Comparing the ROI of Content Marketing and Native Advertising – HBR.
Kelsey Libert is a viral marketing speaker and Director of Promotions at Fractl, you can connect with her at @KelseyLibert.
Many companies today rely on content marketing and native advertising to gain visibility for their brand — after all, 70% of people say they’d rather learn about products through content rather than through traditional advertising. But is either content marketing or native advertising a surefire way to boost brand awareness? And which one offers more bang for the buck?
To answer this question, we at Fractl, a content marketing firm, collaborated with Moz to survey over 30 agencies specializing in content marketing about content formats and the metrics they use to track ROI. And I’ll get to what we found, below. But first, let’s remind ourselves how each approach is different, and what each approach aims to do.
Content marketing agencies produce campaigns for brands (this is an example) and then pitch these to multiple top-tier publishers for coverage. Each time a publisher writes about a campaign, it will usually link back to the company as the source. These links increase a company’s organic search rankings, direct traffic to the company’s website, and drive user engagement for the brand via social media.
Whereas content marketing usually tries to secure dozens of media pickups, native advertising promotes content by paying to partner with a single publisher. (This is an example of a native advertising partnership between BuzzFeed and all Laundry Detergent.) Native advertising (also known as sponsored content) offers a guaranteed placement with a top-tier publisher that might have monthly unique visitors in the multi-millions.
We took a data-driven approach to compare the efficacy of native advertising versus content marketing. Here’s what we learned about how the two strategies stack up.
First, we looked at content marketing services. On average, 65% of agencies produce between one and 10 campaigns per month for each of their clients. The process for a single campaign includes idea generation, concept research, asset design, and – the final step – promotion. Once a team has completed production, they pass the campaign to a media relations associate who secures press coverage for the campaign. The goal: getting staff writers at a high-authority websites to produce a story about the campaign for their publishers.
In the early days of content marketing, widgets, and “listicles” dominated the landscape. As Google began penalizing brands for thin content pages and low-value link schemes, the industry scrambled to produce higher-quality content. Thus, like some publishers, content marketing agencies started to produce more articles and infographics than other content formats.
Almost half of clients measure content marketing success by the number of leads (i.e., customer conversions based on campaigns), high-quality links (i.e., links from high-authority publishers), and total social media shares generated by each campaign. Excluding outliers, the average content marketing campaign earns 27 links from publisher stories (media pickups), whereas the average for each agency’s “most successful campaign” is 422 links and the median is 150 links.
How much does this cost? We found that 70% of content marketing agencies offer monthly retainers, and these fall into five buckets: Less than $1,000, $1,000–$5,000, $5,000–$10,000, $10,000–$50,000, and $50,000–$100,000. Content marketing costs largely relate to the scope of the projects being produced (e.g., press releases versus interactive graphics) and their reach (e.g., influencer marketing versus no outreach). We found that a price tag of between $5,000-$50,000 correlated with campaigns that generated the most links, which suggests that agencies were able to produce innovative, larger-scope campaigns, influencer marketing, and content amplification, rather than just issuing press releases. At the lower end, we did not see as much activity, and we speculate that those firms did not have the resources to generate compelling campaigns. But interestingly, at the higher end, we did not see considerably more value being created once companies went over $50,000.
Next, we wanted to see how native advertising compares. We gathered native advertising cost data from a report by Relevance, another content marketing agency, to which we added 100 additional data points to see what nearly 600 publishers charge for native advertising. We included general news publishers that tend to dominate search engine results and have a collective social following of more than 100,000 people.
At first glance, we saw that the minimum investment to partner on a native advertising is exorbitant for most brands. For example, to team up with TIME on a native advertising campaign, a client can pay up to $200,000. On average, the cost of a native advertising campaign for top-tier news publishers was $54,014.29. (For lower-tier publishers, which we categorized as having a domain authority of less than 80, the cost drops to an average between $70 and $8,000.)
Clearly, native advertising is expensive. But what’s the return? We reviewed 38 native advertising campaigns published on BuzzFeed, a leader for sponsored content, alongside 58 Fractl content marketing campaigns, to evaluate the reach (in terms of links) and engagement (social shares) of each. (Full disclosure again that my company Fractal is a content marketing agency.) Overall, Fractl’s content marketing campaigns were republished and shared more than BuzzFeed’s native advertising. For example, just comparing the top performing campaigns for each, we found that Fractl’s 11 campaigns for client Movoto resulted in, on average, 146 pickups and 17,934 social shares. BuzzFeed’s 13 campaigns for Intel resulted in one pickup on average and 12,481 social shares.
And in line with these findings, a report by eMarketer found that the most common issue cited by executives who use native advertising was of scale. Of course, you’re paying to publish content solely on the site you’re partnering with, which limits potential reach. One additional stumbling block: Google considers native advertising to be paid links, which prevents campaigns from improving the company’s search engine rankings.
With its smaller reach, is native advertising ever worth the cost? For some firms with large budgets, the expense is worth it if it means aligning their brand with a high-authority publisher and the right niche audience. Ultimately, native advertising has been proven effective in drawing higher click rates than traditional banner ads and other outbound marketing methods, so as a replacement for those, it could make sense.
While I may be biased, these data-driven findings suggest how companies might get a better bang for their buck with content marketing — especially if they’re looking for a wide reach with different publishers and audiences. However, for those mainly interested in guaranteed placement with a big-name publisher, native advertising might be the way to go.