By now, we have all heard about the buzz. Native advertising is the new black. Everyone is talking about it,  everyone is excited about it, but how many people really understand it?

We asked three industry leaders to weigh in on native advertising. Offer Yehudai, our very own President and Co Founder, Ouriel Ohayon, CEO and Founder of Appsfire (who recently sold his company so congrats on that!), and Linat Wager who leads innovation for Yahoo Israel and is very involved in the whole aspect of native and video advertising in Yahoo.

Some great insights below. Enjoy!

Who are you? Give me some background.

Offer Yehudai:

Co-founder and President of Inneractive. Been busy the last 10 years trying to understand why ’serving the right ad to the right user in the right time’ is easier said than done. Excited about problem that many have but so little manage to solve with a strong attraction to solutions that other tend to dismiss.

Ouriel Ohayon:

I am an entrepreneur, French and Israeli. I created a few projects so far but my latest focus is Appsfire a mobile ad network. I moved to live in California about 1.5 years ago to keep developping Appsfire as the USA was becoming our priority.

Linat Wager:

I am leading innovation and collaboration with Israeli startups for Yahoo. Basically reinventing the way Yahoo works with early stage startups. Started in Yahoo for 5+ years as a product manager after my MBA in Stanford. Spent half of my Yahoo time in the US and half in Israel and was responsible for products in the content, social and advertising space.

 

Talk to me about mobile advertising. Why is it broken and how can we fix it?

Offer Yehudai:

The reality is that most publishers out there complain about the same ad product (a banner) but keep using it. There are only 2 companies out there that cracked mobile advertising and it’s Facebook and Twitter. Both of them brought together unique 1st party data, programmatic and native ads. The problem is most publishers don’t have these assets and will not put their entire business on Facebook, Twitter and even Google. We can fix it by empowering publishers with technology that creates those assets and put control back into their hands in way that was built for mobile and not transitioned from desktop.

Ouriel Ohayon:

It’s getting better but we’re still not there. Because users don t use the browser on mobile and spend their time in native apps, the traditional ad tech solutions from the ad formats to the traditional data used for targetting cannot work the same way. New solutions, that are less intrusive, more native and specific to the mobile ecosystem were required.

The iPhone and Android have accelerated the need for those solutions. Users, specially the new generation, have been also trained to ignore traditional ugly and disruptive banners and the industry has been trying to capture their attention through new ad experiences in order to compensate with a growing loss of performance and efficiency.

Company who will be successful in this, will at the same time be very good in creating and controlling those new ad experiences but also in mastering the value chain from data collection, data profiling and data targeting in the context of a native mobile app.

Linat Wager:

Mobile advertising is any form of advertisement displayed in mobile. Making a very rough simplification of the old online advertising world, in the past we had two types of advertising paradigms – search, the famous blue links, and display, the famous banners. When mobile was introduced, what advertisers and publishers did was taking these two paradigms and move them to the mobile world as is. This is why we saw a lot of banners, and later more interstitials and rich media ads which are very annoying.

The problem with this is that the user understanding, interactions (not just what but also how), the use cases and the attention span of the mobile user with his phone are fundamentally different from the same ones in his browser. Examples of the problems are the lack of real-estate in the mobile, the fat finger errors, the inability to identify user across devices which leads to less user signal, interactions are new (pinch, zoom in/out).

The same problem happened not just in advertising but other areas like websites.

In order to fix it, what we will need to do it to reinvent the way we think about advertising in mobile. Not just new ad formats but fundamentally change the way we render ads, where we put them, how we rank them, how we understand what users are doing in mobile and make the experience more valuable to user as their time on these devices is precious.

Native Advertising, the hot buzzword, what is it and why is it important?

Offer Yehudai:

Native Advertising is a very broad term to describe sponsored content that users can choose to interact with. The very basic use case is an ad that looks and feel like the content around it with similar functionalities. It is important because the alternative display products ignore the content around it and in a mobile environment it harms the user experience and the users. A good use of native advertising will deliver and create value instead of taking real estate and space on our screen.

Ouriel Ohayon:

No one really knows how to define Native advertising. At the same time it s been around for years and it is not specific to mobile. Native ads are supposed to be ads that are more integrated in the experience of the user and specific to the service or platform they are using both in look and feel, code, and presentation. If you think about it, Google has had the first native ads in the world at large scale

But with mobile, specially with things like banners which are losing in efficiency, a need for something “better” has arrived. Suddenly everyone seems to realize that advertising can’t be disconnected artificially from the content browsed by the user which explains, in particular news publications which have been both vocal and instrumental in experimenting with it

Facebook has managed to build a multi billion dollar business just out of this using in stream formats to broadcast at scale app install ads and improve paid discovery. Everyone has paid attention of course and everyone is trying to follow because the opportunity is massive and a huge chunk of the existing mobile inventory is inefficient.

Linat Wager:

Native advertising is the first step towards meaningful mobile advertising. It is the ability to take an advertisement and adapt it to the context – both visually and content wise – to the user mobile experience. You can see examples of it in yahoo.com and different Yahoo sites, your Facebook and Twitter streams. We call it sponsored ads. They are less intrusive and easier to digest since they are part of the user natural flow in the application or the mobile web.

If native is so embedded in the content/feed, isn’t that tricking the user? Is that effective long term?

Offer Yehudai:

Native Advertising done right leaves all the control in the users hand, literally. They can scroll by or stop to interact with the sponsored content, unlike most display products that takes a part of the screen and there is nothing you can do about it. Studies show that CTR and engagement with native ads are higher and Facebook reports over 85% increase in in-feed video engagement, even though users can just scroll away. It teaches us that trust and relevancy are very important factors when implementing a native ads strategy.

Ouriel Ohayon:

It’s not tricking if you do things right. But it is correct to say that the industry is still young and that many mistakes are still made sometimes on purpose in order to optimize the return. Advertising (native or not), should be honnest, disclosed, distinctive and instantly spotable. Those are rules of common sense, but also rules established by the FTC and other authorities.

There is no standard yet about what a native format should be like although some companies like Facebook and Twitter are de facto, by their size, a model. But even there many things could and should be improved: from the way ads are disclosed and presented (for example is it right to say that an ad is a “recommended app” when we all know it s there because someone paid for it) to the reliability of the messages that some advertisers chose to broadcast and on which Facebook has little control.

News publications have even more responsibility because they now used sponsored article, which look like journalistics posts, as ads formats and it is really easily as a reader to miss the difference and understand that an ad is an ad and a piece of news is a piece of news.

In the long term market forces, regulation and more competition will influence the industry in the right direction: that is always the case on the web.

Linat Wager:

In a way, the way most native advertising is done these days, is basically taking the banners and moving them to be native, i.e. and ad format and that is it. This was the first step. In Yahoo, for example, we started working on the second step, which in my mind is the most important one. Make the sponsored ad the advertisement not just visually aligned with the user context but also content align. Make it so it would be the next thing the user would want to do in your application. In this way we would drive value to the user through advertisement and conversions would be higher.

What, in your opinion, is next in mobile advertising and what’s the timeline?

Offer Yehudai:

75% of mobile ad spend in 2014 was for app installs. There are many good companies that make good money out of it. I believe we’ll see a slow yet steady shift to brand advertising in the next 12 months. Why? Facebook and twitter are doing a very good job driving app downloads, so we need more innovation for brands and SMB to drive commerce and transactions on their sites and properties. I believe that deep-linking technology with offline to online conversation will be the major drivers for mobile commerce as the next generation of advertising.

Ouriel Ohayon:

If I knew it I would not disclose it here  I anticipate more innovation in video though which can’t just keep on being so intrusive and based on just incentives in order to succeed. Formats should be shorter, better designed and more integrated in the experience without being too intrusive.

Ads will always suck but overtime I do believe that the industry efforts will manage to make ads suck less. Personalization is also an area of major improvements: we’re still seeing too many ads that are totally irrelevant, including on Facebook which is the company that knows us best on the web. Finally I anticipate ads to move beyond the smartphone screen and reach new screens, from watches to connected TVs and possibly our cars.

Linat Wager:

As mobile advertising evolve, a lot will change in term of how and what we present to the user. With native advertising being the tip of the iceberg. We will better understand users’ behavior on these devices and will know how to track them across devices, this will help drive greater value to the user. We will use more signals that only exist in the mobile world like user’s location and specific interaction of the device. We will see more advertisements part of the native flow in the applications. A new marketplace will emerge where applications, who know their users best, offers native advertisement real estate as part of their existing native flows, not just in the stream, and advertiser become more sophisticated in understanding their mobile users.