In Spite of Uncertainty, Native Ad Spending Grows

It’s a buzzword, it’s a digital ad trend, but beyond all the hype native advertising is something else entirely: an enigma. Over the last six months brands have been scrambling to get a handle on native ads, spending all the while. EMarketer reports that native ad spending in 2012 reached $1.63 billion, and that this number will increase to $2.85 billion by 2014. It also estimates that spending on digital sponsorships, which many believe fall under the native ad umbrella, will rise by more than 22 percent this year to top $1.88 billion.

But even as they invest in this growing segment of the digital ad market, brands are confused. There’s a lot of uncertainty surrounding what constitutes native advertising and how best to employ it. Native ads are inherently different from the display ads we know so well: most are highly customized for the advertiser, and deeply integrated into the publisher’s editorial content. This puts a strain on media buyers whose mandate includes finding ad units that are scalable.

Developing unique creative for each site doesn’t make financial sense, nor do most agencies have the resources to do it. Agencies work hard to suss out strategies for reusing existing creative across publishing platforms, and so far, native advertising has been directly at odds with this approach.

Its for these reasons that, earlier this month, the Interactive Advertising Bureau (IAB) launched both a Native Advertising Task Force and a Content Marketing Task Force with the intention of defining these overlapping marketing channels and establishing best practices around employing them. Dig down to the IAB’s roots and you’ll find a legacy of growing the interactive ad marketplace. The organization has done this by championing digital ads, recommending standards for usage, and distributing measurement guidelines. Since its launch back in 1996, its recommendations have become the gold standard for advertising brands. And so we wait now with bated breath for the IAB to deliver us from online ad pandemonium yet again.

The organization has its work cut out for it. Its objectives include creating a set of standards for native ad units – something media buyers desperately need. But consider the nature of the best native ad campaigns you’ve seen. OK, that’s a trick question: many of the most effective native placements are so well-integrated, so perfectly attune to the sites on which they appear, that they don’t even jump out as ads. While the objective isn’t to fool consumers, it is important to ensure that placements are utterly germane to the sites on which they appear. Standardizing such an individualized form of advertising will take some real finagling.

In the meantime, publishers continue to roll out new native units, flooding the market with options and opportunity. In April, Yahoo introduced Yahoo Stream Ads, a series of sponsored posts that will be embedded into the home page news stream on users’ desktop, smartphone, and tablet content. This “stream” is personalized for each Yahoo user, and the ad placements will reflect its look and feel. At the same time, Yahoo is offering Sponsored Web Posts on Tumblr that mimic the look of a typical Tumblr post and are integrated into the microblogging site’s dashboard. They function like Tumblr posts, too, in that users can like, share, and reblog the content, as well as follow the advertising brand’s Tumblr page.

In May, Hearst Magazines Digital Media launched five native ad units for online and mobile platforms including one that can be used with short-form videos like Vines. The sponsored features revolve around a “Native Content Module” – a box that’s integrated into the page content and that links to more subject-relevant, partner-supported information. Content can take the form of an article related to a developing story, a branded photo grid, a collection of themed videos, a scroll of social content pulled from sites like Pinterest and Twitter, and an image-based mobile flipbook.

On the surface, some of these formats appear structured enough. Because they incorporate content that already exists elsewhere, such as videos, photos, and social media posts, they don’t require a build-out from the ground up. This isn’t true of all native ads, though, and even those based on preexisting creative will require some modification.

The next few months will be critical in determining the future of native ads – all kinds, from in-stream placements to contextual videos and section sponsorships. Whether you’ve already allocated part of your ad budget to this segment or are considering doing so in the year to come, this is a subject worthy of careful scrutiny. If we’re going to make content marketing work long-term, on a large scale, we’re going to need a lot of guidance.