Why the digital advertising ecosystem loves native

Native ads present publishers and advertisers with an opportunity to create non-intrusive, thematic ads that consider consumers’ experience first, which is key to meeting their high expectations. This is especially true on mobile as smartphones take center stage in day-to-day life.

It’s no shock that advertisers spent $7.9 billion on native ads in 2015 — a number that’s expected to soar to $21 billion in 2018. Mobile native ads revenue is also anticipated to grow market share over the next four years to hit 63 percent of mobile display ad revenue, up from 52 percent in 2015.

While the definition of native is a bit loose, for the purpose of this article, I’ll define it as ads that are created especially to fit contextually as closely as possible to the content around them. These days, that’s often represented through articles, infographics and so on, but it can also come in the form of ads in social network feeds like Facebook.

Regardless of how you define native advertising, here is how it’s a win for consumers, publishers and advertisers alike:

Consumers are fans of native

Often turned off by pop-up ads and pre-roll video, consumers prefer to digest marketing messages that relate to them and are in line with the content they’re already in the process of consuming.

In fact, according to Yahoo research, 60 percent of consumers have positive impressions of native advertising. They feel that integrated ads are less annoying and more interesting and informative than other forms of advertising.

Still don’t believe me? There is a reason why companies like Taboola and Outbrain are seeing such great results. A year ago, Taboola raised $117 million in funding and was dubbed a “Billion Dollar Unicorn.”

Both companies specialize in native advertising recommendations, often in the form of content through a network of publishers including USA Today, Business Insider and The Weather Channel. The digital advertising ecosystem is quickly learning that people like informative content that’s targeted.

Publishers can beef up ad revenue

Since the digital revolution started with the launch of the web and now the mass use of mobile devices, publishers have struggled to find a sustainable revenue model. From the beginning, there has been an understanding between the consumer, advertiser and publisher. Consumers get free access to news and information — basically the entire internet — in exchange for receiving ads.

In more recent times, bad digital advertising has gotten out of control, causing consumers to turn to ad blockers. This is no help to publishers who still aren’t making as much money as they need to succeed, despite efforts to create subscription offerings.

Publishers have fully embraced native as a new and possibly more sustainable revenue opportunity. As of 2013, 73 percent of publishers were already offering native ads, according to an eMarketer survey. That figure is aggressively on the rise, as consumers increasingly get irritated with irrelevant and impersonal advertising.

Publishers have caught on that if they offer consumers content that they care about, they also win in the long term.

Advertisers get more bang for their buck

Advertisers are fans of anything that drives long-term consumer engagement and sales. And, more importantly, they like investing in ads that can showcase tangible ROI. Native advertising is a newer approach for brands to target consumers and drive even more sales.

In addition, advertisers know that today’s consumers are fickle and hyper-focused on personalized experiences. So they know native is the best way to reach them — that’s more so the case for the younger millennial audience that appreciates valuable information over anything else.

For brands, native advertising offers a fresh approach to targeting consumers, as well as another way to expand budget and deliver results for the business. In looking at mobile alone, mobile native ads typically drive greater engagement levels than other types of mobile display ads.

And, native can easily be integrated with an advertiser’s programmatic partner to automate the buying and selling of native ads by breaking them down and then tailoring them to relevant properties.

Simply put, native advertising is a win-win-win for everyone involved.

Some opinions expressed in this article may be those of a guest author and not necessarily Marketing Land. Staff authors are listed here.

About The Author

James Smith

James Smith is the EVP of the Americas at Criteo, the leading performance marketing technology company. James is responsible for managing all sales and operations throughout North and South America. Previous to Criteo, James spent eight years as CRO of several very successful start-ups, including Verve Mobile, Flixster and The Huffington Post. In his role as CRO at these organizations, James oversaw a combination of advertising sales and related operations, as well as marketing and business development. Prior to his start-up experience, James held SVP roles at AOL and AOL’s Ad.com, and served as SVP General Manager at Sony Digital. Over the course of his career, James spent many years working across digital video, social and mobile, and has led effective business teams. James is a graduate of Columbia University and resides in New York City where he shares his home with his two short people and a drum set.