is the viewability of ads, but thanks to tracking technologies being developed by the likes of Doubleverify, Integral Ad Science and more, this can now be reported on with decent accuracy. It’s clear that if we get the nuts and bolts sorted by focussing on developing a sophisticated, editorial-consistent method of tracking ad relevancy in real-time, the scalability options for publishers could be huge. Watch this content-optimised space.