BIA/Kelsey is partnering again with the Local Media Association to produce this year’s LMA Native Advertising Interactive Summit next July 15-16 in Washington, DC where we’ll share our latest native ad forecast, insights about marketplace dynamics and trend lines of how we’re seeing this sector evolve. (Note early bird discounts offered through June 15th). The plan overall is to offer a mix of data, best practices, hands-on workshops and take-home ideas for getting your native ad business into higher gear.

The program covers a lot of ground in just a day and half. Nancy Lane, LMA president kicks things off with white board session where she’ll be joined by several other speakers to Schurz Communications’ Kerry Oslund, VP of Publishing and Emerging Media, will share a disruptive new approach to native advertising they’re finding to be successful. Of course, Jeff Bezos’ Washington Post has done a lot of innovation around brands and native advertising as we’ll hear from Kelly Andresen, Director of the WP BrandStudio & Planning who will share winning case studies. You’ll hear speakers from Advance, Gatehouse, Desert Digital and Dispath among others discussion pricing and packaging native ad campaigns, content strategies, outsourcing, selling native effectively and since it’s Washington, we’ll also hear from Laura Sullivan, a staff attorney with the Federal Trade Commission who’s following native closely.

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One the first day of the BIA/Kelsey NATIONAL conference, the women attendees wrapped up their day at BIA/Kelsey’s special networking session “Women Leading in Local.” Our speakers for this session were Tina Paparone and Angela Giovine, founders of Happenings Media. Angela and Tina shared their story and discussed techniques for successfully striking authentic chords within communities and keys to their revenue success — marketing solutions beyond the banner including sophisticated native advertising techniques.

BIA/Kelsey’s Celine Matthiessen with speakers Angela Giovine and Tina Paparone

Here are Tina and Angela’s four rules to live and work by:

1. FOLLOW YOUR PASSION: They say that a man (or of course woman) that follows their passion never work a day in their life. Bucks Happening actually didn’t start as a business; the website was simply a hobby, while we worked to build a different business. However, soon after launching, as readers were discovering the website, we received a call from a local print magazine who wanted to write a story on us. As we sat at the coffee shop trying to steer the conversation towards our “REAL” business, it became clear that 1) There was a real need for Bucks Happening and 2) We better start making money on it or stop spending so much time working on it! We quickly went to work on developing a business strategy.

It was at one of our first meetings with an advertiser that we had a moment of clarity. We were meeting with a local coffee roaster and cafe owner who was frustrated that he didn’t understand how to get his message to the community nor did he have the time to figure it out. As I listened to his story, I knew, “We can help.” We didn’t sit there and say “let’s be innovators in native advertising.” We simply said, what the best way to tell locals about this amazing coffee. And that included storytelling.

2. BOOTSTRAP: We both entered into entrepreneurship with our eyes wide open. As the famous start-up incubator Tech Stars likes to boast, it’s essential for the early-stage entrepreneur to remain “cheap to keep alive.” While it may not sound as sexy to start a business without millions of dollars of financing, doing things our own way, on our own dime, at our own pace allowed us to discover a path to success. Now we have a scalable model without having the collateral damage that a heavily funded company may experience. Moreso, we can take our bootstapping mentality and apply it to expand effectively.

3. IT’S OKAY TO BE AN OUTSIDER: We did not come from the media world. We are not journalist. But being outsiders allowed us to think outside the box. Our content, advertising, and business model were designed to fulfill a need without any preconceived notions of the way things had to be done. Especially in a time when the media world is shifting so dramatically, our ability to identify a problem and approach it with a fresh perspective is one of our biggest assets.

4. FOLLOW THEIR PASSION. Yes, our passion for what we do is crucial, but it isn’t just our own passion that drives growth; It’s harnessing the passion of others. This is a philosophy that we incorporate into almost everything we do — the articles we write, the campaigns we design, and the publishers that we support.

One great example of this is the creation of The Happening List, our annual People’s Choice voting competition, which is one of our most successful initiatives to date. We allow readers to vote for their favorite local people, places, businesses, and events. Through careful design and planning, this contest helps generated hundreds of thousands of email subscribers, massive branding awareness, and thousands of advertising leads.

BIA/Kelsey organized a special networking session during our LEADING IN LOCAL conference in the Fall of 2013. The initial meeting was such a success that the Women Leading in Local session has become a permanent installment at all of our conferences.

BIA/Kelsey’s MacKenzie Lovings at the Women Leading in Local networking session

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Like George Costanza, Deseret Digital Media (DDM) likes to separate its worlds. This is a longstanding debate among media companies about whether or not new digital products and divisions (and correspondingly, ad sales teams) should be independent of the legacy business.

Having these new products/divisions under the operational control of the main organization is what often happens, usually for reasons of control or inertia. But DDM CEO Clark Gilbert believes that this is a fatal mistake. He showed us why during the opening keynote at ILM ’14. (video below).

This furthers Gilbert’s message that has origins in research from his mentor Clayton Christensen. He shows how only 9 percent of companies facing industry disruption managed to grow revenue past the industry peak. Every one of those launched separate divisions to innovate new products (including DDM).

Advantages include allowing new divisions to have their own sandbox and avoid a classic innovator’s dilemma (speaking of Christensen). Digital products won’t hold a chance if they can’t have the independence and autonomous decision making to move at the speed of their pure-play competitors.

Interestingly, the concept of separating worlds transcends operational control. Sales teams selling advertising around digital products should also be separated according to Gilbert. The sales aspects of this debate are central to a BIA/Kelsey white paper that will publish tomorrow.

And the product execution itself — such as native advertising as DDM demonstrates — should likewise be separated in terms of the talent that’s producing it. For example, there should be a church & state division between journalists at a newspaper, and the writers of paid content marketing pieces.

See the 10-minute highlight reel below. This mostly covers the “why”. As for the “how,” the full session was choc full of examples of how DDM is pulling this off. We’ll be back tomorrow with Part II, covering its tactics around things like mobile monetization and native advertising.

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During the first half of Local Media Association‘s Native Advertising Summit the obvious and frequently asked question of how exactly to define native advertising was the first topic to be addressed.

Native advertising sets itself apart from other types of advertising because it is “naturally embedded into a site’s content stream and, while clearly marked as an advertisement, is found to be more impactful than banner ads,” says Ron Josey, summit key note speaker and Managing Director at JMP Securities.  Or as Todd Handy from Deseret Digital Media put it, “it is in the content, engaging, and highly shareable.”

Once the “what” was established, next came the “how.” How does one participate in native advertising effectively? According to David Arkin, VP of Content at GateHouse Media, there are three overarching content goals when it comes to native advertising: it needs to make readers smarter, connect with them emotionally or offer them a solution for a problem.

So how do we accomplish these goals? Arkin answered this question with another list, First you need to establish a focus for your brand (articles, social posts, their site, your site, etc.). Then it is essential for the content to meet the standards of your newsroom. Quality is key. It is also important to produce interesting content that goes beyond the business profile and Q&A — it is not an advertorial. Finally, you need to work with a great company to help you accomplish all of this.

Now that we understand what native advertising is and have a pretty good idea of how to do it, the big question is, why do it? To put it bluntly: because it is effective. “Native ads have ten times the click through rate of traditional display ads,” says Josey, and “32 percent of native ads are shared as opposed to only 19 percent of banner ads.”

With stats like that native advertising is likely to explode in the future.

To learn more about native advertising and content marketing in general, check out BIA/Kelsey‘s latest insight paper Content Marketing: The New SMB Paradigm.

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BIA/Kelsey has released the latest wave of its U.S. Social Local Media Forecast for 2013-2018, and unsurprisingly, the two drivers accelerating advertising spend are mobile platforms and native formats.

The overall social advertising market will surge from $8.4 billion this year to $15 billion by 2018. That same year native will account for nearly two-thirds of all social advertising ($9.4 billion), and mobile will represent more than half of it ($7.6 billion). Native social advertising revenues will eclipse social display next year. Meanwhile, mobile will reach a similar inflection point with desktop in 2018.

Of course the two trends are closely correlated. Mobile use of social networks continues to grow, and as it does, the networks are building monetizable mobile-first experiences. Those ad concepts are predominantly (and in many cases exclusively) native formats that integrate in-stream into organic content.

Take Facebook as a prime example. In just over a year, the company has activated a non-existent mobile advertising business into now more than 50 percent of total revenues. This number will continue to escalate. The formats driving this growth are entirely native News Feed ads.

Compared to mobile and native, location-targeted social advertising is growing less dramatically, as many social platforms have been slower to introduce high-performing local solutions (i.e. more granular geo-targeting). Some still offer only brand advertising. However, BIA/Kelsey still projects locally-targeted social ad spend to grow from $2.4 billion this year to $5.2 billion by 2018, a 31.6 percent CAGR (compound annual growth rate). This projection could be lifted in future waves as a greater push into location targeting is made and more small businesses onboard.

BIA/Kelsey clients can access the full forecast here.

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There’s been lots of action on the Facebook front over the past few weeks. Most recent of course is the company’s quarterly earnings. The big story there is the continued march of mobile, now up to 59 percent of its ad revenues (see our recent mobile forecast).

Where things get more interesting is Facebook’s plans to continue growing mobile revs. Percentage growth naturally slows as revenues grow linearly from a small base to a larger one, as it goes with revenue growth (just ask Google). So the mobile strategy coming out of Menlo Park will be crucial.

It’s likewise important not to misinterpret what is going on at Facebook, as the company’s trajectory in mobile will provide valuable learnings for anyone else tackling mobile advertising (as we discussed on a recent analyst roundtable). Lots of tech reporting has missed the point though.

Someone Else’s Backyard

Attention has focused on two events: The Nearby Friends feature, and a Facebook “off-site” ad network, rumored to be announced at the upcoming f8 conference. These are each interesting in their own right, but there’s been too much link-bait fueled speculation to connect them.

Stepping back, Facebook’s mobile advertising happens on a few levels. They have native news feed ads within their flagship app, and a prospective ad network that would be off-site. The latter would use all of its data on users and target ads accordingly, but within third party apps.

Facebook had a pilot program for that already and then folded it to focus energy on its own native mobile ad efforts (people often forget this). Now the rumor is that they’ll relaunch some version of this off-site network. This makes sense and my prediction is that it will be mostly app install ads.

Facebook certainly has lots of good data for retargeting users within other apps. This would require tracking/identifying users, which can happen within its existing network of apps that use Facebook Connect. Authentication at the OS level — like Twitter’s deal with iOS — is even better.

But ultimately the beauty of an off-site network is to use all of this data and positioning to continue milking demand for mobile ads, without killing the cow. Instead of over-monetizing its own core user experience, it can do so in someone else’s back yard (albeit with a publisher rev share).

For the ad strategy itself, FB will have to translate its success with mobile news feed ads to other apps (this is where the punditry has fallen apart). In Facebook’s feed based interface, native ads work great. But most other apps don’t have the same scrolling real estate / inventory to work with.

So will it be traditional banners instead? That’s not a lot to get excited about, although there’s admittedly value in Facebook’s targeting capabilities alone. That will involve behavioral targeting, and potentially location targeting. But not the way generalist tech media would have you believe (yet).

All About Local… Kind of

That’s where the Nearby Friend’s feature comes into the media blitz. In the wake of its launch, it was discovered that Facebook is thinking about using the location tracking (core to the friend finder feature) to target ads in the future. Interesting but not likely tied to the prospective ad network.

Rather, any location targeted ads resulting from this will be applied to mobile news feed ads on Facebook proper. It could apply to a prospective ad network in the future but Facebook is very careful about rolling these things out — especially anything resembling a privacy minefield.

As for any location targeting they do for their own native news feed ads — if this does indeed roll out in the near term — it could have some benefits in adding location relevance to mobile ads. But there are also some challenges that most coverage so far has ignored.

1. News feed ads are more brand based at these early stages. The calls to action in those ads have been more about branding or downloading an app and other things that have less to do with location relevance or offline transactions. App install ads are in fact a huge chunk of Facebook mobile ad revenues and they don’t have a location targeting imperative. This could change over time but that’s what we’re dealing with now.

2. Most advertisers that have adopted Facebook’s mobile ad options are large brand advertisers as opposed to SMBs (as is the case with any new emerging media or ad product). Per the point above, they are more interested in reach and branding. Location targeting is great ad boosting relevance and ad performance, but it greatly impedes reach by segmenting audiences into tiny geographic pockets. And for many brand advertisers and agencies, campaign reach is a top objective.

3. For SMBs by comparison, there is obviously less emphasis on reach and more on targeting users that are nearby a store location. However SMBs are very hard to reach from an ad sales perspective. Everyone seems to ignore that fact when news like this comes out. Relatively few SMBs self serve and the rest require capital intensive sales resources to reach in the high-touch fashion that’s required. They often need their hands held. (See lots of rich SMB sentiment data in our LCM data).

The other potential route is to partner with a sales channel such as local traditional media companies who can re-sell Facebook ads to SMBs. That’s of course what Google has done (in different fashion) with third parties like local newspaper or yellow pages sales teams or pure plays like Reach Local.

There’s lots of good debate around this channel strategy. Screenwerk recently spotlighted a bearish attitude towards sales channels from Facebook local head Dan Levy. What it will do instead is unclear (go it alone potentially), but this will be a vital factor in Facebook’s ability to unlock local.

___________

We’ll cover this topic closely at our Leading in Local Conference in Atlanta, now just 10 days away. Email me for a discount code to register (mbolandATbiakelsey.com)

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Local B2B news sites always make sense to us. But they have largely been an exercise in frustration, with a lot of money being thrown at them to build local journalism and sales teams. Back in the late 1990s, sites such as Localbusiness.com ran through millions of dollars in an effort to quickly launch and dominate the space.

New players have come out in recent years with business models incorporating native advertising — content-oriented advertising that contextually fits with other content. One of them is Advance Publications’ Streetwise Media.

Initially launched as an entrepreneurial local Boston site named Boston Innovation (now BostInno), the founders have honed the model — including specialized news index technology that can automatically track news releases — and are now in several markets, including Boston, Washington DC and soon, Chicago. More markets are likely to come on board in the near future. Advance bought the company in 2012 and kept the team intact, seeing clear business synergies with its more traditional Business Journals, which are in 40 markets.

CEO and co founder Chase Garbarino tells us his rollout model is to enter a market and focus on the startup community and entrepreneurship. “Once we get an audience foothold, our publications develop,” he says.

Each city varies in terms of its editorial focus. “In DC, we have four full-time writers focused on advocacy, innovation and things like that,” he says. “In Boston, we’ve had a ton of success with the college vertical.” Advertisers have come to realize they need to do more with content marketing, he adds.

Streewise has an internal team that focuses on the native advertising sales, while BizJournals sells most of the company’s traditional display ads. The key, says Garbarino, is that the native advertising format enables the company to guarantee and sell engagement.

“It is not just impressions,” he says. “We can sell a half million impressions and guarantee one percent engagement; share content on LinkedIn and Twitter; and comment on it. It is not just used on the home page.”

The site’s technology also enables targeting around specific audiences. A campaign for Bentley Business School, for instance, focused on the value of having an MBA and was targeted to 20-somethings. The company does especially well with corporate workers and young working pros. While many B2B sites are focused on automation as a way to make them economical, Garbarino says that just won’t work. “The key to the model is having a local presence. You can’t do community and local news without being part of the community.”

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Native advertising — the insertion of contextually relevant advertising amidst other content — is viewed with suspicion by much of the ad community, which sees it as unscaleable, and perhaps the opposite of its drive towards programmatic (automated) sales.

During the Summary Panel today at the IAB’s Annual Leadership Meeting in Palm Desert, one hypothesis by moderator Terry Kawaja, CEO, LUMA Partners, playing devil’s advocate, was that “agencies cannot create the volume and quality of native content necessary to populate every native ad.”

New York Times Executive VP of Advertising Meredith Levien. rising to the bait, strongly disagreed. “Good native advertising puts the onus on the reader to decide whether to engage or not,” she said, noting that The Times, Buzzfeed, Forbes (her former employer) and others have set up native ad areas that are clearly differentiated from other content, and highly successful. “It’s not like we have (columnist) Thomas Friedman writing for Pepsi,” she said.

Facebook VP of Ad Products, Monetization and Atlas Brian Boland, a keynoter at BIA/Kelsey’s ILM show in December, vigorously defended native advertising — not surprisingly, since Facebook is banking heavily on it. Native advertising, when combined with personalization, provides “unprecedented value,” he said. “People are going to a place where they want to discover what is important to them. It creates an opportunity for people to be excited about what they see.”

Boland noted that Facebook has recently been criticized for pushing the envelope with native advertising by having video ads. But critics should have done their homework, like Facebook has, Boland said. He noted that Facebook did reams of testing and research, and the feedback has shown that the video ads are totally engaging viewers.

Going forward, Facebook is developing a set of formats to enable people and advertisers to express themselves via native advertising on every platform — especially mobile. Boland acknowledged, however, that such formats are better suited towards larger media concerns. A handful of publishers will similarly see how things evolve, he said. But it remains “a challenge for mid-sized publishers.”

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This year is the year of many things. The year of attribution. The year of native advertising. The year that term “SMB” loses its meaning. The year that marks the tipping point in digital transformation. It’s going to be a busy year.

Every January, BIA/Kelsey analysts apply their experience, knowledge and gut instincts to divine the likely key trends and developments for the coming year. Next week BIA/Kelsey will release these premonitions in its 2014 “Analyst Picks & Predictions” report.

To preview the report, we gathered a sampling of our analysts on a Google Hangout to share a few of this year’s picks. Joining me were VP of Consulting and social media maven Jed Williams and the newest member of the BIA/Kelsey analyst team, Senior Director of Industry Strategy & Insight Abid Chaudhry.

Williams offer the prediction that “Native Advertising Achieves Local Scale.” Rather than re-purposing an ad format designed for a different medium, native exploits the characteristics of a new form. Facebook’s Sponsored Stories is perhaps the mostly widely cited example of this.

To date, native has not achieved local scale, largely because it is so  new. Very small, local businesses tend to be advertising laggards rather than trendsetters.

Williams contends the stars are aligning for the “gradual movement of native advertising downstream, to be more accessible to the sell side [local resellers] and a bit more accessible to the buys side, to [include] some small businesses.”

So what’s happening to drive this trend? More efforts to adopt standards around ad formats, creative and campaign metrics, all of which make it easier for local sellers to offer native, and for local buyers to wrap their heads around it. Williams cautioned that very small business adoption of native is still a ways off. He cast the conversation about native in the larger context of content marketing. Until small businesses fully understand and embrace content marketing, they are not likely to embrace its progeny native advertising.

Picking up on the very small business discussion, Chaudhry predicted that in 2014, marketers will essentially blow up the old SMB (small and medium size businesses) definition and replace it with a newer segmentation that is ultimately more useful.

“To Jed’s point, content marketing, engagement marketing and the need for standardization of how we approach the omni-channel focus of all the different kinds of things a small business can do will force solutions providers to start rethinking how they look at what an SMB actually is,” Chaudhry said.

So what will this entail? A much clearer segmentation in how marketers approach very small businesses vs. mid-size local businesses vs. national-local (franchisees and local dealers) businesses.

Finally I offered the prediction that other global directory players will announce they are following the path of the Nordics publisher Eniro, which announced last year that in 2014 it will publish its last print Yellow Pages directory in its core market Sweden (that decision had already been implemented in Norway). Eniro was rewarded for its decision with a substantial boost in its share price.

Sign up for next week’s webinar to hear more of BIA/Kelsey’s annual Picks & Predictions.

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