Native advertising 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 function of the user experience in which they are placed. The advertiser's intent is to make the paid advertising feel less intrusive and thus increase the likelihood users will click on it. The word "native" is used to refer to the formatting of the advertising materials to make them appear more consistent with other media in the recipient's universe.
One form of native advertising, publisher-produced brand content, is similar in concept to a traditional advertorial, which is a paid placement attempting to look like an article. A native ad tends to be less obviously an ad than most advertorials.
Formats for native advertising include promoted videos, images, articles, commentary, music and other media. Examples of the technique include Search advertising (ads appearing alongside search results are native to the search experience) and Twitter with promoted Tweets, trends and people. Other examples include Facebook's promoted stories or Tumblr's promoted posts. Content marketing is another form of native advertising, placing sponsor-funded content alongside editorial content  or showing "other content you might be interested in" which is sponsored by a marketer alongside editorial recommendations.
The types of platforms and websites that participate in native advertising can be split into two categories, “open” and “closed” platforms:
- Closed platforms are brands creating profiles and/or content within a platform, then promoting that content within the confines of that same closed platform. Examples include Promoted Tweets on Twitter, Sponsored Stories on Facebook, City, Vivas and TrueView Video Ads on YouTube. Large publishers, such as Washington Post, have recently started introducing their own native advertising formats.
- Open platforms are defined by promoting the same piece of branded content across multiple platforms within native ad formats. Unlike closed platforms, the branded content asset lives outside the platform. Examples include Sharethrough and Nativo for long-form evergreen content, and Versa for short-form responsive content.
- Hybrid platforms allow publishers to install a private marketplace, while having the option to allow advertisers from other platforms to bid on the same inventory either through direct sales or programmatically through Real-Time Bidding (RTB).
Photo sharing platforms such as Instagram and Pinterest are increasingly leading the pack in terms of native advertising. A study has shown that the retention rate for visual information can reach 65% in comparison to 10% for text-based information, thus making Instagram and Pinterest the ideal location for native ads. Since its launch in October 2010, Instagram has accumulated 150 million monthly active users (as of December 2013), posting an average of 55 million photos per day which attract 8500 likes per second. Launching earlier the same year, Pinterest has 70 million users and 80% of these are women, hitting 2.5 billion Pinterest page views a month. Instagram and Pinterest users can earn money for their posts, linked to brands directly by large influencer networks.
Other subtle forms of native advertising began to emerge on Facebook in 2012 and 2013 where brands captured photos or videos of guests and overlaid a logo or brand message and then posted to either the guest's own Facebook page or the brand's corporate page on Facebook. For example, ads for the premiere of The Hobbit: An Unexpected Journey consisted of photographs of VIPs with a Hobbit logo at the bottom.
Twitter's base advertising product MoPub, acquired in September 2013, creates native ads within the Twitter stream such that posts from brands fit into the context around the rest of the user's Twitter updates. MoPub has been successful in generating not only click-through to websites (lead generation) and even direct sale of gaming applications.
One of the biggest problems to date in the native advertising industry has been achieving scale, because early instances of native advertising in these social channels are closed platforms that reach finite audiences. They also don't have the authoritative brand that traditional news publishers like the New York Times and The Washington Post can lend to their native ad content. Recently, several new native advertising networks have emerged in an effort to provide the scale advertisers seek by joining multiple publishers and platforms into networks for distribution. These include Sharethrough, Nativo, and Versa.
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