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There’s a battle being waged in the online marketing world, and it’s caught advertisers and publishers in the middle. The instigators in question are none other than the adtech tools, services, and platforms that are all jockeying for attention and marketing dollars.
In 2015, it’s estimated, digital will account for just under 30 percent of the $187 billion being spent on advertising in the U.S. The real interest should be in the the breakdown of this amount and where most of it will be spent. One of the fastest growing segments of online marketing is native advertising, in which spending levels should reach $7.9 billion this year and ultimately $21 billion in 2018.
Dan Greenberg can see that trend coming — in fact, he’s betting on it. His business is native advertising, and as the founder and CEO of Sharethrough, he’s been spending the past eight years evangelizing this type of ad placement to publishers and advertisers to show how it can move past all the noise and capture the audience’s attention. In an interview with VentureBeat ahead of the company’s fifth NATIVE Summit, he explains why he’s determined to make an impact in the space.
Ads that respect the audience
“There have been two paradigm changes in advertising,” he said. “The first being the Internet, where we moved from print and magazine to digital, which birthed Google. The second was more subtle, and that’s about self-respect and choice, not interruption — this is what birthed Facebook.”
If you’re not familiar with native advertising, it involves ads that fit in natively in the stream of whatever the audience is reading. “Instead of being foreign objects, it’ll appear as features in the fabric of the site itself,” Greenberg told us. “It’s about preserving publishing with ad models that are built on foundations that will last instead of forced engagement and interruption.”
“Traditional ads were built on the premise of interruption, where you can steal someone’s time and show them your ad,” he explained. “It works on TV, but there’s a world of people who are uninterruptable. If you can’t force people to pay attention to your brand, you need to earn it. Every self-respecting platform has said no to traditional advertising.”
Native advertising, Greenberg contested, fits into the needs of the brands: “It’s not that banners don’t work, but the key is that people read native ads. They consume it as content, they engage with it, and there is cognitive value derived from it.”
The fight for independence
Since its founding, Sharethrough has grown a great deal. It now has a team of about 180 people and has offices in San Francisco, Chicago, New York City, and London. Greenberg said that the company is looking to expand its base of operations more internationally, either through continued hirings or by acquiring companies.
“I’m happy with growth, but we can grow faster,” he told VentureBeat. “We had responsible growth in the past, and we’re building a long-term independent viable company.”
Today, it has approximately 500 customers, including some big technology companies and Fortune 200 brands. It also has more than 400 publishers that it supports and is continually looking to better understand audience behaviors — the company hired a neuroscientist last year to better understand what people think.
Sharethrough is profitable, said Greenberg, and all of its return from the past year went back into the company to spur growth, specifically with people, technology, and strategy.
The phrase “independent viable company” was repeated throughout our interview with Greenberg. He strongly believes that amid all the consolidation taking place in the adtech space, there’s room for an “independent alternative to Facebook and Google.” Greenberg doesn’t want to serve native ads on sites owned by these tech giants. Instead, he wants to service the rest of the Web.
“Big publishers are seeing Facebook and Twitter coming and see a disruptive force,” he said. In other words, as these social networks adopt native advertising models and find success in it, publishers are getting the needed motivation to disrupt themselves.
When asked his thoughts about recent consolidation moves made in the adtech industry, such as Verizon’s purchase of AOL, Facebook acquiring LiveRail, Yahoo snatching Brightroll, Oracle snagging Datalogix, and Twitter picking up MoPub, Greenberg remained firm that Sharethrough would still be an independent entity in the industry.
But how long can Greenberg keep up the “independent” message? He admitted to VentureBeat that he has been approached by potential suitors, but followed up with, “Any good company that creates differentiated value in this emerging market has all sorts of acquisition activity around it. We don’t need more funding to be acquired. We want to build a strategic company.”
Crowded field: can there only be one?
If Greenberg is boasting a lot, it’s probably because he really thinks Sharethrough has the market advantage. But it’s certainly not alone in trying to sway advertisers and publishers to get in deep with native advertising. Others in the space include Outbrain, Taboola, AdsNative, TripleLift, Nativo, Instinctive, and Hexagram.
But Greenberg ignores all the talk about competition. “I don’t think it’s relevant or helpful to think about what other companies are or aren’t doing,” he said. “I think it’s relevant to think about what our customers are thinking.”
Sharethrough is not going to be the end-all-be-all solution for an advertiser’s or publisher’s online marketing campaign, and it doesn’t want to be. “I don’t think that there will be one company to rule them all,” said Greenberg. Marketers need to ensure that the service they’re using meshes with their goals. Greenberg emphasized that it’s important to know which software is going to last, and also what powers the publisher’s site that they want to be on.
The future of native advertising
Native advertising has spread from the Web to the mobile device. But what about the next frontier: wearable devices?
With wearables, people can opt into offers and receive vibrations when they walk by a store, but Greenberg thinks it won’t be a notification that pops up. He thinks that we’ve arrived at a place where modern platforms will start to have ads that fit in respectfully and not be shown in an “annoying way.”
Of course, this might be all wishful thinking by Greenberg. Sharethrough doesn’t currently support wearables, but it is thinking about the possibilities and how native advertising could work in the connected TV space.
He further elaborated that with wearables and the connected TV space, Sharethrough is more in a “customer discovery” phase and that the company was more interested in scaling its existing operations on web and mobile.
In the end
Sharethrough continues to be a behemoth in the native advertising space. Could this ad type solve advertisers’ and publishers’ need to engage readers? As long as the ads are respectful, the native format may last, but already many dislike the concept.
It’s worth also noting that while there’s hype around this ad type, it’s not without scrutiny. The Federal Trade Commission (FTC) has investigated native advertising in the past, cautioning advertisers that the agency would enforce its rules against misleading advertising. FTC chairwoman Edith Ramirez said at the time: “By presenting ads that resemble editorial content, an advertiser risks implying, deceptively, that the information comes from a nonbiased source.”
And the FTC isn’t the only one questioning native advertising. Last year, NPR host Bob Garfield penned a piece where he also disputed the rationale behind this ad type, saying:
If brands are so confident about the quality of their “content,” why don’t they proudly slap their name on it instead of camouflaging it to look like third-party mediated editorial?
There is no justification for misleading readers, least of all ad efficacy. At stake is the trust earned by the publication over its entire lifespan.
So while Greenberg thinks that native advertising is the optimal thing for advertisers and publishers, it’s not without its critics. It’ll help make publisher sites appear cleaner instead of spammy with all the banner ads, but that could also make readers more suspect about clicking on anything on the site for fear of being directed to an advertiser’s site.
To get a better understanding of the native advertising issue, we leave you with this video from Last Week Tonight:
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