Is Native Advertising The Latest Victim Of Publishing's Flight To Quality?

It looks like the much discussed "flight to quality" could be having a hugely beneficial impact on British publishers on both sides of the revenue stream -- advertisers and subscribers. However, it also looks like native advertising is in for a very tough ride, particularly in B2B.

It begs the question: does part of this flight to quality involve brands turning their backs on sponsored content? First the macro view. According to the latest Digital Publishers Revenue Index (DPRI) from the AOP and Deloitte, publishers saw a 5.6% lift in revenue last year. The biggest contribution came from digital advertising jumping 27% from the beginning to the end of 2017. In fact, when you compare fourth-quarter 2016 to fourth-quarter 2017, the increase is even more impressive -- 35%.

The other major revenue generator was subscriptions, which were up 8% on average across the industry. 

The figures become more interesting if you take a look at B2B, which grew a little more slowly than B2C publishing during last year. The trend toward paying for quality content is notable here, with subscription revenue leaping 15% during 2017 -- and now, the researchers point out, accounts for nearly half (45%) of B2B publishers' revenue. 

On the other hand, sponsorship is down a massive -51% in B2B publishing in just a year, and recruitment advertising has taken a hit of -15%. 

So, I'm wondering if two things are happening here.

Firstly, across the B2C and B2B landscape, more people are choosing to pay for quality content, and at the same time, advertisers are willing to pay a premium to be seen alongside professional articles in a brand-safe environment that attracts the right audience for the brand.

The flight to quality has been discussed for at least a year or so, against a backdrop of fake news. Subscriptions rising 8% (and nearly double that in B2B), as well as digital display revenue leaping more than a third in the final quarter, would appear to back up this assumption.

What is odd is sponsorship being down 16% in fourth-quarter 2017 for all publishers and being halved for those in B2B. One would imagine this would be soaring high on the momentum created by native advertising.

What we are seeing is a decline, and it can't get a lot more stark than being halved in a single year in B2B. 

There are a few likely contenders to explain why this is happening. Perhaps brands are spending big on their own content and using social channels to drive traffic to it, on their own site. Maybe there's a suspicion that people don't trust sponsored content and the quality end of the market has been dragged down by the native networks that place clickbait articles at the bottom of quality articles.

I would also contend that many brand executives are now setting up profiles to blog on publisher sites in their own right. They get to air an opinion or two and the site gets to tap into their expertise and their audience. This may suggest why digital display is up, due to the extra traffic and the fact that people are subscribing in great numbers, but sponsorship is declining. 

The drop in sponsored content is less severe in B2C so I would say this latter point might be the smoking gun. If execs are publishing direct on sites rather than sponsoring other writers to interpret their views, it would stand to reason that sponsorship is down, other revenues are up. 

It's one to watch, though. This trend to allow guest authors is one aspect, it may be coinciding with brands having a rethink about native. 

1 comment about "Is Native Advertising The Latest Victim Of Publishing's Flight To Quality?".
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  1. Sean Hargrave from Sean Hargrave replied, April 11, 2018 at 4:33 a.m.

    Thanks Paula, that just me "LOL" - somewhere along the way I succumbed to the modern, trendy word because that's what everyone now reports on. I remember years ago saying to people, "it's just advertorial, isn't it?" and getting the puzzled smile a digital native gives to a dinosaur!

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