What’s Next for Native Ads? - eMarketer

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What’s Next for Native Ads?

Social networks, media publishers see huge potential in native ads

March 21, 2014

Native advertising is flourishing across social media, content portals, news properties, video-sharing sites and streaming services. Increased mobile use of these venues has fueled much of the growth, since native ads work best in the content streams that people tend to access on smartphones and tablets, according to a new eMarketer report, “Native Advertising: Difficult to Define, but Definitely Growing.”

Perceptions about what constitutes native advertising are as varied as the ads themselves and the places where they appear. There’s still disagreement over basic terminology such as “native advertising,” “sponsored content” and “branded content.” Some make distinctions among those terms, while others use them interchangeably.

However, perceived effectiveness is fueling marketer investment in native advertising. In December 2013, BIA/Kelsey estimated native ad spending on social media alone would grow from $3.1 billion this year to $5.0 billion in 2017. As a percentage of total social ad spending, it projected native would rise from 38.8% in 2014 to 42.4% in 2017.

US Social Media Ad Spending, by Type, 2012-2017 (billions and % change)

For media publishers, native advertising represents an opportunity to reverse the tide of flat or declining revenues. eMarketer estimates US print ad spending will decline from $32.16 billion in 2014 to $31.29 billion in 2018. Digital ad spending on newspapers and magazines will increase to $8.41 billion by 2018, from $7.48 billion in 2014, but these gains will still leave the industry essentially flat for the forecast period. With these numbers as a backdrop, it’s easy to see why media companies are so eager to create new revenue streams through native ads.

Brand marketers and agencies do not have the same urgency as publishers, but they are just as eager to gain an edge over their competitors—and native offers a way to do that. In an August 2013 Sharethrough study, awareness was the top marketing objective for native mobile ads among US digital marketing professionals. Other leading objectives included branding and brand affinity. Purchase intent and lead generation were further down the scale, indicating that native ads (at least on mobile) are more a branding play than a direct-sales driver.

Leading Marketing Objectives for Native Mobile Ads According to US Digital Advertising Professionals, Aug 2013 (% of respondents)

These findings are in line with what marketers and other ad industry experts say is one of the qualities that makes native advertising especially appealing: its ability to engage the user.

The full report, “Native Advertising: Difficult to Define, but Definitely Growing,” also answers these key questions:

  • What is native advertising, and how has it evolved over the past year?
  • What are the pros and cons of native ads?
  • Why are the Federal Trade Commission and industry groups taking a close look at native advertising?

This report is available to eMarketer corporate subscription clients only. eMarketer clients, log in and view the report now.


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