The second annual independent survey into this market was commissioned by native advertising platform Adyoulike and covered all major agencies and agency trading desks across the UK. It revealed that 16 percent of native advertising spend now comes from new dedicated budget, as compared to only 6 percent last year, and that 63 percent of agencies are now very confident that the native market is well regulated (up from only 33 percent in 2014).
In addition, UK agencies currently say native will account for an average of 18 percent of their total digital display spend in 2015. That figure is further estimated to grow to 26 percent in 2015.
Creativity is seen as a key force behind the future growth of native advertising. Almost two thirds of agencies (65 percent) 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. Around two-thirds (64 percent) 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, a quarter (24 percent) of their native ad spend is predicted to be on mobile native campaigns by the end of 2015.
Francis Turner, managing director of Adyoulike UK, comments: “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.
“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 fully 100 percent of ATDs see programmatic native as a strong market opportunity, although currently only an average of 8 percent of their budget goes on it (if they exclude social media spend).
The two key benefits of trading native ads programmatically were seen as reducing costs and scalability, though the main challenge highlighted by ATDs was the difficulty in making native content contextually relevant.
Francis Turner continues: “Programmatic native is a massive opportunity right now, thanks largely to the OpenRTB 2.3 standard that enables native ads to be delivered at scale. Once agencies are convinced that campaigns can offer both creativity and relevance, which they most certainly can, I’ve no doubt that programmatic trading budgets will skyrocket.”
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 – comments included 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.
Francis Turner concludes: “There are still challenges around native ads, mainly in bringing the creative opportunities that everyone can see to actual fruition. However, what’s very clear is that it’s an incredibly exciting time for the market, with programmatic trading and mobile at the forefront, and things are only going to accelerate over the coming months.”
The research was conducted on behalf of Adyoulike UK by FaR Partners through the FaR Agency Panel.