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What do E.T., Jimmy Kimmel, Mashable and The Washington Post have in common?

They all used native advertising.

Also known as sponsored content, native advertising allows businesses to include branded content that resembles journalistic content in a publication’s pages.

The paid content will never match the credibility and value of earned media, but it can still amplify earned or owned messages, according to Edelman Chief Content Strategist Steve Rubel.

In Steve’s Sponsored Content Report he breaks down the ins and outs of native advertising.

This article highlights Steve’s findings about why native advertising’s popularity has surged and how brands and publications use it.

Why Now?

Native advertising has existed in some form for decades.

Recently, though, major news publications that had once shunned branded content from its pages have become open to it.

Here are three reasons why:

1. Vanishing revenue streams

It’s no secret that U.S. news media outlets need new sources of revenue.

Even since the beginning of 2013, advertising prices have dropped sharply because of increased content accessibility, fewer banner clicks due to increased mobile usage, and digital ad exchanges providing real-time ad inventory trading.

At the same time, few consumers have shown a willingness to pay for news.

2. Evolving reader behavior

Twitter and Facebook pioneered chronological news consumption with its layouts that include ads and personal content alongside editorial news.

People generally accept advertising in social networks (and search engines) because they understand that’s the cost of a free service.

Having paid, owned and earned content next to each other has potentially changed how audiences feel about “the permeability between advertising and editorial (e.g. the so-called church-state wall),” Steve writes.

Wrestling with native advertising? Register for Steve’s free webinar now!

3. Brands focusing on content

B2C Content Marketing - Native AdsFifty-five percent of B2C content marketers said spending on content would increase over the next 12 months, according to a 2012 study.

The continued growth of content marketing—which allows marketers to tell their brand story on their own websites, mobile apps and social channels—creates stiff competition for prospects’ attention.

Marketers joining forces with news executives “may enable sponsored content to thrive,” Steve writes.

What Do Native Ads Look Like?

Just as content types differ, so do the types of native advertising. Steve’s research has show three common approaches.

Steve suggests that more forms of native advertising will emerge as the practice becomes more widespread, ethical dilemmas are resolved and publishers differentiate offerings.

Here are three of today’s most popular methods:

1. Paid syndication

Currently the most common format, paid syndication places clearly labeled branded articles, videos, slideshows and infographics in the news section.

Paid syndication has potential pitfalls, though. Clearly labeling content as a “sponsored post” could drive readers away.

Other times, it can frustrate readers. In January 2013, The Atlantic published native advertising by The Church of Scientology and came under fire as its audience found it too self-serving. The backlash forced them to take down the article 11 hours later.

AOL, Slate, NBC News, and Gawker Media are some news outlets that run paid-syndicated posts.

2. Paid integration

Steve compared this tactic to TV product placement, where a publication weaves a brand into a narrative.

BuzzFeed, for example, uses this tactic by creating a post centered around a “sponsor’s ideals” with a brand message weaved in, Steve says.

Other publications will integrate native ads into posts but do so more overtly. For example, a top 10 list will have a sponsor listed as number 11.

3. Paid co-creation

The future of native advertising may be paid co-creation, Steve says. It has the potential to benefit readers, marketers and publishers while being “ethically safer.”

With the tactic, a brand funds the development and staffing of a new site, news section or app. Though a marketing team guides the new platform’s direction, the publication typically controls the editorial content.

Mashable, for example, has teamed its content creators with marketers to develop a series of feature articles that relate to the brand’s values or themes.

Conclusion

Steve writes that native advertising continues to evolve and provides the PR industry an opportunity to expand its relationship with media outlets. However, unknowns, including solutions to ethical issues, remain.

The onus of resolving the pitfalls of native advertising does not belong to publishers only, though.

“The PR industry can play a key role in the development of this new advertising format,” Steve writes. “Experimentation should be encouraged. And just as the social media revolution expanded the profession’s remit, so may sponsored content – but perhaps in a much more profound and accelerated way.”

BY BRIAN CONLIN