Study Highlights Opportunities and Challenges for Native Advertising

David Murphy

facebook ad network native templatesUK ad agencies see creative, programmatic and mobile as the biggest opportunities for native advertising, according to the second annual survey of the UK’s biggest media agencies and trading desks. While the survey size is small, the findings are relevant, given the make-up of the sample, which included Starcom, Mediacom, Carat, Maxus, Mindshare, Maxus, Xaxis, PHD, OMD and Havas.

The survey was commissioned by native ad platform, Adyoulike, and carried out by FaR Partners through the FaR Agency Panel. It found that that 16 per cent of native advertising spend now comes from new dedicated budget, compared to only 6 per cent last year, and that 63 per cent of agencies are now very confident that the native market is well regulated, up from only 33 per cent in 2014.

In addition, UK agencies currently say native will account for an average of 18 per cent of their total digital display spend in 2015. That figure is estimated to grow to 26 per cent in 2015.

Creativity is seen as a key force behind the future growth of native advertising. 65 per cent of agencies say that native’s fundamental role is addressing the creativity challenge in digital advertising – even though getting past ‘banner blindness’ is seen as the number one factor that is currently driving agency spend on native, with engagement second and the opportunity for better creative coming in third.

The two other key areas of opportunity for the future, according to the report, are mobile and programmatic. 64 per cent of agencies see native as the best way to address the creativity gap in mobile ads, with an improved user experience and higher engagement levels seen as the primary benefits. In fact, 24 per cent of their native ad spend is predicted to be on mobile native campaigns by the end of 2015.

“A lot of the challenges that existed around native advertising last year, such as regulation and budget, have become less of an issue as brands and agencies fully grasp everything native can do for them,” said Adyoulike UM MD, Francis Turner. “Currently many still see it as a way to beat ‘banner blindness’, but more and more agencies have realised what native can do to address the creativity gap. Native is a highly creative medium that offers brands and publishers a way to deliver high-value content at scale.

“This is particularly true on mobile – the second screen is more important than ever and native is clearly the way to reach consumers through those devices. Traditional display advertising simply doesn’t work there.”

The study also highlighted the prospects that exist for programmatic native, speaking specifically with agency trading desks (ATDs). It found that 100 per cent of ATDs see programmatic native as a strong market opportunity, although currently only an average of 8 per cent of their budget goes on it (if they exclude social media spend).

The two key benefits of trading native ads programmatically were seen as scalability and reducing cost, though the main challenge highlighted by ATDs was the difficulty in making native content contextually relevant.

The study also highlighted some of the challenges agencies face when looking to run native advertising campaigns. The key area of concern was the client sign-off process for content, followed by potential issues over resourcing.

In addition, the ad agencies’ view of creative agencies is that they are still challenged when it comes to executing on the native opportunity. Respondents said that creative agencies were challenged by the remuneration model (which means they have less time and resource to deliver strong native executions), that they struggle with the collaborative element required for native executions, and that they find the contextual/environmental restrictions of native challenging.