Happy Sunday!

I hope you’re having an amazing weekend. For those who have the day off tomorrow, welcome to Saturday night, round two. If you’re reading this, you know the rules — must be sitting down, relaxed, with a beverage in your hand. Today we’re going to dive into the world of those recommended articles you find at the bottom of other articles, under that headline that reads, “You may also like…” It’s another deep dive, but all about native advertising today. 

Since last Sunday, did you buy anything on Temu? I wonder what the true ROI of those Super Bowl ads were. That has to be the highest frequency of ads run by a single advertiser? Also, where were the Doritos, Pepsi, etc. type of commercials? 

Did you listen to this past week’s episode of Limited Supply? Moiz and I talked all about maximizing FB ad efficiency, Shopify vs TikTok/Instagram shops, Nutrabolt's investment into Bloom Nutrition, and more. Find us on Apple Podcasts, Spotify, or wherever you listen by searching for “Limited Supply”. Also I couldn’t be about our sponsor, Postscript! Just a great company, people and product.

Before we get into the newsletter, we’re hiring for a few roles at Sharma Brands, the company where no one has ever quit (since we started 4+ years ago):

Ok, native advertising. This is a topic that I rarely see discussed on in my DTC circles, so I wanted to write a newsletter about it. Depending on which stats you trust, Native Advertising spend was projected to be around $97BN in 2023. This report expects it to rise to over $300BN per year in 2031. That’s a lot of money. 

So in today’s newsletter, I want to break down what it is, how to use it, when to use it, why it’s relevant, and a lot more. I’m also going to talk about one of the most successful campaigns I’ve ever run (which happened to be a native branded ad with the Hustle in 2017).

Alright, let’s dive in: 

First, some context: 

I first got into the world of Native Advertising in 2015 when I worked at an AdTech company where I helped the largest Taboola and Outbrain spenders get onto Facebook.

Now, these advertisers were mostly running the recommended articles widget you see at the bottom of news sites that said "You won't believe what this celebrity looks like 27 years later!" or "First she put on the red dress, then this happened!” It was essentially clickbait marketing, where you click, and then go through a slideshow (usually 10-30 slides) with each slide having its own set of ad units filling up the pages.

The name of the game for these publishers was to get a 1-2 cent click with Taboola or Outbrain, and if they could get someone 4-6 slides in, they'd make maybe 5 cents and profit 3 cents per user. But the advertisers would spend hundreds of thousands per day pushing these campaigns, so when it was profitable, the money added up quickly!

How did I learn how to run FB ads? I was setting up these incredibly efficient traffic campaigns and figuring out the best possible combinations of copy and creative to optimize for high quality traffic. 

At the end of January of 2017, I left that role and joined Hint as the Director of Performance Marketing. Upon meeting everyone, the then-CFO said, "Most people don't last long in this role, so good luck." I was given one directive from the management team at the time: acquire 5,000 new customers in the month of March. I figured, worst case, I can go sell 5,000 people on the streets of SF!

I started digging into the easiest channel, Facebook. 

Upon opening Ads Manager, I realized that the cost-per-clicks were way too high. They were paying $4-5 dollars just to get someone to the website, not to mention, the website at the time was built on Symphony Commerce, which had a horrible user experience (both front and back end). Out of those site visitors, maybe 0.5% to 1% converted, which equated to roughly an $80-100 customer acquisition cost!

I thought to myself, what would be the clickbait-style ad that could solve this? In my previous role, I saw advertisers getting 2 cent clicks, so maybe I could get Hint down to 5-10 cent clicks if we created the right content. 

Before I finish my story about what happened at Hint in 2017, I want to dive into some educational content about what native advertising actually is. 

I promise, the juicy details of my Hint story will come later in the piece.

The Fundamentals: What is Native Advertising?

So, for those of you that aren’t familiar, native advertising is just another form of paid advertising where the ads match the look and feel of the media format where they appear. Generally this is within content, and it’s recommending other forms of content. If you’re on a publisher site, the ad unit generally looks like a link to another relevant article. They fit “natively” and seamlessly within the site’s UI design. That said it’s not always just the recommended content, but that’s much of it.

Unlike banner or display ads, the goal of native ads is to blend in. The entire point is to show viewers promotional content (aka ads) that seems like it’s supposed to exist on that particular site. Think about recommended articles or inline sponsored posts in the middle of a news site as I mentioned above. These are native ads. The less intrusive or obvious, the better! 

6 Common Types of Native Ads: 

There are a bunch of popular native ad formats but here are some of the most common categories in the space: 

  • In-Feed: These are basically sponsored posts on social media. It’s an ad that appears in a user's feed on social or websites, looking “native” to the platform's standard content. Although this is still considered native advertising, for this specific newsletter, I’ll mainly be talking about publisher content since that’s the more interesting and under-discussed part of native ads. 
  • Recommended Content: These are ads that are presented as recommended articles, often found at the bottom of web articles on news sites. Everyone has seen these before — “You may also like…”
  • Sponsored Content: These are articles or videos created by or on behalf of a brand, but published on a media outlet or platform. One of my favorite examples of this is the Allbirds native ad in the New York Times. As you can see at the top of this article, NYT includes a banner to say that this was a paid post. You will regularly see these on product review sites as well. 
  • In-Content Native Ads: Unlike content that appears at the end of articles, these are ads that appear within the article itself. Think about the video or image ads you see while scrolling a Forbes article in the middle of reading the content piece. 
  • Sidebar Ads: These are dynamically placed ads that look and feel as if they were part of the site, but appear on the side-bar as new content that someone could consume. 
  • Promoted Listings: These are found on all big e-com marketplace sites. These ads promote products within the site's browsing experience. (Think about the promoted or recommended products on Amazon) 

Media Formats & Sizes: 

Just like other platforms, the media formats for native advertising are primarily text, image, and video. You can also do carousels, GIFs etc and you can use many different creative sizes like 16:9, 4:3, 3:2, 1:1 etc. From a creative perspective, you have a ton of flexibility regarding what you can run. 

Distribution: 

The crazy thing about native ads is that they provide access to inventory that’s getting billions of organic and paid page views per month across the web. 

Beyond social, this is all about the available inventory on major media sites like CNN, The Wall Street Journal, Forbes, BBC, Bloomberg, National Geographic, The Weather Channel, ESPN, HuffPo, The Guardian, etc. 

The two most powerful DSPs (i.e Taboola and Outbrain) both claim that they can reach over a billion consumers through their respective publisher networks. They both claim to have access to over 7,000 publisher sites including nearly all mainstream media sites plus a ton of other niche publications and blogs.  

The Platforms and How To Buy Native Ads:

Since I just mentioned Taboola and Outbrain again, I think now is a good time to talk about the platforms and how this all works. To keep it simple, Taboola and Outbrain are the best platforms to buy native ads. You can actually get a special deal setup with Taboola using this Sharma Brands sign up link!

There are also some other competitors like Plista, AdYouLike, MGID, Revcontent and other proprietary networks like Verizon Media (Formerly Yahoo! Gemini) that help you buy native ads across their respective inventories but for this email, I’ll stick to talking about Taboola today. 

As you can probably imagine, these platforms are very similar. Think of them like Coca Cola and Pepsi, two heavyweights in the same category with similar product offerings but unique brands. They may have different UIs and different analytics but they largely do the same thing. 

I personally think about Taboola like the Meta Ads Manager for the rest of the web. You login, create a campaign, upload your media, select your targeting and publishers, run your ads, and then review the performance just like you would with any other ad platform. The big difference is that you aren’t restricted to only placing media within Meta or TikTok or X’s walled garden. You are advertising across thousands of publisher sites on the open web. 

The beauty of being able to access sites like Yahoo, USA Today, NBC, MSN, CBS, and Business Insider, is that you can test which publishers align best for your campaign goals (assuming it’s maximizing the ROI of acquiring a new customer) with the publishers. When I ran the campaign I mentioned in the beginning of the email, we had 20-30 publishers we started with, and then narrowed it down to 3-4 publishers that drove the most efficient CPA for us.

Measurement and Analytics:

Just like any other ad platform, you can measure total impressions, clicks, CPMs, CTRs, CPAs, CVRs, and ROAS for all of your campaigns.

Both Taboola and Outbrain have their own pixels that you can add to your site to measure all of the events taking place so that you can both track and optimize all of your campaigns. 

The Costs and Targeting: 

Just like on Meta, the CPM rates vary by the content, category, targeting, and engagement but I generally find native ads to be much cheaper than other platforms overall. You can easily spend millions per month on this channel without having to worry about running out of valuable inventory space, especially once you find the right creative and landing page. 

Similar to TV and direct mail, once you find the winning combination, it’ll work for a long time.

As far as cost, the CPMs can be anywhere from $2-20, and of course if you’re trying to advertise on a site like WebMD, you’ll pay a bigger premium. CPM wise, it’s probably lower than Meta, but engagement rate is also harder to crack, so there’s a balance.

When it comes to targeting, the options are similar to what you see on other ad platforms. These include: 

Geo Targeting

  • I.e you can target users based on their location, which can range from broad (like country-level) to more specific (such as region, city, or the exact ZIP code).

Demographic Targeting

  • You can target audiences based on age and gender

Interest or Behavior Based Targeting

  • Both Taboola and Outbrain analyze user behavior (Outbrain claims to analyze 1 billion data points per minute! ) to better track user engagement with content to target consumers based on their past interactions. It will automatically target people based on which articles they read, videos they watched, and topics they engage with all across the web. 

Device Targeting

  • Just like Meta, you can target based on specific devices, including desktops, tablets, and smartphones, and can also target based on the operating systems i.e (iOS, Android).

Retargeting

  • You can also easily retarget users who have previously interacted with your brand, whether by visiting your website, or engaging with a previous ad. As mentioned, this is achieved by placing a pixel on your site from either Taboola or Outbrain to track activity. 

Contextual Targeting

  • These are ads that are dynamically matched with content that is relevant to the ad’s message or the advertiser’s product, which hopefully increases the likelihood of engagement. This targeting considers the theme and content of the publisher’s page that they are running these on in order to dynamically place related ads.

Lookalike/Similar Audience Targeting

  • Similarly, by analyzing the characteristics of an advertiser's existing audience, both Taboola and Outbrain can identify and target new users who share similar interests, expanding reach to new potential customers who are more likely to be interested in the ads. 

Time of Day/Day of Week Targeting

  • You can also target and run ads based on the time of the day or day of the week. 

Publisher Targeting: 

Lastly, you can also manually choose specific sites within either ad network where you want your ads to appear. Only want to run something on TechCrunch or the BBC? You can do that. This is what I recommend doing.

Exclusion Targeting:

  • The same thing goes for exclusions. You can run your ads everywhere except for X,Y, Z publisher sites that aren’t aligned with your brand values or objectives.

It’s highly sophisticated ad engine and you have a ton of flexibility on how you can target your campaigns: 

When to Test Native Ads: 

IMO, I generally recommend that brands should learn to win on paid social and paid search before testing anything else. As I have said before, for most brands, Meta alone can drive your first 7-8 figures in revenue.

With the Hint example, which I’ll finish in a second, once we found the winning combination on Meta, we were able to replicate that same success with Taboola. We could have absolutely started with Taboola first, but I am always a fan of validating with Meta, since the feedback loop is the most trustworthy, and then expand with those learnings to other channels.

If you’re thinking of testing it out, test it with $10k, and see what happens. The golden rule with testing any programmatic advertising channel, is you should be able to see it work with $10k of spend.

Back To One of The Most Successful Campaigns I’ve Ever Run:

Okay, we’re back! It’s now time for me to finish my story about what happened at Hint. 

As I mentioned above, when I joined, Hint was spending $4-5 per click to get visitors to their site and the new customer acquisition cost was around $80-100. We needed to change this ASAP!

At the time, The Hustle newsletter and media publication was exploding in popularity and they were running native branded ads inside of their publications. 

Initially, I asked The Hustle team if they'd be interested in some kind of affiliate-style article that they could earn 10% of all revenue I made off that article. They refused and thought this wouldn't do much for them. So, instead, I paid a few thousand dollars for this article to be posted online instead.

The article initially went live with the title of "Getting Called “Sweetie” Helped this Entrepreneur Create a $90-Million-Dollar Business" but eventually we had to tone it down a little bit and changed it to: "Getting Called “Sweetie” Helped this Entrepreneur Create a Multi-Million-Dollar Business"

The story itself was engaging, had the perfect reading time (2-3 minutes), was at a 5th-grade reading level, and at the time, The Hustle didn't have any distractions on the sidebar or an email capture in the middle of the article. (They have since changed this now) 

When the article was ready, I used AdEspresso at the time, created about 96 different combinations of ads for a Facebook ad set, and began running it. Overnight, our acquisition cost went from $90 to $25, and instead of doing double-digit new customers per day, we began doing thousands of new customers per day. The content was a massive hit, and now it was all about finding new audiences at scale that we could put this article in front of. 

Because the story was so good, it ended up getting so many of its own organic shares. Literally hundreds of thousands of people shared it on their own profiles. I don’t think I’ve seen anything like this ever since. 

As a bi-product, Hint’s wholesale and retail business began doing great as well. People kept saying they read the founder story on Facebook and they wanted to try the product!

After the success of this article, which included selling out our distribution centers multiple times and breaking The Hustle's website a couple of times, I ended up trying this same strategy on the publisher sites that everyone knows of: BuzzFeed, Refinery29, etc. The results? Not even close.

Then we tried one with Digg.com, and that took off. At this point, we realized that the secret sauce wasn't in the logo that was up on the site, it was in the story, the formatting, the length, what popped up, what else was on the page, the font size, font type, and the ad units driving the traffic. In 2018, I drove roughly 1/3 of all Digg's traffic doing the same thing. It was wild. 

Every advertorial that we ran that did well, we than turned on with ads from Taboola. The format of the page experience we were driving to was an article, and that continues that native reading experience. The only difference was once we got someone to read about Hint, they wanted to support and buy the product right after.

So again, why am I telling you this? Because it's easy for you to set this up on your own and test it out this year. In an environment where CPMs are only going up, sharing engaging stories keeps your CPMs low. Using Native ads can be a massive unlock and I think more brands should try it. 

I just think that there’s so much inventory space for native ads that is still under-explored for DTC. Yes, sponsored or branded content within publications can be great avenue, but so can programmatic native ads on major publications like CNN or Forbes that can be cheaper than other platforms to run. 

It’s a massive category that most aren’t using well unless you are a large brand. 

Go run some native ads next month and tell me what you think. I’d love to hear about your results. 

Okay, that’s it for this week; onto some fun stuff…

Vendor of the Week:

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When customers come to your website, if you’re really good at capturing emails, you’re getting about 10-12% of those emails. What happens to the remaining 88% to 90% of people who come and don’t leave their email with you? That’s where Listrak comes in. With Listrak , you can identify site visitors, even if they don’t give you their email directly, and plug them into automated email drip campaigns. According to G2, Listrak has the most effective solution for this product, and it’s why we use it for our clients at Sharma Brands.


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That's all for this week

I hope today’s newsletter was a fun one to learn from. I’ve been enjoying doing these deep dives recently, but next week I want to get back to something strategic and tactical that you could read and implement. If you have ideas, send them over, otherwise I’ll think of something great.

Tonight is Sunday night, and while we don’t have football anymore, we do have another opportunity to get 9 hours of sleep tonight! Have an amazing upcoming week. Stay hydrated. Get a sweat in. Call an old friend. Do something outside of your comfort zone. 

I’ll see you here next Sunday!