More and more sites are moving towards native ads instead of avoiding site monetization or relying on annoying pop-up ads. But what is native advertising? Why are it appearing online and in apps?
In this article, we define native advertising and discuss how these ad types can monetize your website/app experience.
Native advertising means integrating ads seamlessly into your feed, homepage, search results, and more. Often, these native ads look identical to your standard content, except with an added “sponsored” or “promoted” tag.
The pioneers of native advertising are social media companies like Facebook, Instagram, Twitter, etc. Their promoted posts appear as users scroll through their feeds. However, other industries are moving towards integrating native advertising into their sites/apps. WeTransfer (a file transfer service), for example, shows skin ads on their homepage. These promotions allow WeTransfer to monetize their free users without disrupting the user experience. Additionally, others — from fintech to marketplaces — have built native ad platforms for sponsored deals, promoted listings, and other featured content.
Klarna, for example, recently integrated sponsored brand ads into their mobile app, enabling advertisers to promote deals, products, and stores. The ads look identical to the organic content, except for the “Ad” tag. This provides Klarna with a new high-margin revenue stream, while still maintaining a user-friendly experience. Native advertising isn't reserved for billion dollar companies, though. Even small companies implement it to drive additional revenue.
For instance, Chairish is a marketplace for buying and selling antique furniture. They created a new revenue stream by letting vendors promote their listings, similarly to Amazon’s and eBay’s ad platforms. These native ads appear simultaneously alongside organic search results. Native ads don’t have to be rectangular ads that blend in either. Allrecipes, for example, displays sponsored ingredients from local grocery stores within its recipes.
Programmatic ads are not the future of ad monetization, and native advertising verifiably drives revenue without hurting user experience.
As Facebook reported, native ads benefit both the publisher and advertiser:
While Facebook is unique in its size and data, the success of their native advertising business can’t be understated: as The New York Times reports, “Advertising revenue, which continues to be the bulk of Facebook’s income, rose 56 percent to $28.6 billion in Q2 2021.” Similarly, Amazon reported $7.8B in their “other” category for Q2 of 2021, most of which is made up of ad revenue, like their native sponsored listings. They accounted for 3% of total US digital ad revenue in 2020, and the company is projected to take a higher share in 2021. In other words, native advertising allows you to monetize your traffic without hurting the user experience. It’s a win-win-win. Advertisers love the more engaging ad units; users aren’t inundated with terrible programmatic ads; and you now have a high-margin revenue stream.
There are three ways to integrate native advertising into your platform: a homegrown ad product, a third-party ad server, or an ads API solution.
Here, you’d build out a large tech team and design the ad product from scratch. By building it from the ground up, you have full control over its scope and vision. Facebook, Amazon, and Pinterest took this route.
The final option is building the ad platform yourself, but using ad APIs to speed up the time to launch, similar to building your communications solution on top of Twilio. With these tools, you integrate via APIs to get instant access to the building blocks you need to design a native ad product, including ad decisioning, tracking, targeting, management, and reporting.
Atom Tickets, for instance, uses Kevel’s ad APIs to insert skin ads into their homepage, creating a visually-appealing and non-invasive user experience.
Client-side ad serving involves inserting ad code directly onto the page/app. These tags then ping the ad tech vendor directly, who picks the winning ad and inserts it wherever the code was placed.
Most third-party tools — like GAM and Outbrain/etc. — do not offer a server-side integration. If launching pseudo-native placements quickly is your goal, you can use these tools, but they aren’t advised if you want to build a full-featured, truly native ad product.
Instead, besides building the platform yourself from scratch, your best option is an ads API partner, who is server-side by default.
The United States’ FTC requires publishers to differentiate ads from organic content. Here’s a quick checklist to see if your native ads fit within FTC guidelines:
Are they distinguishable? In this WeTransfer example, the skin ad for American Express is obviously an ad, not standard content.
Did you provide disclosure? If the native ad is not distinguishable, is it labeled using non-ambiguous terms and without any blockage?
For more information, see our article on FTC native ad compliance.
The native advertising sector is expected to be worth $400B by 2025. Advertisers are increasing their native ad budgets, hoping to capitalize on the higher engagement rates of these ad units. Now is the time to build an ad platform that supports this.
Your ad revenue is dependent on many factors, including your traffic size, product, amount of ads, fill rate, etc. Below provides our analysis of average CPMs for various native ad units, as well as educated guesses on the CPMs that major ad platforms drive. (“CPM” stands for “cost-per-mille” and refers to the revenue you make for every 1,000 ad impressions).
|Ad Unit||Average CPMs|
|Retail Media||Varies; Amazon at $2.50, Walmart at $20|
|Sponsored Listings (B2B or B2C Marketplace)||$5-$15; niche $50+|
|Sponsored Listings (P2P Marketplace)||$2-$5|
|Social Network Native Ads||Most: $2-$8; niche: $30+|
|Utility Publisher Native Ads||$5-$10; niche:$30+|
|Podcast Ads||$8-$25, depending on audio length|
|Ad Exchanges (Video)||$10|
|Sponsored Listings/ Retail Media||eCPM|
It should be noted that these values are all much higher than standard programmatic banner ads -- which can average $0.50 - $1.50 -- highlighting the great opportunity every publisher has in launching or switching to native advertising.
If you’re interested in launching native advertising — and don’t want to wait years — we’d love to chat. Kevel is the industry leader in ad APIs, and we’ve helped other brands like Klarna, WeTransfer, Slickdeals, and Ticketmaster integrate high-revenue native advertising in just weeks.
Sarah is an experienced writer with a software background, allowing her to translate between ad tech experts and lay readers. As Kevel's Associate Product Marketing Manager, she helps broadcast new products and features.