The Native Advertising Proposition

By: Becky Bracken

The old rules of advertising are dead. They don't work. The old, passive approach was too fragmented and publishers are having a hard time making a living off of them. So how are digital content creators and marketers coming together to solve the crisis? It's pretty simple, really: disguise ads as content. The vogue name for the enterprise is “Native Advertising” and it presents a true opportunity for Communications Service Providers, particularly in the area of video advertising.

Video advertising is everywhere and its working for marketers. In fact, comScore's Video Metrix service shows that in January, 2014, alone 183.8 million Americans watched 48.7 billion online content videos in January, 2014, while the number of video ad views totaled 26.9 billion. comScore adds that a hearty 85.1 percent of the U.S. Internet audience viewed online video and that the video ads made up more than 35 percent of all videos viewed and 4.5 percent of all minutes spent viewing video online. And thanks to native video advertising, that number is likely to continue to grow exponentially.

All of that video offers a great revenue opportunity for communications service providers (CSPs). All of those video ads need to be hosted, delivered and tracked. And since native advertising, by definition, requires some knowledge of the target consumer's behavior, the data that lives within the CSP networks also becomes a hugely valuable asset. Amazon agrees and launched its service that allows companies to host video ads or demos on their site for placement in relevant customer searches. So not only is Amazon making money off of the advertising, but hosting the ads as well. But Amazon is wisely mindful of the impact on the customer and places product “demos” with product information relevant to the customer's search. So if a customer is searching for a deal on diapers, Pampers can have a video demo ad explaining the ins and outs of quality diapering. So it's informational, sort of; but it's an ad, make no mistake.

For network operators which own a far richer set of user data, including location, usage based metrics and even rich billing histories, the opportunities to host, and then strategically place native video advertising in front of the right audience is potentially huge. There are a few technological hurdles in place that need to be tackled before CSPs can fully engage in native advertising.

“This may happen over the next year or two,” Tapstream CEO and Co-founder Slaven Radic says. “Holding this back is the fact that the mobile ad-tech is still developing and the infrastructure of tracking user demographics, intent and in-app behavior is fragmented and spread out across different systems. That said, most of the data sharing infrastructure is already in place and it’s just a matter of connecting it all together and having the right business strategy.”

But, Slavic adds, mobile advertisers are already paying attention to the growth in video advertising and looking for smart ways to capitalize.

“Yes, this will become a bigger and bigger opportunity as video native ads take off,” Radic adds. “We are seeing a much higher interest from mobile advertisers to test video ads in their campaigns.”

As it stands now, the hot technological issue to be worked out, according to what Radic sees in the mobile video advertising space, is the need to sort out the complicated technological relationship between publisher and advertiser.