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Forbes CEO Mike Perlis’ defense of native advertising

One of the key buzzwords of the year is native advertising, with spending on social sites alone set to increase from US$3.1 billion to US$5 billion by 2017 globally, according to eMarketer.

While set to be one of the biggest trends for advertising, champions of traditional journalism models are equally opposed to it.

HBO’s John Oliver famously went on a long rant against native advertising, opining that it diluted the integrity of journalism, and that consumers simply don’t know the difference.

If you missed it, watch it here:

The strategy has its hits and misses. For example, Netflix buying a paid post on the New York Times, creating a fictional memoir-like post in New York Times-style on women in prison for its Orange is the New Black series. The move turned out reasonably well with readers and for the advertiser.

However, in one example of native advertising that went terribly wrong, The Church of Scientology ventured into native advertising with The Atlantic. This backfired and the ad was hastily pulled as the magazine’s readers slammed the move. The magazine had to make an apology.

But at a time where newsrooms are suffering, the strategy is a new goldmine for many publishers. One example is Forbes, which is finding a significant amount of its digital ad revenues coming from native advertising.

Mike Perlis, Forbes’ chief executive officer told Marketing that Forbes had been focused on native advertising since four years ago when its Brand Voice offering debuted. Since then, its digital ad revenues have surpassed its print in 2013; and the former is pulling in approximately 65% of ad dollars for the publisher.

Brand Voice works by helping marketers to create “thought leadership-based” content, but labeling it as such, said Perlis.

“We’ve been doing it for a long time. When we started Brand Voice a little more than 4 years ago, the term native advertising hadn’t even been created yet. For us, it was our way of appreciating that content in today’s media world can come from a lot of different places. It can come from journalists. It can come from contributors who have depth in the subject matter. If it’s clearly marked and transparent, marketers and companies also can be content producers. We make the lines very clear. Our native advertising product isn’t for selling a product etc but used for thought leadership,” said Perlis.

What about journalistic integrity, Marketing asked. Can consumers tell the difference, and does that matter?

“If managed correctly and transparently with clear identification, and high standards for that content, I think native advertising adds to sources for content that people are so hungry for. The short answer is that if it’s done right, native advertising is an important element in the content landscape.

Unfortunately, people who simply sell ads by allowing people to run that does not meet the standards that I just described – that’s what gives native advertising an advertorial feel,” said Perlis.

Forbes classifies its digital ad offerings into three kinds, display advertising, native advertising and programmatic advertising. Perlis conceded that while the first is “still good business for us”, it is increasingly hard to monetise.

And the results are showing, he said.

“We’ve grown very rapidly and our employee base has remained the same actually. Four years I’ve been at the company – there have been a lot of changes in terms of shifting people from one assignment to another – but the total number of people has remained the same. No cuts in jobs,” said Perlis, referring to the slashing that has been taking place at many publishers and newsrooms recently.

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