Just over a year ago, the captains of the media industry gathered in Palm Springs for the IAB’s Annual Leadership Meeting 2014. Incoming Chairman Vivek Shah took to the stage announcing the 20th birthday of the banner ad—a landmark moment providing pause for reflection.
Faced with the devaluation of the digital economy’s mainstay, the agenda was clear…the industry must collaborate to tackle the challenges of fraud, adopt progressive metrics including viewability measurement and “insist on more creativity and less clutter”.
Running in parallel with the sobering realities of declining display CPMs, a new initiative was gathering momentum. Innovators including Facebook, Buzzfeed and Forbes had embraced responsive design and uncluttered user experiences to suit a 4 screen world. These adopters had turned their focus towards sponsored content and custom advertising formats situated “in-feed”; designed to connect consumers with brands through equally responsive and intuitive user experiences.
Native Advertising had arrived. Its disciples were reaping huge rewards and swathes of start-up services were in place to enable plug-and-play adoption across the on-looking industry. Excitement and confusion surrounded the broad topic of Native Advertising. Debates would rage between the Advertorial vs. In-Feed Ad vs. Content Recommendation camps for the title of “True Native Advertising” and the question “What is Native?” broke the record for the fastest “broken record” in industry history!
Cue Terry Kawaja, stepping up to round out the conference in style, with the unveiling of the inaugural “Content Marketing / Native LUMAscape”.
One year on, the landscape is almost unrecognizable. As adoption of Native Advertising propels towards maturity at unprecedented speed, the landscape is populated with another wave of start-up entrants and several familiar faces from the display AdTech space. A Native LUMAscape V2.0 would afford no space to identifying the early adopting publishers and would more closely resemble the Display LUMAscape as many early tech players have specialized to focus on either buy-side, sell-side or solutions for rich media and measurement.
Here are 5 key drivers shaping the Native landscape which, in turn, is transforming the digital media landscape:
1. Rapid Publisher Adoption
Driven by improved revenue, user experience and performance across responsive platforms and all devices, Native Ads are now central to the strategies of many media owners. A survey from Hexagram predicted that over 78% of publishers would have adopted some form of Native advertising by 2015. Aggressive guarantees and exclusive deals such as Outbrain’s $100m, 3 year lockdown with Time Inc. are signals of saturation in distribution for the content recommendation format. Publishers and Networks are now focusing on yield optimization across direct sales, partner mediation and programmatic revenue to improve competition and fill across existing Native placements. The quality of sponsored content should continue to improve by virtue of increased competition, as publishers and networks rely less on an individual partner to provide backfill.
2. Specialization and Full Stack Development
With increased competition and another year of innovation behind us, many of the early Native players have developed into specialized services. The first Native ad networks are becoming the built-for-purpose Native SSPs, DSPs and Rich Media services of 2015, catering to the unique creative, optimization and measurement needs of advertisers and publishers. The super stack is also evolving as the major media and social networks invest in Native; Twitter acquired Namo Media last June, adding to its MoPub Native Ad offering. Gravity became part of AOL in January 2014 and Yahoo launched “Gemini,” their Native marketplace.
3. OpenRTB Standards
Following collaboration across the IAB’s Advertising Technology and Native councils, the latest version of industry standards, OpenRTB 2.3 is the first RTB spec to provide guidelines for handling Native ads programmatically. Upon ratification, these standards will form a foundation for DSPs, SSPs and Exchanges to develop scalable Native Advertising capabilities. We are likely to see several of the leading programmatic Display, Video, Mobile and Search platforms making moves towards Native Advertising.
4. Lower Barriers to Entry
With emerging industry standards, open exchanges and customizable platforms like PowerLinks, the landscape is seeing a proliferation of vertical networks, independent trading desks and unique start-up services. These new entrants are leveraging great publisher and brand relationships, unique data and innovative applications built on top of the technology foundations laid in 2014. The opportunity for businesses to invest in innovation without having to build technology from scratch will be a market maker—accelerating solutions to challenges and unearthing growth opportunities. Furthermore, the collaborative and open approach emerging across the Native Advertising sector will reduce the time taken to scale and become profitable; buyers and sellers can tap into open marketplaces with huge transaction volumes, forging partnerships in days rather than years.
5. Growing Budgets from Multiple Channels:
Native Advertising is proving effective across mobile and desktop as a channel for promoting branded content, both editorial and video, alongside direct response campaigns such as app downloads. All of Facebook, LinkedIn, Google and Twitter sell Native Ads on their core platforms, where it is near impossible to buy an IAB standard ad unit. The reach of these global platforms has attracted brand dollars from search, social, video, mobile, display and content marketing budgets. Those budgets are flowing into the wider Native marketplace as media owners follow suit and technology platforms consolidate audiences at scale. Early adoption is promising with 41% of brands and 38% of agencies having already invested in Native Advertising outside of Facebook and Google; however, the growth in the near future will be exponential. Leading global research firm IDC recently predicted Programmatic Native Advertising will grow at a rate of 114% year-on-year to $4.8B in 2018 in the US alone.
The diversity of budgets could herald Native Advertising as the convergence point of the Marketing & Technology landscape.