UPDATE: The second half of our “Native Advertising on Lock Screens” series has been published! Check out Part 2 to learn about challenges in native advertising and what our solutions are for advertisers, users, and publishers.
If you were to ask me what the most powerful mobile advertising trends are in 2014, I would say “programmatic” and “native.” Programmatic advertising has evolved from being simply a buzzword to becoming a real game changer over the last few years, thanks to its firm foundation from the era of desktop advertising. However, the concept of native advertising is still quite new and vague for many people. In this first post of our native advertising series, I’ll be discussing the definition of native advertising and the potential of using the first screen of smartphones (a.k.a. the lock screen) as a type of native advertising.
What is native advertising?
Native advertising, as defined by Wikipedia, is…
”… an online advertising method in which the advertiser attempts to gain attention by providing content in the context of the user’s experience. Native ad formats match both the form and the function of the user experience in which it is placed. The advertiser’s intent is to make the paid advertising feel less intrusive and thus increase the likelihood users will click on it.”
Native ad formats should match both the form and the function of the user experience, and there is little opposition to this aspect of the definition. However, I would argue that this definition is limited, because native ads are not only about online advertising. Below are two examples that fit well with the definition. These advertorials are presented in the same form as other articles and they have the same function of providing content for readers. These are examples of print native advertising in newspapers and magazines. In fact, they are precisely the forerunners of the modern version of advertorial native ads seen in the New York Times.
Source: Dixon Advertorials
So even if native advertising has only recently become a buzzword, it is not an entirely new concept. Its origins trace back to the print era when advertorials were often placed between news articles. There are also customized ads in magazines, which are much more difficult to differentiate from original content. Putting aside for now the debate of whether this type of advertising is good or bad, based on the definition, native advertising has clearly existed since the print era. It’s just now getting more of the spotlight.
So why is native getting more attention now than ever?
Although the rate of smartphone adoption has been rapidly rising and a quarter of total Internet traffic now comes from mobile, mobile advertising still can’t seem to get the attention it deserves due to its inherent limitation. What I mean by inherent limitation is the smaller screen size of mobile devices, which prevents traditional banner ads from having spacious placement on mobile like they have on desktop PCs. The banner ad, which takes up a fixed area of the already tiny screens, is not the answer to mobile advertising, even if it was the first and, until recently, the only way of buying ad inventory on mobile. Scarcity as a foundation of innovation has led people to reinvent mobile advertising. For example, Facebook, after its IPO in 2012, had trouble with mobile user monetization. A great majority of users were already on mobile, but for Facebook, a scrappy banner ad was not an option. They finally came up with an innovative in-feed advertising product and successfully became one of the biggest mobile advertising firms. Users were receptive of Facebook’s advertising effort and CTR proved to be 10 times higher than traditional banner ads. In Q4 of 2013, mobile accounted for 53% of Facebook’s total ad revenue! Inspired by this eye-catching outcome, Yahoo!, Twitter, LINE, Pinterest and many other mobile giants also followed to capture this rapidly growing market.
(Source: The Next Web)
In a nutshell, the rise of native advertising on mobile is an inevitable consequence of its limited screen size. The success of Facebook ignited the trend and sufficiently explains why we need to take native advertising into account more than ever.
4 Major Growth Areas for Mobile Native Advertising
- The in-feed type is particularly popular thanks to Facebook’s success. Ad units are inserted between content in the same form and design. This type is proven to have 10X the CTR and users find in-feed ads less intrusive than traditional banner ads.
- Mobile giants like Facebook, Twitter, and Yahoo! have built and operated their own native advertising platforms and a few in-feed ad networks have been trying to tap into this market. InMobi and Facebook have launched in-feed native ad networks, and Namo Media, a native ad startup, was recently acquired by Twitter.
- The advertorial native ad is a renewed advent of its predecessor from the print era. The New York Times courageously led the initiative and the responses are quite contradictory. Some believe that this is the future of media, which is currently suffering from viewership decline and revenue loss, while other strong advocates of journalism argue that this kind of deceptive advertising has crossed the line.
- If the New York Times is representative of the traditional media camp, the new media publisher BuzzFeed goes even further. BuzzFeed’s sponsored content mechanism is a bit different from NYT’s approach. Sponsored content is not about a self-promoting brand, but rather entertaining content associated with its brand image in a more indirect way.
3. Sponsored Accounts in Messaging Services
- MIM (Mobile Instant Messaging) services such as KakaoTalk, LINE, and WeChat have been pioneering this area in a bid to increase lifetime value (LTV) of their users, on top of their game platform business models. Utilizing their inherent characteristic as a messaging service, they have come up with “sponsored account advertising products” that allow a brand to broadcast promoted content to those who follow its account. Although dealing with a trade-off between user experience and advertising revenue is rarely a painless process, these messaging services have been doing a great job by limiting the number of sponsored accounts.
4. Mobile First Screen (a.k.a. Lock Screen)
- Smartphone first screens are a valuable piece of real estate for native advertising. According to our internal research, mobile users “slide to unlock” their devices 100 times a day on average, varying from 50 to 150 times, implying enormous opportunities for brands to communicate with users. Even though there are only a few publishers who have succeeded in creating this type of inventory, lock screen advertising promises advertisers with superb ROI – it secures interstitial-level CTR (7-8%) in a less intrusive manner.
- At Buzzvil, we ourselves have this type of inventory in Korea and Japan (Honeyscreen and Lockjoy). As one of the first and biggest players in Korea and the leading lock screen advertising service in Japan, we believe this product is extremely promising and has the potential to become the next big thing in the native advertising landscape.
In this first post, I’ve covered some general topics on mobile native advertising. In the next post of this series, I’ll discuss some of the challenges of mobile native advertising and take a closer look at lock screen inventory. Stay tuned!
The FOCUS series on our blog features specific projects and insights that we believe can change the rules of the game in the mobile industry. To learn more about Buzzvil’s core values, take a look on our website.
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