Lifting the Curtain on Native Advertising Pricing Models

Lifting the Curtain on Native Advertising Pricing Models

Native advertising is a popular ad format because it has the ability to generate higher engagement rates than standard display banner ads.  In our recent post THE ESSENTIAL GUIDE TO NATIVE ADVERTISING,  we broke down the 3 primary formats: sponsored content, native display ads and native social ads. Today we will break down the pricing models of each format when working with top publications. Native advertising pricing does not have a standard pricing model. Depending on the format, the creative and the distribution, publications have huge variations in their price points.

Cost per Thousand

The native display ad format is primarily priced on a cost per thousand basis (CPM).

“Native display ads organically embed ad units within the flow of original editorial content on the publisher’s site. Most major publishers have these ad units incorporated into their site design.”

This is the format that can be bought programmatically through networks such as Sharethrough and Nativo and well as directly through large publisher networks such as Tribune Media (our parent company).

Programmatic buys can be executed in specific geographic areas with contextual targeting. For example, you might want to reach the midwest region with a piece of content that is in the health and wellness vertical.

Pricing for this type of buy ranges from $10 – $18 per thousand impressions. The range in CPM is directly related to the quality of the publishers that you are working with and whether the cost of the content is included in the price. Content at these price points is primarily an article with stock or advertiser provided photography.

Articles are relatively inexpensive to produce for publishers, using resources that are already efficiently built in to the organization.

According to Digiday, the Huffington Post “is often repurposing existing editorial articles to extend brands’ native ad campaigns” allowing them to price their native display at a competitive $10 CPM ($30,000 for one article with 3 million impressions). It is unclear from the article whether these are viewable impressions or if these impressions are guaranteed.

Custom Content Priced Separately 

When working with top publishers, most will charge separately for content production when that content is custom. Custom content is considered video, infographics, eBooks, etc.

The New York Times and the Wall Street Journal both charge separately for content creation according to Business Insider. Both the Times and the Journal create hyper-premium content that features in-depth experiences with the advertiser sponsor. Their sponsored content weaves content from the advertiser within editorial content that fits in with the quality and the interests of their audiences.

In the example below, the Wall Street Journal has created an entire interactive experience called ‘Gaming the American Dream’ around the new Showtime series Billionaires. The sponsored content includes rich media graphics, long-form editorial, audio clips from financial experts, an interactive infographic, an interactive quiz and the ability to watch clips from the series and/or the entire first episode of the series.

Anatomy of Premium Sponsored Content

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Hybrid Pricing Model 

The third pricing model combines the ease of buying native on a cost per thousand basis with the true cost of the custom content built into the CPM. This is the model that PIX11 Media uses along with other top publishers such as the Daily Mail.

According to Digiday, the Daily Mail charges $10,000 for content with 40,000 guaranteed views.

Pricing under this model can vary widely based on the type of content being produced. On the high end is video content and interactive elements. The low end includes articles and recycled editorial.

Social Distribution Pricing

The cost of social distribution may or may not be included in a distribution plan with a publisher. Social distribution means that the publisher pushes out an organic or a sponsored post to their social audiences to drive visibility and traffic to the piece of native advertising. This type of distribution is not available programmatically and can only be done directly with publishers.

Publishers often have an advantage over brands on social media, particularly Facebook because their posts will have more organic reach. However, to guarantee views or clicks to the advertiser content, the publisher needs to boost or sponsor a post on social media. A few publishers are still packaging in individual posts with no distribution guarantee or targeting; however, it is in the best interest of both the publisher and the advertiser to boost and target posts to particular audience segments that will be most interested in the content and that fall within the target audience of the advertiser.

Publishers vary on how they charge for social distribution but generally it will be on a CPM basis to allow for ease in the buying process. For instance, if a brand directly posted a video to their own page and boosted it to an estimated viewing audience of 50,000 people, the CPM could range between $6-$13. When a publisher posts a video in partnership with a brand to the publisher page and boosts it to an estimated viewing audience of 50,000 people, they need to account for the cost of the media, the cost of the content as well as the value of the engagement that will be generated around the post. For example, a recent native piece that ran on PIX11.com targeted parents of high school students with messaging about the importance of open houses. The social post on Facebook was shared over 350 times and had an active comment thread where parents debated the merits of open houses in the college-selection process.

Comment Thread of Sponsored Post on Facebook
Parents of high school age children engaged in an active debate on the merits of open houses in the college selection process on a sponsored Facebook post.

Because of these additional costs and the value of the engagement, CPMs for social distribution through a publisher will range from $26 – $50.

Native Advertising Pricing Models: Key Takeaways

Native advertising does not have a standard pricing model but norms are developing.

  • Native display format is primarily priced on a CPM basis. This may or may not include creative but generally does not include any sort of premium creative. This is how the native programmatic market is priced.
  • Sponsored content is priced separately, particularly at top publications like the New York Times and the Wall Street Journal.
  • A hybrid pricing model that includes premium content and allows advertisers to pay on a cost per thousand basis is developing as the model of choice for direct publisher buys.
  • Social distribution through publishers is available and is priced at a premium because of media costs and the value of increased engagement.