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Native advertising: Is there still room to grow?

December 4, 2018 | By Todd Krizelman, CEO—MediaRadar @ToddKrizelman

Seventy five percent of consumers report that, if content piques their interest, they’ll engage with it, regardless of whether it’s branded or not, according to Reuters. That’s the beauty of native advertising. Unlike display ads or banner ads, native ads don’t have to look like ads. They are non-disruptive and introduce the reader to advertising content without sticking out like a sore thumb.

Native was once one of the hottest trends in online ads. However, the total number of advertisers has stagnated, starting around the beginning of 2017. Only about 11% of online advertisers use native formats these days. And brands that buy native ads only run them across 10% of the sites where they advertise. What caused this shift?

Certainly, online ads should be fair, clear, and engaging. Unfortunately, at times, native ads can be almost too inconspicuous, as they weave seamlessly into the platform where they appear. Additionally, the process of crafting a native ad or campaign is a costly, multistep process involving a lot of collaboration and time. And, without unified standards, it’s especially hard to gauge performance metrics like return on investment (ROI), impact, and effectiveness. For these reasons, some advertisers see too many challenges with creating an effective native advertising program.

On the flip side, many would argue that the benefits of native advertising outweigh the negatives. Native display ads receive a higher click-through-rate (CTR) than typical display ads. According to an AppNexus whitepaper, CTR is actually 8.8x higher with native display ads. Moreover, two out of three GenZ, Millennials, and GenX consumers trust branded content more than traditional advertising, finding it more entertaining, thought-provoking, and impactful, according to a Time Inc. study. Furthermore, a Collective Bias survey found that one-third of Millennials say that they’ve purchased something as a result of a sponsored post and nearly 37% agree that useful and high-quality posts offset any objections they may have to branded content.

Based on these findings, it’s not surprising that the industry investing most in native advertising is Media & Entertainment with over $269mm. Top spenders include Comcast Corporation, Hulu, and Cox Communications. The Finance & Real Estate and Technology sectors tie for second place, both investing $75mm, with Professional Services and Retail not far behind, spending $57mm and $46mm respectively.

Overall, MediaRadar’s study found that, while the native market is maturing, there is still room for growth. In North America, where users have become accustomed to branded content, brand advertisers must differentiate themselves from competitors. They can do this by focusing on their most profitable products, reworking existing products that underperform, or refreshing their offerings with new innovations. While publishers must continue to perfect their offerings for native to reach its full potential, the advertising format still has plenty of opportunity for growth in the future.

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