Pando

As banner ads turn 20, Sharethrough wants you to accept the inevitability of native advertising

By James Robinson , written on November 10, 2014

From The News Desk

As far as ad tech beefing goes, last Thursday was a doozy.

Farhad Manjoo’s “Fall of the Banner Ad: The Monster That Swallowed The Web” hit the front page of the New York Times. Among other crimes, Manjoo accused the ruinous economics of banner ads of perverting content online. The choicest quote came from Andreessen Horowitz’ Chris Dixon, “It’s almost like a prank that was played by the technology industry on the media industry 20 years ago.”

Before the afternoon was done, Randall Rothenberg, IAB President and CEO, had already published his own lengthy response. “Banner ads are the Mark Twain of the Internet: reports of their death are greatly exaggerated,” he wrote. “Farhad Manjoo has built a lengthy piece on a ridiculous premise.”

That all of this was taking place right before my scheduled sit down with Sharethrough CEO Dan Greenberg -- founder of the world’s largest native advertising exchange -- was a nice piece of journalistic kismet. He sits firmly in Manjoo’s camp, seeing the age of the banner ad as, if not over, to be at least corrosive. The only difference is he’s staked a business in the banner ad’s successor.

My conversation with Greenberg falls immediately to that day's ad-tech rumble. Greenberg, one of those almost-too-cheerful, not-yet-30 CEOs that only seems to happen in tech, has a fondness for taking to a nearby whiteboard to illustrate his responses to certain questions.

Pen in hand, Greenberg creates a flowchart for me. Classically, story flowed into meaning, which created an audience. The greater the audience was, he says, the more advertising revenue you could generate. But banner ads short circuited the entire system. Meaning became irrelevant and the only thing that came to matter is audience.

“It created a shell game, circling ads on top of ads on top of ads,” Greenberg says.

We talk about our favorite examples of junk content. Mine is “10 Hollywood Stars You Didn't Know Had Killed People." His is an “8 Starlets Rejected From Playboy” link that he shows me on the Yahoo homepage. He clicks on it, which takes us to the article on Suggest.com, a page that so soggy with banner ads that it hurts my eyes.

Content doesn’t even really figure on Suggest.com. The entire site is an excuse for advertising.

Greenberg points to a Braintree ad in the corner of the page. “I was on the Braintree website earlier in the day. They don’t care where I am on the Internet. They’re just trying to remind me they’re there,” he says.

“Banner ads forced the New York Times and Suggest.com onto an even playing field. But they also made it worse. Because it’s cheaper for Braintree to reach me on Suggest.com than it is the New York Times.”

So for all the journalistic posturing and worrying about native advertising as the death of journalism, Greenberg counters that native advertising has actually restored the previous journalistic order. A native advertisement (Greenberg himself isn’t a fan of the term and Sharethrough uses the term “in-feed” instead) is an ad served within the same user experience of the website someone is browsing.

What’s being sold is the mindset of any given user. “So the value of a native advertisement on Suggest.com has to be much lower than the New York Times,” Greenberg says. With native advertisements, it means something to be the New York Times again.

Besides, the slippery sponsored content element of native advertising, that gets the John Olivers of this world so worked up, is only a small piece of the native advertising pie for Sharethrough. Greenberg says that the native advertisements that go through Sharethrough’s exchange split 50-50 between written stories and video. Of the written stories, maybe a third is sponsored content, while the rest is made up of explicitly company-authored stories -- eg. Intel’s own independent blog -- and earned media promoted by a company.

Disclosure of what is an advertisement will remain an important issue, Greenberg says, but it isn’t the defining one of an entirely new genre of ads.

Native advertising are an improvement. But they're not going to bring back the golden days of journalism. In 2012, it was estimated that $15 was lost in print advertising for ever $1 of digital advertising gained. The decreasing bottom-lines for news outlets and the “short-circuiting” of online publishing to favor audience size over article quality has led to a much-decried supposed debasing of our collective tastes. As we all moan, cat videos are the new blockbusters, while long, artful, thoughtful pieces of work go uncelebrated. To this end, Sharethrough launched the $1 million Meaningful Content Fund in July, partnering with Twitter, Chartbeat, Quartz and Medium to choose and promote overlooked and worthwhile content from across the web.

As Greenberg displays to me, a recent Meaningful Content pick, a photo essay on Pixable about the plight of transgender females in India has been shared less online than the aforementioned starlets denied from Playboy slideshow. He laughs when I ask him whether advertisers starting a philanthropic cause to promote journalism is only further proof of how dead the journalistic business model is. But he doesn’t deny it. He’s accepting that there’s a naievete to the entire idea that some might want to laugh at.

The meta point behind the Meaningful Content Fund, to me at least, is that advertising and journalism has always had a complicated relationship. The news media, like the music industry, is a sector that has been kneecapped by a seismic shift in how we consume information. But unlike the music industry, where people just aren’t willing to pay as much for content anymore, in the news industry readers were never the ones fully supporting it. Advertisers were. And then advertising got a lot cheaper. But advertisers need publishers to stay afloat too. Because companies always need to reach audiences through the best means possible.

Sure, native advertising creeps some people out and can make the pure of heart self-righteous. Greenberg says that people will trust this content more when brands get better at being content producers, placing entertainment and storytelling above simply reworking a sales pitch into an article.

This shift is already happening, Greenberg thinks. Red Bull sponsored and produced the clip of Felix Baumgartner free-falling almost 128,000 feet from space. The world watched, transfixed. At the end of October a Google VP, Alan Eustace, broke his record but slipped under the radar entirely. The missing X-factor to Greenberg, is Red Bull.

“If I said to you, watch this clip of an eagle flying with a camera strapped to its head, or watch this video of an eagle flying with a GoPro attached to its head, you’re more likely to watch the GoPro clip, because they’ve built up a reputation of making great stuff,” Greenberg says.

Native advertising is fueled by companies with good content to promote. When more companies prioritize quality of output over mere advertising, that’s when Greenberg sees the whole industry taking off.

To anyone worried about this new paradigm, Greenberg has a simple question: “If it’s an ad, why does it have to be bad?"