IZEA CEO On The Benefits, Pitfalls Of Native Advertising

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IZEAIZEA, a company that connects social media content creators with brands, recently rolled out a cloud-based "Sponsorship Marketplace" to help advertisers automate content distribution and measurement. IZEA's network is comprised of over 50,000 registered advertisers and agencies. Some of the company's agency partners include Mindshare, Starcom, Initiative, Ogilvy and Hill Holliday.

Founder and CEO Ted Murphy spoke with AdExchanger about the state of native and social advertising, and the potential pitfalls that native approaches could present.

ADEXCHANGER: What are agencies and brands doing with paid social and native advertising?

TED MURPHY: We’re seeing a big move toward short-form content. Whether it’s status updates or short Vine videos, photos or Instagram videos, art of that is because there are more content creators out there and it’s easier to produce (short-form content) rather than writing long posts or making in-depth videos.

I think there’s a challenge that agencies and brands are dealing with. On one side, there’s the display network that can offer a huge amount of tonnage and really achieve ad rates, but at the end of the day the engagement is very small and there’s usually zero pass-along value. I think what brands are starting to recognize is that they’ll likely be paying higher rates to do any sort of sponsored content or native advertising, but if it is done in the right way they have the ability to take advantage of the sharability of the content created.

What challenges do you see with native advertising? Are industry players still reluctant to devote budget? 

If you had asked me that question two years ago I would have said yes. What we’re seeing now is that everyone is rushing into native advertising as fast as they can. The challenge is more around scale and workflow management. True native, in my opinion, is custom. It’s unique content in the voice of the publisher or in the voice of the content creator and scaling that is more difficult.

I’ve been really impressed with what The New York Times has done with their brand studio. The Netflix piece they did for Orange Is The New Black was incredibly well done. But obviously, there’s a tremendous amount of production work that goes into that, producing it in the right way and making it have value to the user outside of the advertisement. That’s likely the biggest challenge in our space right now. You’ve got to make the transaction process as seamless as possible and you’ve got to be stacked up properly to produce the content on the other side.

Are agencies cutting more content deals at the expense of display dollars?

Absolutely. We’re seeing much more of that. But when people say native advertising it’s such a loose term and what it means really depends on the day. If you look at the early days of television it began with soap operas and heavy content integration and product placement. Then everything went to spots, thirty-second spots, sixty-second spots, etc. Now everything is coming back full circle on television. In the same way, you’re starting to see this movement back online where things are becoming much more customized. It’s becoming much more of a sponsorship model and people are really depending on the creation of custom content.

Different publishers take different approaches to native, but the publishers that I believe are really doing it right are the ones whose content is forever part of their site’s property. That creates media continuity for the brand where they’re continuing to generate traffic or views for months after campaigns run. If you compare that to display advertising, the content disappears the second you stop spending. The content strategy helps to build a long-term, sustainable marketing effort. Brands are getting exposure in many different ways, as the content becomes part of the fabric of the site.

How does IZEA’s platform measure native ad success and what metrics do you use?  

We’re looking at traditional advertising metrics like page views and clicks. We also layer on social metrics that we’re able to get from each of the social platforms. On Instagram it’s how many “likes” or comments and on Twitter it’s how many retweets or replies. Those are factored in as additional metrics. We also (use) pixels and cookies so that we can track the ultimate conversion rates long-term. If you’re doing a sponsored tweet campaign and have a thousand people tweeting, each one of those is getting a unique tracking URL that allows us to track them all the way through to conversion.

Who does IZEA compete with?

I get asked that question all the time. Virtually every publisher and every broadcaster out there is competing with us, in some way, because they’re all offering posts and tweets and videos. Our goal is really to be the platform. We have our exchange platform where third parties can set up their own social sponsorships through our system, through all of the major social channels much in the same way that DoubleClick enables major publishers to serve display ads. We’re doing the same thing for all sorts of sponsored content. We’re in a weird spot in that everyone competes with us but we don’t have a direct competitor.

What can you say about return on native advertising?

It’s always going to vary depending on what the advertiser is looking for. The engagement rates that we tend to see are mid-to-high single digits all the way up to double digits. If you compare that to the performance of display, it’s an order of magnitude higher than what you see in traditional display units. That’s not unique to us, either, any sponsored post or sponsored tweet will show a higher engagement rate and that’s why brands are flocking to native.

The number one thing that we hear from our clients is that they want to be sure the content produced is high-quality. They want to be sure that the publisher they select is a good match for their brand. Time and time again we see that brands prefer higher quality content to more exposure, if they had to pick.

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