A new report examining the state of native advertising has found a significant divergence between supply and demand within the sector.
The findings, produced by advertising exchange Hexagram, in collaboration with consultancy Spada, reveal that 62% of publishers surveyed are already offering native advertising – yet only 34% of agencies are offering it as a service, despite the majority (84%) believing that native advertising adds value for consumers.
The State of Native Advertising 2014, shows that agencies currently not offering the service are missing out on significant opportunities to acquire relevant inventory. Furthermore, 41% of brands are already engaging in native advertising campaigns and over 66% are creating the content themselves, suggesting that agencies are lagging behind their own clients in capturing opportunities.
Despite this, the general consensus from the 1,000 respondents – drawn from across the publishing, advertising, marketing and PR industries – is that brands and agencies’ take-up of native advertising is significant and growing. 20% of brands and 12% of agencies currently not engaging in native campaigns are planning to start using it within the year.
However, the continuing need for transparency and a duty of care to consumers were cited as “crucial issues” for the reputation of native advertising. 79% of publishers already clearly label native advertising campaigns to distinguish them from editorial content. As a result, the majority of publishers (82%) and brands (71%) surveyed had not received complaints as a result of native advertising campaigns.
“As with any new market, there are entities that are quick to realise potential, and those that get left behind,” said Chris Ingham Brooke, founder & CEO of Hexagram. “Importantly, it can take time for new formats and media to catch on – this happened with display advertising and it is happening now with mobile.
“The survey clearly highlights some major concerns for agencies. Brands feel comfortable generating content and managing native ads internally, and indeed expect this to be a bigger part of day-to-day operations than agencies do. Agencies need to envisage how they can add maximum value for their clients’ campaigns, and in turn establish their most viable business model as this multi-billion dollar marketplace becomes fully liquid.”
Other key findings show that native advertising represents an average of 20% of total current publisher revenues and publishers expect it to represent 30% of their total revenues within a year. It also shows that blog posts (65%), articles (63%) and Facebook (56%) are the most popular forms of native advertising.
The most popular way of signposting ad content was through the use of the tags ‘sponsored’ (64%), followed by ‘brought to you by’ (34%) or ‘featured’ (29%).
