Native Advertising Outlook

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The Local Media & Advertising Experts

Pricing Native Advertising

Rick DuceyManaging Director

BIA/Kelsey

Topics

Native ad ecosystem Forecast and drivers Does native advertising work? Pricing metrics and strategies Case study Recommendations

2© 2014 BIA/Kelsey. All Rights Reserved.

Native Advertising Outlook for 2014 and Beyond

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Native Ad Ecosystem Has Many Players Trying to Earn a Living


Where do native ads occur?

Social networks. Facebook’s News Feed ads, YouTube’s Promoted Videos and Twitter’s Promoted Tweets are among the most popular formats, but others such as Pinterest, LinkedIn, Google+ and StumbleUpon are ramping up in this area.

Mobile. A key driver behind the success of native advertising has been the growth of mobile usage on platforms such as Facebook, Twitter and Pandora.

Digital media. Native implementations include BuzzFeed lists, sponsored articles on Mashable and The Huffington Post videos on


sponsored articles on Mashable and The Huffington Post, videos on CollegeHumor and real estate listings on Trulia.com.

Traditional media. Publishers with active native ad programs include The New York Times, The Atlantic, Hearst, The Guardian and Vanity Fair.


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Social Native Advertising Growing to $9.4B by 2018

5© 2014 BIA/Kelsey. All Rights Reserved.Source: BIA/Kelsey, 2014



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Native advertising is #2 “most important digital revenue source”




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So…does native advertising work?

11© 2014 BIA/Kelsey. All Rights Reserved.© 2014 BIA/Kelsey. All Rights Reserved.

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ROI Assessment of Media Used For Advertising(1 of 2)

40%

50%

Excellent 10-19x Spend Extraordinary Over 20x Spend

ROI from Native Platforms

18.8% 19.3% 20.0%

13.6%

20.2% 18.9% 19.5% 18.8% 18.8% 17.8%13.3% 12.6% 13.2%

15.8%

26.1%

13.3%

18.6%

11.9% 12.8% 12.2% 12.3% 12.1%10.9%

13.3%11.3%

7.7%

0%

10%

20%

30%


Source: BIA/Kelsey Local Commerce Monitor, Wave 17, Q3/2013 (and prior waves, if relevant). Methodology: Online panels.

0%

Q107


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“You are 475.28 times more likely to survive a


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plane crash than click on a banner ad.”

-SolveMedia

53%53%

of users say they are more likely to look at a native than a banner ad


look at a native than a banner ad

14.


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32% would share a native ad.

18% more (52% vs 34%) of native ad viewers show purchase intent


intent.

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Pricing Factors1. Campaign goal – branding, direct response have

different metrics and value points2. Content type – SMS, video, text3. Channel – desktop, mobile, tablet4. Programmatic platform vs direct selling5. Packaging and bundling – increase AVO (average value

of order)6. Competitive pricing – market factors, easier to manage

with bundling


with bundling7. Value pricing – easier to achieve with bundling8. Cost-based pricing – difficult to fully attribute costs, but

probably leaving money on the table.


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Pricing Metrics and Strategies CPM – common currency but doesn’t capture key value

point of social native advertising of social “shares” and quality of impressions (accidental click versus reading

i l h i i h f i d )article, sharing with friends) CPE – engagement metrics are higher value for

advertiser but need to standardize on these (time spent, amount read/watched, sharing, other secondary actions)

Sponsorships – Pricing more of an art than science, value-based pricing but may end up with higher CPMs vs


other pricing models, may not be sustainable. Bundling - Value-based pricing but if used effectively

can achieve client goals by matching inventory to consumer purchase journey stage in funnel

How are publishers pricing native?

S hiSponsorship41%

Packages41%


CPM/CPE18%

Source: Polar, 2014


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$4 58$4.58

CPM for Facebook sponsored stories


stories

19.

$100K per campaign is typical for BuzzFeed (~$5 CPM)


20.


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Case Study: Houston Chronicle

Created own digital agency (AmuseDigital.com)

ll k f h Sell packages for 3 month minimum @ $7K/mo

Move to $12K/mo within first year but annual programs in $250K range

Includes assets, promoting in


print Partnering with Outbrain, Navio Native ads generate “7-figures”

annually Stephen WeisEVP, Digital Revenue

Houston Chronicle

Case Study: Houston Chronicle



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Recommendations1. Go for Life Time Value (LTV) with clients by bundling

inventory to match their campaign goals to Your inventory and its capabilities Creative execution related to stage (e.g, branding vs direct g ( g, g

response) Long term contracts with committed clients Appropriate calls to action for low funnel native ads Appropriate metrics to funnel stage

2. Appropriate pricing metrics for stage in funnel CPM more for branding


CPE for lower funnel ads Sponsorships for higher funnel

3. Check back with the client – is it working? A/B testing Fine tune the campaign

The Local Media & Advertising Experts

Questions & Comments:Rick DuceyManaging [email protected](703) 818-2425(703) 8 8 4 5

© 2014 BIA/Kelsey. All Rights Reserved. This published material is for internal client use only. It may not be duplicated or distributed in any manner not permitted by contract. Any unauthorized distribution could result

in termination of the client relationship, fines and other civil or criminal penalties under federal law. BIA/Kelsey disclaims all warranties regarding the accuracy of the information herein and similarly disclaims any liability for direct, indirect or consequential damages that may result from the use or interpretation of this information.


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Native Advertising Outlook