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Pricing Native Advertising - BIA/Kelsey Presentation to LMA Native Advertising Summit
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Transcript of Pricing Native Advertising - BIA/Kelsey Presentation to LMA Native Advertising Summit
The Local Media & Advertising Experts
Pricing Native Advertising
Rick DuceyManaging Director
BIA/Kelsey
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Topics
Native ad ecosystem
Forecast and drivers
Does native advertising work?
Pricing metrics and strategies
Case study
Recommendations
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Native Ad Ecosystem Has Many Players Trying to Earn a Living
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Where Do Native Ads Occur?
Social networks. Facebook’s News Feed ads, YouTube’s Promoted Videos and Twitter’s Promoted Tweets are among the most popular formats, but others such as Pinterest, LinkedIn, Google+ and StumbleUpon are ramping up in this area.
Mobile. A key driver behind the success of native advertising has been the growth of mobile usage on platforms such as Facebook, Twitter and Pandora.
Digital media. Native implementations include BuzzFeed lists, sponsored articles on Mashable and The Huffington Post, videos on CollegeHumor and real estate listings on Trulia.com.
Traditional media. Publishers with active native ad programs include The New York Times, The Atlantic, Hearst, The Guardian and Vanity Fair.
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Social Native Advertising Growing to $9.4B by 2018
Source: BIA/Kelsey, 2014
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Native Advertising is #2 “Most Important Digital Revenue Source”
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So…Does native advertising work?
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Source: BIA/Kelsey Local Commerce Monitor, Wave 17, Q3/2013 (and prior waves, if relevant). Methodology: Online panels.
ROI Assessment of Media Used For Advertising (1 of 2)
Video
You
Tub
e
Faceb
ook P
age
Onlin
e Cou
pons
Googl
e
Onlin
e Ban
ner/D
ispla
y
Video
Web
site
Other
Soc
ial
Emai
lIY
P
Mob
ile O
ther
Link
edIn
Spec O
nlin
e Dir.
0%
10%
20%
30%
40%
50%
18.8% 19.3% 20.0%
13.6%
20.2% 18.9% 19.5% 18.8% 18.8% 17.8%13.3% 12.6% 13.2%
15.8%
26.1%
13.3%
18.6%
11.9% 12.8% 12.2% 12.3% 12.1%10.9%
13.3%11.3%
7.7%
Excellent 10-19x Spend Extraordinary Over 20x Spend
Q107
ROI from Native Platforms
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“You are times more likely to survive a plane crash than click on a banner ad.”
-SolveMedia
475.28
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53%of users say they are more
likely to look at a native than a banner ad
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32% would share a native ad.
18% more (52% vs. 34%)of native ad viewers show purchase intent.
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Pricing Factors1. Campaign goal – branding, direct response
have different metrics and value points2. Content type – SMS, video, text3. Channel – desktop, mobile, tablet4. Programmatic platform vs direct selling5. Packaging and bundling – increase AVO
(average value of order)6. Competitive pricing – market factors,
easier to manage with bundling7. Value pricing – easier to achieve with
bundling8. Cost-based pricing – difficult to fully
attribute costs, but probably leaving money on the table.
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Pricing Metrics and Strategies CPM – common currency but doesn’t capture key
value point of social native advertising of social “shares” and quality of impressions (accidental click versus reading article, sharing with friends)
CPE – engagement metrics are higher value for advertiser but need to standardize on these (time spent, amount read/watched, sharing, other secondary actions)
Sponsorships – Pricing more of an art than science, value-based pricing but may end up with higher CPMs vs. other pricing models, may not be sustainable.
Bundling - Value-based pricing but if used effectively can achieve client goals by matching inventory to consumer purchase journey stage in funnel
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How Are Publishers Pricing Native?
Sponsorship41%
CPM/CPE18%
Packages41%
Source: Polar, 2014
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$4.58CPM for Facebook sponsored stories
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per campaign is typical for BuzzFeed (~$5 CPM)
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$100K
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Case Study: Houston Chronicle
Created own digital agency (AmuseDigital.com)
Sell packages for 3 month minimum @ $7K/mo
Move to $12K/mo within first year but annual programs in $250K range
Includes assets, promoting in print
Partnering with Outbrain, Navio
Native ads generate “7-figures” annually
Stephen WeisEVP, Digital Revenue
Houston Chronicle
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Case Study: Houston Chronicle
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Recommendations1. Go for Life Time Value (LTV) with clients by
bundling inventory to match their campaign goals to Your inventory and its capabilities Creative execution related to stage (e.g, branding vs
direct response) Long term contracts with committed clients Appropriate calls to action for low funnel native ads Appropriate metrics to funnel stage
2. Appropriate pricing metrics for stage in funnel CPM more for branding CPE for lower funnel ads Sponsorships for higher funnel
3. Check back with the client – is it working? A/B testing Fine tune the campaign
The Local Media & Advertising Experts
Questions & Comments:Rick DuceyManaging [email protected](703) 818-2425
© 2014 BIA/Kelsey. All Rights Reserved. This published material is for internal client use only. It may not be duplicated or distributed in any manner not permitted by contract. Any unauthorized
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