The sale of sponsored editorial is up significantly, across almost all big name publishers. BI Intelligence predicts that the native spend will hit $21 billion next year and account for nearly three-quarters of all digital ad revenue by 2021. Similarly, according to our own MediaRadar analysis, native adoption and demand are extremely high. An average of 610 new advertisers use custom content each month. Demand is exploding as native’s impact among consumers – providing a unique ad experience compared to traditional display – has also grown considerably.
Despite this success, there are visible cracks in the foundation. Competition and unsuccessful campaigns are driving unusually low renewal rates. The average advertiser renews only 33% of the time.
We analyzed the native ad success of a prominent publisher which doubled their sponsored editorial sales in one year. This represents a major success. However, if we look a bit deeper, the results are sobering. In a year over year analysis, while 71% of advertisers did buy sponsored editorial again, only 43% returned to the original publisher, and 29% stopped buying the format entirely.
The takeaway: As the market matures and becomes more saturated, emphasis must be placed on winning the renewal. The best publishers today enjoy 90% renewal rates, creating a cash machine. There are several reasons for their success.
- Clear Objectives: Publishers that see higher renewal rates establish and demand partner campaign objectives in advance. They also test that the objectives are met.
- Campaign Duration: Additionally, we observe that those publishers with the longest campaign flights (more than 6 months) have much higher renewal rates. This enables for better testing and adapting, as well as provides a greater sample size of data.
- Native Investment: Those winning renewals have also invested in technology and additional personnel for their solutions. They typically see a 49% renewal rate.
Native is a massive opportunity for publishers. However, a lot of work still needs to be done to optimize success and strengthen results. Without the expansion of successful native offerings, demand will outweigh supply, and the bubble could burst.