• by Will Price , April 5, 2013

Native advertising is one of the industry's hot topics right now, so we have introduced this three-part series to delve into the phenomenon from the perspective of a technology company and premium ad network (Martini Media), an agency (Morpheus Media), and a SaaS platform (Flite).

Native advertising is the next generation of rich media advertising. For publishers, it means higher CPMs, higher revenues and less commoditization by ad networks. For advertisers, native ads offer a more integrated brand experience, which in turn defeats banner blindness and drives engagement with consumers.

If you're not exploring native advertising, you run the risk that your inventory will be commoditized in the long term. Below you will learn what you need to know about how to build native ads, the constraints of the medium and how to surpass them to build a scalable native ad business.

Defining the Ad Product

Native ad products gained momentum with the growth of social media, where sponsored content was placed seamlessly next to a user’s tweets or status updates. If you’re a publisher developing native ads, consider what makes your site unique. This can mean pulling in your site’s own content alongside branded content.

For example, Buzzfeed offers a native product that allows a sponsor to display entertaining content in a similar way to how editorial content is shown. The signature buttons -- LOL, FAIL, OMG, CUTE, etc. -- allow users to participate with the native ad in the same way they engage with the site at large.

Another example is Forbes, which is known for having great lists. It’s common to find content like The Best Companies to Work For or Forbes List: Top 10 Billionaires. For native ads, Forbes can leverage this type of content right in an ad unit, pairing it with a brand’s related message.

When defining your native ad product, build it with metrics in mind so you can A/B test how your native ads are performing. For example, a leading health information Web site used Flite to create five different formats to identify what would resonate best with the audience. This ultimately resulted in highly compelling and effective native ad units.

The benefit of using an ad platform in this case is that you can easily test and swap out functionality without bringing in developers. If you want to see if ads with Facebook or Twitter resonate more with your audience, or if you should include a video instead, an ad platform will facilitate that kind of innovation. By testing and iterating, you can refine your ad product before going all in.

What Do You Need to Build Native Ads?

Many native ads are content-driven, so advertisers need to provide assets beyond their usual media kit. As advertisers adjust to being able to push content marketing into paid media, publishers should encourage them to pull from resources like their own Web sites and social media. With native ads, entertaining and informative content such as stories, videos, slide shows, social feeds and articles can find new distribution opportunities in paid media.

For example, The Atlantic ran a very successful native ad on our platform for a leading IT services provider. The ad featured informative articles and videos about how cloud computing can fuel effective business growth. As consumers enjoyed the content, they were also likely to explore cloud computing options from the advertiser.

What Are Some Constraints to Native Advertising?  
Native ads take forethought to get right. Here are a few constraints and how to overcome them.

• Constraints from template: There is typically more flexibility with rich media creative than there is for native ad creative, since native ads have to more closely match the publisher site aesthetic. While some advertisers may want to run the same ads they run in other contexts, the benefit of running native ads is to offer an organic, seamless experience to the site.

• Questions of scale and resources for building custom ads: Once you determine your ad product, how do you build ads quickly? Using a platform that streamlines production can allow publishers to assemble ads with efficiency, justifying the additional work with even more additional revenue.

• Selling a differentiated ad product: Since native ad formats tend to be unique and specialized, publishers will face the challenges traditionally associated with marketing and selling any differentiated ad product. New pricing, marketing materials, pitches, case studies and training may be required. As with any innovation, if done right, publishers will reap rewards from a successful product.

• How to tell if a content-driven ad is successful: Advertisers may be unaccustomed to looking beyond the click-through. By defining metrics that give insight into content-rich ads like time-on-unit, publishers can help advertisers realize the ROI of native advertising.

What Are the Technological Parameters?

One reason why native ads are successful is because they are consistent with a site’s aesthetic. The limits on creative are fundamental to their success. By offering a more integrated advertising opportunity -- one that flows with the content of a publisher’s site, instead of blaring against it -- native ads are achieving encouraging results.

As a publisher, your native ad process needs to be set up thoughtfully so that it’s easy to create ads with brands and agencies. There are many different tools involved in creating native ad products: HTML 5, Javascript, Flash, Omniture to track metrics, another tool to surface metrics -- not to mention rewriting code every time you want to adjust functionality for your ad. Using a collection of spot solutions and manual processes can be time-consuming and prone to errors. A platform solution can be crucial here by offering a simple way to create templates and drag-and-drop features as you iterate on your ad products. This can help to streamline the ad creation process significantly.

Ad products serve the customer, and the customer is constantly evolving. Even after you have defined and launched an ad product, you should continually refine it. Native ad units -- like all ad products -- don’t last forever, so see what users are engaging in to make improvements. Just as advertisers continually optimize their creative during a campaign, publishers should frequently review native ad performance and look for ways to optimize.

This is the final part of a three-part series on native ads.