Tackling The Publisher Revenue Stack for Native Advertising.

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Native advertising is providing online publishers with premium monetization strategies, and the opportunities continue to grow. In fact, recent studies show native advertising shows no signs of abating and could reach north of $20 billion by 2018 (up from roughly $8 billion this year).

So with the fresh round of opportunities comes a real set of complexities, and associated decisions that Publishers are making to prioritize and manage native ad campaigns.

Today we are seeing a blend of strategies, ranging from pure native content developed and distributed by the publisher, to more typical implementations which feature network-based monetization. Balancing yield and quality is the goal and a native advertising revenue stack framework is beginning to emerge featuring 3 levels.

Level 1, native publisher-developed content sponsored by Brands. Otherwise referred to as Direct Sponsored Native, this form of campaign is labour intensive and requires specialized publishing resources, but offers the most premium revenue opportunity for publishers. Buzzfeed’s model is predicated exclusively on this model, with integrated campaigns fetching from $50,000-$250,000. Other publisher networks like The Times and Forbes have developed content studios to meet the demand. In addition, publishers are looking to amplify their own content through other publisher channels in order to fill the demand.

From a tech-perspective, management solutions range from custom-built CMS/serving systems, to native ad platforms and marketplaces capable of delivering and amplifying adaptive content across varying site templates and devices.

Level 2, native brand-developed content distributed by Publishers. Also commonly seen as the “Advertorial” format, this form of native advertising has existed for years and now starting to see renewed relevance as publishers open their doors to $25+ CPMs being offered by big brands. Much of this content comes from a brand’s blog or corporate library, and also curated or sourced through professional journalist networks.

This form of native can offer double the value as they also provide relatively high quality content to populate their sites, and fill the gap due to journalist layoffs at many top publisher networks. Tech players like Nativo and our very own DistroScale are delivering value and scale on this tier.

Level 3, native demand delivered within the Publisher feed. This demand is provided through networks and exchanges, the most common forms being delivered through in-feed ads and content recommendation widgets. For publishers, this can provide the greatest revenue opportunity through sheer scale alone, however, publishers may find themselves commoditizing a fresh revenue stream and falling prey to network click-bait specialists. CPMs are sub-$10 and in some cases, in the $2-$4CPM range.

A handful of SSPs/Networks are providing significant scale today, and more partners are bound to pop up. We project that publishers will have several of these in their stack based on their desired experience.

Stacking It All Together

Many publishers are taking a top down approach as they focus on the bigger revenue and profit opportunity through Direct native campaigns, though in the end, a mix of ad tags/platforms will be used.

Having a flexible and extensive solution will be paramount as publishers seek to leverage today’s opportunities, while ensuring that they can control content, partners, campaigns, and advertiser demands in a progressively programmatic world.