Much has been written about native advertising recently. Some are predicting a $10B+ market. Others, like the Atlantic Monthly, are scrambling to save face after poor execution of a native advertising campaign for The Church of Scientology. To quote Homer (Simpson), Doh!

So what is native advertising? And is it the holy grail? Or will it cause customers to say holy sh@t!

To understand what native advertising is, let’s start with a story. And as we know, all great stories start with three guys at a bar.

Joe and Bob are sitting at the bar. Joe can’t stop talking about this Cuban cigar he smoked on his last vacation to Mexico, and how much he’d love to get his hands on another one (hey, I write about what I know…).

Ray happens to be sitting in the seat next them. He turns to Joe and says, “Excuse me, I couldn’t help overhearing. If you’re interested in Cuban cigars, I can get you some at a very reasonable price.”

Leaving aside the questionable legalities of purchasing Cuban cigars in the US, what just happened is what contextual advertising has strived to achieve for years. Ray had an offer to promote. But rather than asking everyone in the bar if they wanted to buy Cuban cigars, he presented the offer in the context of the conversation his prospect was already engaged in. It felt natural, rather than an interruption.

Being able to do this on a mass scale has long been hailed the holy grail of marketing. Trouble is, conversations that give insights into people’s needs rarely happened publicly.

Until now. People Facebook post, Tweet, LinkedIn message, and Pin their every interest for the world to see. And the technology to mine and act on this information keeps getting better. For the first time, contextual advertising has a real shot at reproducing that scene at the bar en masse.

So much so that we couldn’t resist renaming it. Meet native advertising, or the artist formerly known as contextual advertising.

Native advertising is nothing more than really good contextual advertising. In fact, it’s so good that you can’t tell the difference between the core content on the page and the paid advertising. In short, it appears ‘native’ to the core content.

But is native advertising good marketing? Let’s go back to the bar.

Let’s say Joe, Bob, and Ray all know each other. Bob and Ray are engaging Joe, asking questions about these cigars he’s going on and on about, and sharing their own stories about cigars. What Joe doesn’t know is that Ray’s actually paid Bob to be there, so that he could sell Joe some cigars. When Joe finds out what’s going on, he walks out, calls Bob an asshole, or gives him a right hook. Depends on how many drinks he’s had, I guess.

Sometimes too much of a good thing is, well, no good. Whether you call it native advertising, contextual advertising, product placement for the digital era, or ‘paid’ pull marketing, the principles are no more complicated than the scene at that bar.

People don’t like to be interrupted with something that’s out of context, and they really don’t like to feel deceived, whether the deception was intentional or not. Just look at the fallout from the Atlantic Monthly case. For marketers, context and transparency reign supreme.

The technology to recognize context is getting better. Joe’s real interest is in cigars, not another Mexican vacation. That’s easy for you and I to spot, but not so easy for a computer to do at scale. I routinely get sponsored Facebook stories and tweets promoting something related to my job. While it might be relevant to me in some capacity, it certainly doesn’t feel in context with rest of the content on my wall. You can say context is real-time relevance. But the algorithms do continue to improve, and that’s a tremendous opportunity for marketers.

It also means that if Bob knows Ray’s a cigar salesman, he should let Joe know upfront. There’s a reason Google clearly labels paid listings, and doesn’t allow advertisers to pay for organic results. If native advertising in its current state really takes off, I expect a fierce backlash from the internet community at large. Word of caution to all the 20-somethings filing papers to launch native advertising start-ups…

Get the context right, be transparent about who you are, and you’ll find the holy grail of marketing. Mislead your audience into saying holy sh@t! when they find out you’re a paid advertiser, and expect consequences similar to what the Atlantic Monthly suffered.

For what it’s worth, I can understand why The Church of Scientology felt compelled to pay for flattering content. But the publisher has a higher responsibility to its readers. I’ve now mentioned Scientology twice in this blog. I wonder if Tom Cruise’s attorneys are getting some sort of alert…