Can Native Advertising Save the Media Industry?

When something works, embrace it.

For media companies that have mostly had to endure steady declines in advertising sales over the past 10 years, the advent of native ads is a welcome development.

It's no mystery why. Native ads read like a typical news story but are actually paid ads. They're tagged with a colored headline that informs readers of that fact. While that may be unsettling to journalism purists, it's become common currency in the digital age.

Most importantly for media companies, native ads command a hefty premium over banner ads and other traditional forms of Internet marketing. For brands, they also provide an unusually interactive way of engaging prospective consumers.

Spending on native ads is expected to more than double in 2018 to $8.8 billion, according to eMarketer. For investors, that translates to a fresh source of revenue that makes the companies that employ native ads more attractive investments.

"Native is growing from an incremental part of a few companies' budgets to a large investment by all brand advertisers," said Patrick Keane, president of the native ad platform Sharethrough, in a phone interview. "This isn't a shiny object. This is unequivocally the future of media and advertising."

The Boston Globe became the latest media outlet to enter the world of native ads when it ran an online story last month that was paid for by the Massachusetts bank, Rockland Trust. The story follows the growth of a small business the bank funded.

With the Rockland Trust partnership, the Globe was merely following a slew of print publications -- The New York Times, Chicago Tribune, Washington Post -- as well as trailblazers like Facebook (FB) and privately held BuzzFeed, that are relying more and more on sponsored content to bolster online ad revenue.

Most importantly, it's working.

"What was once a rapidly declining source of revenue, where magazines and news were outclassed by pay-per-play, now has an entirely new stream of revenue," said Peter Kreisky, a publishing consultant, in a phone interview. "It's allowing media companies to compete in a way that non-media companies can't .... It's the most important new form of advertising in the last five years."

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