As magazines and newspapers moved online, publishers have had to adapt traditional advertising to this new context. However, recently consumers have become increasingly annoyed by the disruptive nature of banner ads, pop-ups and video commercials. In response, many consumers started to use ad-blocking software in their online interactions. It is against this backdrop that publishers and advertisers have to look for other innovative solutions to monetize their digital offers. This is where “native advertising” comes into play: companies are moving from the traditional banner ads and investing more into this new form of product promotion that is more naturally blended with editorial content.

But do audience accept this new type of advertising? Is it easy for them to recognise editorial content from branded content? When they discover that content has been sponsored or placed by an advertiser, do consumers feel deceived?

Below you can read a summary of the article ‘Attitudes to Sponsored and Branded Content (Native Advertising)’ from the 2015 Reuters Institute Digital News Report which was written by Shaun Austin, the Director of Media Research at YouGov and Nic Newman, Research Associate and co-author of the Digital News Report at the Reuters Institute. This essay provides figures from qualitative and quantitative research into order to determine how advertising is perceived by customers. The research was mainly conducted in the US and the UK.

Native advertising for beginners

Branded content is not a new phenomenon. Advertising has been crucial to the business models of newspapers and magazines for a long time, but with the shift to digital and the impact this has had on consumption patterns and the willingness of audiences to pay for news, publishers have struggled to come up with innovative solutions.

In recent years, platforms such as Twitter, Facebook and Buzzfeed offer great examples of how to effectively use native advertising content. Buzzfeed especially has learned how to blend native advertising into their other content, a feat that has caught the eye many venture capitalists, who have noted the long-term business potential of this strategy and are investing significant capital into the site. Additionally, Buzzfeed seems to have developed a format, with its use of listicles and quizzes, to create an environment where native advertising is appreciated by consumers, such as the Sauza tequila sponsored post on the site. Next to private enterprises publishers are also trying to adapt this approach of product promotion in their digital offers. In fact, some publishers have set up their own studios in order to create branded content for their websites (for instance T Brand Studio or Guardian Labs).

What do people prefer: traditional or native advertising?

According to statistics from Austin’s and Newman’s research, consumers today view traditional online advertising, like banners or videos, in a negative light. One respondent made the following remark:

‘The most intrusive advertising I encounter is on the website for my local paper. Huge pop up videos before you can access content. If they weren’t auto playing they wouldn’t be so annoying.’ (Alain, 31, UK).

Even though customers agree that advertising is an inevitable part of getting free digital content, they continue to have a negative perception of adverts, to the extent that the use of ad-blocking software has increased. In the UK, ad-blocking software on laptops or desktops are used by 34% of people and 7% of consumers have added ad-blocking software to their mobile or tablet devices. In the US these numbers are even higher (desktop/laptop 41%, mobile 11%, tablet 7%). Looking at these numbers we can conclude that both advertisers and publishers need to find another way how to reach audiences in a way that blends seamlessly into a consumers’ online experience. It is here where branded or sponsored content can serve as an appropriate solution, since its aim is to bridge entertainment and advertising. Thus, instead of the traditional disruptive forms of advertising people are seeing adverts presented alongside editorial content.

Hidden behind curtains?

While this seems like an ideal solution, many consumers react to branded or sponsored content negatively, saying that it can be misleading. Therefore, advertisers have to find the right balance between ‘native’ product promotion and consumer trust, without crossing the line to deceptive content. For instance, if content isn’t clearly marked as “sponsored”, a consumer who reads an article and only mid-experience realises that it was actually an advert, then he or she could feel deceived. The challenge here is that the ability to recognize paid content is very individual, for instance age plays a very important factor here. In any case, paid content should be clearly labelled as ‘paid for’, ‘sponsored’ or ‘promoted’.

Another factor worth considering in order to maintain consumers’ trust is the right placement of paid content. A vast majority of people among the researched group agreed that some areas should be excluded from branded content, such as world news, politics and financial news. Overall, the point of view was that native advertising included in these webpages might have damaging impact on the reputation of news organisation.

‘If the news brand wants to be seen as independent and trusted then news, politics, business should not be influenced by commerce.’ (Emily, 27, UK)

On the contrary, a welcomed place for branding content are webpages about lifestyle, entertainment, fashion, travelling and so forth. On these sites, consumers are often more open to getting adverts.

Nowadays only 14% of consumers in the UK like seeing branded content. However, this numberdoes not take into account the age factor, which influences a consumers’ receptiveness to sponsored content. After all, it is logical that members of the digital generation will be more likely to enjoy this type of content than people who rarely visit Buzzfeed.

Lessons learned

Traditional types of advertising are having significant difficulties in developing positive relationships with consumers. Companies have therefore shifted their approach and started to introduce branded content, specifically native advertising. Generally, there are two types of sponsored content: 1) Practical and useful but still funny (can be found on Buzzfeed as a listicle or quiz); or 2. More serious, informative with clear link between the brand and the editorial content (for instance, the online versions of a broadsheet newspaper: New York Times native content for Netflix’s “Orange is the new Black” series).

In order to utilize this type of advertising effectively, publishers need to understand that consumers want to see clear labelling and signposting of paid content. When consumers are aware of native advertising, they do not feel deceived and are more likely to read the content and spend more time on the page. Thus, advisers should try to maintain a balance with how to promote content while maintaining consumers’ trust.