Native Advertising on Marketplaces: The Good, the Bad, & the Ugly

Seyf Emen

March 1, 2022
8 min read
Native Ads
Marketplace Monetization
Sponsored Listings
Banner Ads
Video Ads

What is Native Advertising?

Native advertising is a form of advertising that is designed to match the look and feel of the platform it appears on. Thanks to its unobtrusiveness, it has been a powerful tool for marketplaces and vendors.

Native ads are more engaging than traditional ads because they are designed to fit in with the environment they're being viewed in. For example, if you were viewing an article on Yahoo! News, you might see native ads that are related to the topic of the article you were reading.

Similarly, when you search for "red shoes" on Amazon, you'll see some sponsored listings which are basically native ads.

They are getting increasingly popular in marketplaces, delivery apps, and multi-brand retailers.

The rise in popularity of native advertising has been attributed to its ability to be more effective at grabbing attention than other forms of online advertisements such as banner ads and pop-ups.

If you want to read more about native advertising, check out our resources page.

In this article, we will explain the pros and cons of native advertising for marketplaces.

Before that, let's see the popular native ad formats that are common in marketplaces.

Popular Native Ad Formats for Marketplaces

Sponsored Listings

Sponsored listings are the most common type of native ads we encounter every day while using marketplaces.

They show up on the search result pages and are usually above the organic search results. Labeled as "sponsored", "promoted", or "ad", these ads are highly effective at increasing the visibility of a product or a brand, and increasing product sales.

sponsored listings on marketplaces

Banner Ads

The banners you see on the homepage, search results, or category pages of your favorite marketplaces are actually banner ads. As another popular form of native advertising, banner ads offer an intuitive and sleek ad experience inside the buyer's journey.

In addition to increasing sales, native banner ads are the perfect way of building brand recognition and increasing brand awareness.

banner ads on marketplaces

Video Ads

Even though they are not as popular as sponsored listings and banner ads, marketplaces and vendors are increasingly leveraging video ads in their media mix.

Well-designed native video ads make products and brands more relevant through storytelling and increase the time users spend on the platform, resulting in higher brand awareness, engagement, and ROAS.

video ads on marketplaces

Related/Relevant Products

Since we see various product recommendation widgets on the product detail pages titled "visitors checked these products", "products often purchased together" or "related products" etc., related or relevant products native ads can blend in really well and generate good results.

Now that we've covered common native ad types on marketplaces, let's jump to the good, the bad, and the ugly parts (playing Ennio Morricone tunes in the background)

The Good: Native Advertising is Beneficial for Marketplaces

The success of a marketplace is dependent on the number of people who are willing to buy and sell. Native advertising is a powerful tool for marketplaces because it provides an opportunity for sellers to reach potential buyers and for buyers an easier way to find the products they are looking for.

It also gives them the opportunity to monetize their website traffic in the most effective way which is through native ads and they have the potential to reach around 10 to 15% of the GMV like Amazon is doing right now. So native ads are a great monetization tool for the marketplace.

Native advertising benefits marketplaces in many other ways:

-It helps attract more buyers by reaching them at the right time and place.

-It can help increase a seller’s conversion rates by showing the visitors relevant ads.

-It can be used to target specific audiences with ads that are relevant to their needs and interests.

-Canalize some of their vendor's ad budgets from other ad platforms to the marketplace

-Gives a new tool for the vendors to sell more

-Increase the vendor loyalty

The Bad: Some Disadvantages of Native Advertising on Marketplaces

Native ads are usually a good way for brands and vendors to get their products in front of consumers. But you need to be aware of some disadvantages of native ads on marketplaces.

The first disadvantage is that creating and managing a native ad campaign can be challenging for first-timers or small vendors who do not have marketing experts within their teams. The reason is that many of these native advertising campaign managers of the marketplaces are not user-friendly for beginners. Campaign creation might require multiple steps that might come off as confusing for non-technical people.

The second disadvantage is that it is hard for brands to measure how effective their campaign was because there are so many variables involved in native advertising on marketplaces. The charts and reports of the marketplace native ads dashboard can be confusing and hard to read.

Finally, the management of a native advertising solution can be costly for a marketplace. Marketplaces need to spend time training vendors on creating ad campaigns and using their platforms. They also need to monitor the campaigns and make sure that they do bring good ROAS for the vendors.

Based on the size of the marketplace, managing a marketplace native ads platform might require a big team, which translates to a lot of additional costs.

While these disadvantages are present, they are also easily avoidable with a well-built and intuitive native ad platform.

The solution we offer with Topsort doesn't have any disadvantages.

With a strong empathy for small vendors, we've built our dashboards in a way that even a first-timer can easily create and manage ad campaigns. Our real-time reports are easy to read and are straightforward in reporting the performance of the campaigns, and ROAS.

Finally, the same intuitiveness is available on the marketplace admin side making it very easy for a marketplace to manage the vendors and their campaigns, without needing a huge team.

The Ugly: It's Not Easy to Build a Native Ads Solution That Fits The Needs of Marketplaces

Here comes the ugly part!

Building native ads platform from scratch is hard.

After seeing the value a native ad platform brings to a marketplace, the first thought can easily be building an in-house solution. You have a very talented dev team, don't you? They are the ones who build your marketplace anyway. Native ads sound like another feature to add to your roadmap.

Native ads, especially those that fit the needs of a marketplace, are very complex projects.

The engineering and mathematics that fuel a real-time auction-based native ads platform are complex. Not every marketplace can afford the time and resources companies like Amazon, Google, Etsy, and Walmart spent to perfect their ML models, ad platform performance, and effectiveness. You can read more about the technical side of native ads in our blog.

Keep in mind that you don’t want to harm your user experience for the sake of creating a new revenue stream through native ads. Promoted listings, banner ads, video ads or other native advertising formats should enhance the user experience for your visitors, not diminish it.

A homegrown ad solution with poor loading times, irrelevant ads, bad ROAS for vendors, and inconsistent performance is worse than not having an ad solution at all. You'd be losing more users and vendors due to a negative ad experience.

You need to make sure that you have an easy-to-use native ad solution that supports different media formats and delivers good ROAS for your vendors and brands while also delivering a smooth and useful ad experience for your users.

Conclusion: Consider Using a Marketplace Native Advertising as an Extra Source of Revenue, but Make Sure That You Have The Right Solution

The purpose of a marketplace native ad solution is to create a win-win-win situation for 3 key players in the buyer-seller ecosystem: marketplace, vendors/brands, and customers.

Any solution that delivers a poor experience for any of these key players will cause more harm than good in the long term.

That's why we built Topsort keeping all of these players in mind. With Topsort, everyone wins.

The marketplace is the first player. A native ads solution powered by Topsort gives you the opportunity to monetize the traffic on your marketplace in the most effective way which is through real-time auctions. It has the potential to reach around 10 to 15% of the GMV like Amazon is doing right now. So it's a great monetization tech for the marketplace.

The sellers (vendors or brands) come next. The sellers also benefit from Topsort because they have the opportunity to easily create native ad campaigns with high ROAS in a matter of minutes. You don't need to be a digital marketing expert to create campaigns that have high ROAS. Sellers don’t need to depend on the big players like Facebook and Google. They can take some of the budgets from those platforms out and put them inside your marketplace and actually get better results. We can assure you that they will get better results.

Topsort is also the perfect marketplace monetization tech for your end users as well. First of all, we are a privacy-centric solution that doesn't need 3rd party cookies to deliver great results. We are a cookie-less solution.

Second of all, the way that ads are rendered on your marketplace is so native that it doesn't bother your users. When your customers run a search on your marketplace, they will receive an ad delivered by Topsort that is directly linked to what you're looking for. The whole buyer journey is made faster.

If you want to know more about a native ads solution for your marketplace, get in touch with us and learn more about our API-first solution.

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