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Google's New Native Advertising Is Actually A Very Big Deal For Investors

Jul. 14, 2017 1:34 PM ETAlphabet Inc. (GOOG), GOOGL72 Comments
Ian Agar profile picture
Ian Agar


  • Google's new Native Ads for AdSense are an extremely valuable growth opportunity for a stagnant revenue segment.
  • The company now can effectively compete with, and even beat out, privately held native ad competitors such as Taboola and Outbrain.
  • With Google's strong global presence and a naturally higher click-rate, investors may enjoy over $1 billion in additional annual revenue as a result.

Google (NASDAQ:GOOG) (NASDAQ:GOOGL), as the world’s search engine giant, generated 88% of their revenue in 2016 from advertising alone. Thus, when the company announced on July 5th, 2017 that they would begin offering native advertising to publishers through the AdSense network, this was an enormous step forward, despite seemingly scarce coverage of exactly what this means for the company and shareholders. Although Wall Street seems to have brushed off the news as just another day, I strongly believe this is an enormous catalyst for Google that will propel the company further in to dominating the world’s advertising market.

What Are Native Ads?

Before we analyze the financial prospects, we must first understand why native ads are so uniquely different from and more advantageous than any other type of ad. Whereas traditional banner ads were once very effective earlier in the Internet age, banner ad effectiveness has since dwindled as users grew banner blindness. This psychological concept means that users are simply ignoring banners and anything else that does not look and feel the same as the content they truly want from a web page, often unconsciously and without the user intentionally working to block out ads.

With this concept being the reality, banner ads and general display advertising have an incredibly low click-through-rate of only 0.08% on average. This means that for every 1,000 impressions of a banner ad, an advertiser can expect less than one click on average at best, largely due to users either using ad blockers or simply experiencing banner blindness.

Banner ads, therefore, have entered the realm of the universally annoying pop-up ad and the pig-squealing, seizure-inducing ads of the mid-2000s and earlier. Further, ad-blocking technology is on the rise in 2017 with 18% of users in the United States and 11% of users worldwide utilizing some form of ad-blocking technology, according to PageFair’s

This article was written by

Ian Agar profile picture

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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