Why Native Ads Are the Largest Digital Advertising Category

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Digital advertising continues to grow, but there a host of complaints about the consumer experience it provides. The rise in ad blockers and the drop in click-through rates attest that the interruptive form of advertising is in dire straits.

At the Native Advertising Forum, which was held Tuesday at Advertising Week in New York and sponsored by Sharethrough, several speakers presented native ads as a potential solution that could overtake interruptive advertising satisfy consumers, publishers and marketers. Native advertising, much of it of the in-feed variety on social networks, already comprises the largest category of digital advertising: In 2016, marketers will spend $16.8 billion on native ads and $13.2 billion on non-native formats, according to Business Insider Intelligence.

Native is thriving, because, as Dan Greenberg, CEO of Sharethrough, said in a playful paraphrase of Bob Marley: “You can interrupt some of the people some of the time, but you can’t interrupt all of the people all of the time,”

Karin Hennessy, product manager at DoubleClick, was another speaker at the Native Ads Forum. She made the case that not just native advertising, but programmatic native advertising, offered a better way forward for digital marketers.

First, in-feed native ads offer a more inviting format for creativity and storytelling. Hennessy said that marketers are spending 90 percent of their digital advertising budgets on media inventory, but only 10 percent on creative development. She said this ratio is inefficient, because 70 percent of a campaign’s success is driven by creative execution. “Seventy percent of the impact of a campaign is driven by the creative. You can target them, but if you show them the wrong thing, you’re wasting an opportunity,” Hennessy said. Native ads, which fit into the same format as social media posts and journalistic stories, provide a better canvas for creative storytelling. “These (native) ads look like content, and they fit in with form and function of the page,” Hennessy said.

Second, native advertising is a strong fit with mobile. Banner ads are too disruptive on mobile optimized pages, Hennessy said. On the other hand, native ads fit into the flow of the feeds that characterize most mobile pages. “Your creative has to work in a mobile-first world,” Hennessy said. In his presentation, Greenberg said of the natural combination of mobile phones and native advertising, “The more intimate and personal a device is, the more integrated the push message model must be.”

Third, programmatic native is poised to make native ad buying more efficient. Programmatic buying is mainly associated with display advertising, but companies like Sharethrough are making programmatic buying a reality. In the past, native ad often had to be customized to the size of the feed on a site-by-site basis. New technology, however, enables a native ad to be broken down by its components — the headline, main image, body copy, and logo — and then reassembled on a variety of websites, no matter their sizing or other specifications.

The increasing availability of programmatic native is one reason why marketers will spend more on native advertising in the years to come. Video is another factor in native’s projected growth. Native ads will evolve quickly with video soon taking the lion’s share of ads, in large part because of Millennials, 70 percent of whom read headlines while watching silent autoplay videos, according to a Qualtrics study.

With everything native has going for it, it’s no wonder that Business Insider Intelligence predicts that marketers will spend about $75 billion on native advertising over the next three years.

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