By Jody Simon
Native advertising is one of the hottest topics in digital media, and platforms working to find innovative, organic ways to deliver robust digital advertising campaigns have taken notice.
Native advertising is a form of online advertising that closely resembles the form and function of the platform on which it appears. By creating ads in the same format as the content the users are there to consume, brands hope to provide a more organic advertising experience. With native advertising, brands experience above average user engagement, drawing higher click rates and shares.
While banner ads and online video pre-rolls may have some interactivity, they are not really all that different from traditional magazine ads and TV commercials. Even so, traditional forms of digital advertising take on extra power from improved targeting with consumer engagement, realizing an average of $3 on incremental sales for every $1 spent on advertising, according to Nielsen. This return on investment is why digital platforms like Facebook, Twitter, Hulu, Snapchat and others constantly look for novel new ways to generate revenue through advertising. Their next step is to combine demographic targeting with native formats to further consumer engagement in more organic ways.
The challenge for many digital advertising platforms is to exploit the advantages of consumer targeting while delivering an authentic connection with users, rather than delivering advertising content that feels like a creepy big brother watching every move. When computerized algorithms track clicks and likes, the distinction between traditional and native advertising can be painfully apparent. For example, if you type in a search for information on franchising a business, every pop-up and banner ad for the next month will be about franchising. Many users find these unwanted ads uncomfortable and intrusive. But how can companies cut through the content clutter to deliver their message effectively?
Snapchat believes it has a solution. The ephemeral messaging platform recently announced that is it offering brands — for a price — the opportunity to deliver sponsored geofilters to its 100 million daily active users. Geofilters are special overlays for Snaps that can only be accessed in certain locations. Artists and designers use the geofilter tool to bring their unique style to the Snapchat community, and users can add these overlays to their selfies to deliver scrapbooking-style personality to their stories.
Snapchat reports that their location-specific geofilters already account for more than 1 million of the daily messages sent on the platform. These audience numbers are enticing to companies like McDonalds, which was the first brand to sign up for this new type of native advertising program.
Here’s how it works: Snapchat users at any McDonald’s location can upload a Snap and then choose from a number of whimsical images of burgers and fries to tell all their followers that they are “lovin’ it.” This innovative advertising medium offers a level of user engagement that could be very attractive to advertisers because users have chosen to put themselves inside an advertisement and then to disseminate the ad to their circle of friends and followers.
Significantly, Share This and Nielsen recently released statistics on advertising that substantiates the value of this type of user-generated, native advertising: 92 percent of consumers believe recommendations from friends and family, 57 percent of all purchase decisions are based on recommendations, and 9.5 percent of consumers are more likely to buy a product with an excellent shared recommendation. These statistics put into perspective the importance of Snapchat’s new sponsored geofilter service, which may be a game-changer in making advertising more organic and effective. This, together with a report from BI Intelligence that native ad spending will reach $7.9 billion this year and grow to $21 billion in 2018, rising from just $4.7 billion in 2013, makes Snapchat’s sponsored geofilters a model to watch.
The interesting thing about this program is that creates a new advertising medium that could only exist on social media. Snapchat’s sponsored geofilters make creative use of social media’s unique properties, allowing users to own, control and disseminate advertising as part of their online personas. As this model rolls out, we can expect to see more clever ways for brands to get their stories out as the digital ecosystem matures and as native advertising becomes more ubiquitous.
Jody Simon is a veteran entertainment law attorney and partner at Fox Rothschild whose clients span television, digital media outlets, publishing, live stage, live action and animated programming, and graphic novels. He regularly posts industry analysis on Fox Rothschild’s blog Pay-or-Play.