Native Ad’s Pricing Problem

Native advertising, steadily becoming a significant revenue source for online publishers, is hurtling toward a paradoxical problem. And that is, the more popular it gets, the more its fundamental weaknesses will be revealed.

These native ads—by which I mean articles and videos that mimic a site’s editorial content but are paid for and are meant to subtly promote a brand—are a much more expensive option than other kinds of digital ads. For a brand to run a native ad campaign on a site like CNN or The Atlantic, it costs as much as $40 for every thousand views. That’s three to four times more expensive than a premium banner ad that was directly sold by a top tier site.

But the process of making native ads means publishers can’t easily cut those prices without seriously eroding their margins. And with more sites jumping into the ad format, that type of pricing pressure seems inevitable.