Wednesday, September 25, 2013

LinkedIn navigates native ads in media push

This is a great article by Scott Martin,  of the USA TODAY
LinkedIn CEO Jeff Weiner wants a piece of the action as a media company.
The professional network visited mostly for jobs and recruitment has morphed into a daily destination to read news, share and comment. If it sounds a little like Facebook and Twitter, it is. And so is the advertising opportunity.
"There is a lot of content. Our job is to package up the most relevant content we can find for members," Weiner said on stage earlier this month in San Francisco.
People are clicking on LinkedIn's business media. Page views have shot up 69% from a year ago. But LinkedIn executives won't call the company a media business. That's because only about a quarter of its revenue comes from ads.
Yet now it's playing in native advertising, the hottest trend of the moment for marketers -- and publishers. LinkedIn joins an advertising craze embraced by Facebook, Twitter, Google and even The New York Times.
What's at stake is social network ad spending dollars, expected to rocket from $7.3 billion in 2012 to $14.5 billion by 2015, according to eMarketer.
"People are really going to talk about this with Twitter going public because Twitter's main ad product is native advertising -- Sponsored Tweets," says Altimeter Group analyst Rebecca Lieb.
That will be especially so during Ad Week in New York City this week as thousands gather to discuss all things digital advertising.
Native advertising, or sponsored content, can run front and center in your face. It begs you to share and interact with it.
LinkedIn has been steadily serving up media to advertise against. LinkedIn Today includes stories from 1.5 million publishers. It has turned on Influencer business blogs. It snapped up Silicon Valley's hottest mobile news-reading app, Pulse, in April with ambitions to mesh its business. If this isn't a media play, then Rupert Murdoch is a goat herder.
With 238 million members, LinkedIn is the second-largest social network, ranked by unique visitors, just ahead of Twitter, according to comScore. "To me this represents the next step in building on this business," says comScore analyst Andrew Lipsman of its ad move.
You're officially a nobody social media marketer without a native ads strategy today. "It's the new darling of online advertising," says says Rich LeFurgy, a consultant to online advertising startups and former chairman of the Internet Advertising Bureau.
Don't expect them to go away anytime soon either. On mobile, a source of increasing visitors, they are a necessity with its limited advertising space. Native ads are "a fast-growing sector -- huge," says eMarketer spokesman Clark Fredricksen.
Ad revenue at LinkedIn is expected to soar more than double, from $376 million this year to $763 million in 2015, according to eMarketer, as it embraces the new ad forms mingled with its nascent business media.
Some aren't so hot on native advertising. With ads creeping in closer to the information people come to read, worries persist that people will be duped into consuming ads with the false impression they're not looking at advertising.
The FTC last week announced plans to hold public discussions in December over concerns around native advertising.
"The industry is going to step up its efforts on disclosure," says Altimeter's Lieb.
It's easy to understand why. Native ads on Facebook's mobile app say, "Suggested App" in light gray on advertisements to download apps. The smallest, lightest gray text says, "sponsored." It's difficult to read the text.
Native ads are designed to blend in and look more like publisher content. Friends are able to share, comment and like these sponsored ad units. Friends become advertisers.
When Mercedes saw LinkedIn's new in-news advertising opportunity and the chance to get in front of the high net worth audience, the company jumped, says Mark Aikman, social media chief at Mercedes.
"They may be the closest to the current Mercedes Benz buyer and they represent the best opportunity," says Aikman.
Computer maker Lenovo bit at the chance to get in front of such executives as chief technology offers. LinkedIn allowed precision targeting to that audience, says says Lenovo's social media chief, Roderick Strother.
"What we really wanted to get in front of was the decision makers, executive decision makers with specific responsibility for making those decisions for buying IT products. Your C-suite really in that area," he says.
Strother says his campaign on LinkedIn using its sponsored updates performed four times better than display ads.
"The ability for a marketer to tell a story is resonating extremely well with our members," says Jonathan Lister, vice president in LinkedIn's Marketing Solutions advertising unit.
LinkedIn's advertising business makes up just 24% of the company's revenue. The network's biggest moneymaker is its group whose recruiting tool helps drive 56% of total revenue. Using LinkedIn Recruiter for finding talent, which runs nearly $9,000 a year per seat, means you're a somebody in the corporate headhunter world.
Recruiter's success helps explain why company executives don't overplay its identity as a media business. Instead, LinkedIn's media push is positioned as a way to attract people to its other services.
LinkedIn's core mission -- to connect the world's professionals -- hasn't wavered. At the same time, members biggest request has been content, says LinkedIn's Lister. And LinkedIn has obliged.
Despite LinkedIn's downplay of its media business, The Washington Post would have taken those kind of digital ad dollars any day. And if they had, well, they likely wouldn't be owned by CEO Jeff Bezos today.

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