Those numbers are for brands that returned to a site 60 days after their initial campaign.
“Renewal rates for native are an area that publishers have been looking to improve,” stated Todd Krizelman, CEO-cofounder, MediaRadar, the ad sales intelligence platform. “There were definitely gains in 2018, though more can be done to ensure that the growth is long-term.”
The MediaRadar report also found that in the first half of 2018, an average of 473 advertisers placed native ads for the first time each month.
“This year’s numbers demonstrate improvement, but there’s still a long way to go for publishers,” Krizelman added.
Brands running native ads are doing so on a small portion of sites. They placed native content on just 10% of the websites where advertising. About 11% of brands advertising online are placing native ads.
“The market has definitely matured,” stated Krizelman. “To win in a mature market, publishers need to build out native capabilities, infrastructure and products to meet the demand from advertisers. As they do this, I expect the number of sites winning native campaigns to increase.”
The report looked at digital native ad spend from January 2016 to June 2018. The study reviewed thousands of ads from over 3,000 sites.
Media and entertainment is the top native category by spend from January to August 2018. Media and entertainment companies spent $269 million in that time period, led by Comcast, Hulu and Cox.
The other top categories using native were technology ($75 million, led by Microsoft, Google and Grammarly), finance and real estate ($75 million, led by Bank of America, Discover and Charles Schwab), professional services ($57 million, led by HomeServe, Stitch Fix and Kelley Blue Book) and retail ($46 million, led by Amazon, Walmart and Best Buy).
The report lists three challenges with native advertising.
“Measuring the performance and sustainability (with higher renewal rates) of native campaigns is one of the most difficult challenges to overcome,” reads the report. “It’s especially hard to gauge metrics, such as return on investment (ROI), impact and effectiveness.”
The time and labor required to produce native advertising is another challenge for advertisers and content creators alike. So is deception.
“Audiences don’t want to be disrupted by ads, but they also don’t want to be duped into believing that an advertisement is anything other than what it is,” reads the report. “Consumers should only be exposed to online advertisements that are fair, clear and engaging. Unfortunately, native advertising has the potential to be too discrete.”
The FTC has a native advertising guide to instruct advertisers on using appropriate terminology and obvious labels to inform consumers they are looking at an ad.
Native advertising has numerous benefits. It is generally believed to be more trustworthy by consumers, as well as more interesting and therefore more engaging. Native ads have higher click-through rates than typical display ads and are good drivers to purchase, especially from millennials, per the MediaRadar report.
Due to the growth of branded content studios created in-house by publishers, “consolidation seems inevitable," the report reads. “Publishers are bound to pool their creative resources together."