You pay, that is, while others view.

In an interview with Bloomberg, Tumblr VP Derek Gottfrid said the blogging network has already tested the product internally, will roll it out in the first half of 2013, and is currently looking for advertisers who want to sign up. No word yet, however, on exactly how promoted posts will actually be promoted, or what tools bloggers will have to decide who they get promoted to.

The new revenue will, Gottfrid thinks, drive the 162-employee and 100-million-blog company into profitability this year. Which seems to be a likely goal, even if only a fraction of its 16 billion total page views transition over to the ego-driven monetization model.

Tumblr, which became the ninth most popular site on the U.S. web in 2012, significantly improved its mobile apps late in the year, including its iPhone app and a new iPad app. But the company did not introduce any form of monetization at that time. This new native advertising model will ensure that traditional banner ads don’t clutter the mobile experience, but will present posts to users who might not have intended to see them.

One interesting note that Tumblr’s sales head Lee Brown let slip: Tumblr’s average advertising sale is just under $100,000 … meaning that major brands and enterprises are behind much of the site’s current revenue.

This is once again expanding the native ads landscape. We have Twitter with promoted tweets (which it just started selling via ad partners), Facebook with promoted posts, and now Tumblr with, perhaps, trending Tumbls.

All that’s needed is for Pinterest to introduce promoted pins, which I confidently expect sometime in 2013.

One question: where are WordPress.com and Automattic? (Update March 6: testing native ads too.)

photo credit: matt coats via photopin cc

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

This guest post is written by Virurl co-founder and CEO Francisco Diaz-Mitoma.

The biggest buzzword of 2012 in advertising was “native advertising,” but the buzzword may be here to stay.

It seems most in the industry have agreed that native advertising means two things:

• Native ads blend in with the website or app. It is more difficult at a glance to tell which ads are native and what is the regular content.
• Native ads attempt to be more relevant to a user’s browsing experience. If a user is on a funny website, the sponsored video is probably comedy or at least skews to the demographic of the readership.

The reason “native advertising” may be more than a seasonal buzzword is because this is the first time where the user’s satisfaction with respect to relevance has become such a critical part of the equation in advertising.

When you’re reading your favorite blog or news site, there is a very low probability that you’re looking for auto insurance or need to order drugs from a Canadian pharmacy. Advertisers such as these continue to pump money into the online advertising economy because it’s easy for them, even though it’s not relevant or interesting to their target market.

Conversely, while native advertising promises more bang for the buck, it also promises to be infinitely more complex to get it right. If we were to map out all the data points necessary to perfectly solve a native advertising transaction between advertiser, publisher, and readers, it would look something like this:

The diagram demonstrates just a few of the necessary variables when creating the perfect ad. The overarching goal is imparting value to consumers with as little obtrusion by the advertiser as possible. For example, accidentally clicking on a mobile ad and being driven out of your current experience into a new download process is obtrusive and goes against the fundamentals of native advertising. On the other hand, reading a sponsored post that is both enlightening and relevant has many of the positive signals of native advertising.

The positive powers of native advertising are clear:  an unobtrusive browsing experience with higher engagement rates. However, the improvement in experience relies on trust. This power needs to be wielded carefully by both advertisers and publishers alike. If not, the damage could be far greater than any banner ad to an advertiser.

For example, look no further than the negative backlash when the Atlantic published a Scientology piece in a native format that made it resemble a journalistic entry:

After a huge outcry against the article and a day of relentless mockery on social media and even in The Onion, the Atlantic removed the sponsored content and apologized to its readers.

The litmus test for most native advertising campaigns should always be: Will my readers naturally share this content? In the case of religious propaganda, the answer for the Atlantic was clearly negative. Native advertising campaigns must be well thought-out and matched with the appropriate audience; otherwise, the advertisement cannibalizes the trust of the end user and (eventually) native advertising engagement rates hit rock bottom.

Even though it sometimes goes wrong, when native advertising goes right, it is impressive enough to be used as a model for not only killing the banner ad, but all outdated forms of online monetization in general. Both closed and open publishing platforms are attempting to find a model for native monetization that works. Facebook even recently experimented with allowing the public to send Mark Zuckerberg a private message for $100. If Facebook does in fact successfully begin monetizing private user messages, I wouldn’t be surprised to see an uproar demanding a revenue share from its users.

The holy grail of advertising is creating a positive relationship between the advertiser, publisher, and end user. Currently, there is no winner in native advertising: It will be the company that has the most formats, the largest inventory of sponsored content, and the ability not to sell out early with poor quality content.

Sponsored, poor quality content is the forbidden fruit of advertising because, yes, it pays, but it also cannibalizes the reader’s trust. If people don’t trust an ad, regardless of how native it is, the engagement rates will fall to that of the traditional, annoying, intrusive ad.

Francisco is the co-founder and CEO of Virurl, a paid content distribution platform with over 115,000 influencers and publishers. VIRURL helps small and large content creators such as Funny or Die, Vice and Sports Illustrated find the right audience.

Photo credit: x-ray delta one via photopin cc