Decoding the message behind native ads

By 2020, in-app native advertising revenue is set to generate 63.2% of mobile display advertising revenue and will amount to $53.4 billion, according to a study released by IHS, a company which provides information and analysis to support the decision-making process of businesses and governments in industries.

Native ads, what are they?

Native ads follow the natural form of the platform on which the advertisement is being placed. HCL Technologies Vice President and Head (Strategic Marketing) Apurva Chamaria describes, “Native ads are those which match both the form and function of the platform that they are on.”

“Any form of advertising that blends into the environment of the platform is native advertising. With its shape and size similar to that of the content on the platform on which the ad is being placed, the only callout is the mention of it being sponsored content,” said  Arun Pattabhiraman, Vice President and Global Head of Marketing at InMobi.

Native advertising, which earlier used to be an additional product delivered upon request, has now become an inevitable part of the mobile ad package especiallywith the rise in ad blocking. Native ads have emerged as the most suitable form of advertising. In the past one year, ad blockers have become very powerful. This reduces the impact ads can have. Native advertising, cutting across platforms, has become a natural extension to advertising on different platforms.

The eCommerce industry and app companies are increasingly leveraging it and are the leading users of native advertising.

Going mainstream

“Native advertising is almost mainstream if not more. Native ads when executed correctly can positively drive brand salience and perceptions in the minds of end-consumers. Native ads are known to have worked well for transaction-oriented campaigns (For example, driving sales),” said Millward Brown, a market research agency with expertise in areas such as effective advertising, marketing communications, media and brand equity research. 

While comparing the effectiveness of native ads and traditional ads, it has been found that there is 53% more probability of the consumer looking at and consuming a native ad over a traditional ad.

“The best from of native ads must blur the line between content and advertisement, whereby the ad is seamlessly integrated into the content of the platform. Therefore, for lay audience, native ads take the content of the platform forward rather than impede the flow of the content,” said Chamaria. “People are looking for engaging content. So what if it has a little bit of ad in it? Today, the case is such that stories happen to be ads and not the other way around,” he added.

“Native advertisisng is not new. There have always been instances of sponsored content in print media and product placements in television media, especially in cookery shows. However, going by the nature of the platform, native advertising is far easier to do on digital media,” said Pattabhiraman.

“Native advertising offers higher visibility. If your company uses native ads to share content, the engagement with your audience can be significantly higher than any other form of advertising,” said Manica Arumugam, founder of Addiemall, a digital marketing agency for women. “Since native advertising can be disguised as valuable content, the consumer is more likely to share that content with their friends or followers on social networks or email, amplifying a brand’s content and special offers,” she added. 

Getting it right

On the flipside, “A native ad that blends too well with platform content loses its purpose. Next, it cannot be so big that it obstructs the flow of the content itself. From the consumer perspective, the experience must be identical with how the user would normally interact with content on the platform,” said Pattabhiraman. He further added that by far, the most sophisticated native ad placements have happened inside map apps in that they have allowed for geo-fencing for stores to promote offers and sales.

While gaming apps originally paved the way for native ad placements, in the last couple of years, the rise of non-gamong apps have opened up several opportunities for the growth of native ads. Native ads thus far have found suitable homes in news apps, social apps and entertainment apps, which are witnessing a wide eruption of native ads.

It has been predicted that by the end of 2016, up to 50% of mobile display advertising is likely to come from native ads. “While native advertising is positioned at the bottom, say 7th or 9th order when compared with other popular and established marketing platforms in today’s business spending and environment, the largest social platforms in the world have monetised with native ads which includes Facebook, Twitter, Instagram and Tumblr,” said Arumugam.

“Native ads have also proven effective, drawing higher click rates than traditional banner ads, particularly on mobile devices. 2016 will be the year when native advertising comes of age and ceases to be just another buzzword by gaining wider adoption among small- and medium-sized publishers,” she further added. 

Need of a sophisticated approach

While native advertising may be one of the better forms of advertisement, it needs some level of sophistication from both, advertisers and publishers, to be able to scale it. Since the ad has to fit into the content and context of the platform, it has to be custom-designed, which makes scaling it that much difficult.

Moreover, there is the issue of lack of transparency. “The obvious questions the advertisers have are — has my ad reached the right audience? And if it did was it viewable?,” Millward Brown spokesperson said, adding, “Next, inadequate inventories: There is lack of classified inventories that enable programmatic ad serving. This limits the opportunity for certain advertisers to leverage the capabilities.”

However, native advertsising is only gaining. Some 63% of companies and marketers plan to increase their adspend on native advertising., which implies, spending on native ads will reach $7.9 billion this year and grow to $21 billion in 2018, rising from just $4.7 billion in 2013.

“A big part of this boom will be driven by social native ads, which is telling. For instance, $7.5 billion of this year’s native ad spending is expected to go toward social ads. By 2018, that will be $11.9 billion.The average spend by the companies on native ads is definitely soaring,” said Arumugam.

Native ads allows for significant lowering of the total media spend. Since the platform is already there and consumer is consuming the content, it is not a very expensive affair in terms of monetary investment. Here, investment in terms of creativity is higher.

Even from the consumer’s point of view, acceptance is about three to four times higher for native ads when compared with banner ads. “A native ad is like art. If not executed correctly, it could end up putting off the consumer. In other words, a native ad is like a third friend (the first two being the content and the consumer) that adds value to the content and makes it compelling without disrupting it. It makes the strange familiar and the familiar strange, which intrigues the customer,”  said Chamaria. About 10-15% of an average marketing budget is dedicated towards native ad content development and placement, he added.