Banner ads are passé. Desktop growth is decreasing, and mobile and video are the primary channels fueling continued growth in digital advertising. At this point, we all know that banner ads on mobile don’t work well. Alternatively, native advertising performs great on mobile and delivers a better user experience when properly targeted but is difficult to scale. Companies from TripleLift to Nativo are working to scale native programmatically, begging the question of why this format hasn’t taken a stronger hold in the marketplace.
In the US alone, the native digital display advertising market is valued at $22.1 billion in 2017. Granted, social network behemoths like Facebook concentrate 84.2% of the total today—no surprise there. But the share of non-social spending in native digital display ads, much of which is publisher inventory, is expected to inch up to 17.8% by next year. That works out to a flourishing $5 billion market beyond social networks’ domain. As you can imagine, most native spending is devoted to mobile, which is expected to amount to 88.3% of the total this year, including both social and non-social. [1]
So what, then, is the hurdle to scaling native and taking advantage of the massive opportunity native presents? Is it a sell-side issue, a demand-side issue, a creative issue, or some combination thereof?
Conversations with our top publishers have highlighted the fact that native inventory is in no short supply; rather, it’s the demand for native ads that needs to be beefed up across the industry. On the flip side, we also often find publishers concerned over whether creative review can be conducted before the ad is shown on a page—an effort to ensure that the ad content aligns well with editorial content and that readers won’t be upset by intrusive or inappropriate content.
Of course, this can also go the other way—advertisers don’t want their ads placed against editorial that goes against their brand image or message. For example, it’s highly unlikely that any consumer wants to see an auto ad while reading an article about drunk driving. Nor do readers want to be presented with messages that they might find offensive or with ads that have little to no relevance to the content surrounding them.
We’ve also heard that while there appears to be plenty of supply from publishers, it’s often challenging to source native creative assets from agencies. According to Ido Iungelson, director of revenue & operations at Viber, “Overall, the industry still prefers easier-to-run formats like banner ads, and there’s a lot of skepticism around whether these are the best ads for consumers.” While I understand that producing native creative assets is different then handing over a fully formed creative asset, I cannot see how it is that much more difficult. Of course it takes additional effort to create separate assets for a headline, subhead, image file and a call-to-action, but we need to move more quickly.
If creative designers need more training or more explicit instructions, then we as an industry need to make sure they get that training. As Einstein once said, “Intellectual growth should commence at birth and cease only at death.” In other words, learning and adapting are part a lifelong journey that should never stop. I’ve seen so many similar transitions in my career (the transition from Flash to HTML5 is the most recent to come to mind). Humans are creatures of habit, but the habit we need to adopt is the ability to develop new skills and constantly continue to learn.
Don’t Fight Change, Embrace It
We are living in a moment of innovation and disruption. One that requires us to embrace, rather than fight, change. The situation reminds me of one of my favorite sayings, from H. Jackson Brown: “In the confrontation between the stream and the rock, the stream always wins—not through strength but by perseverance.” Said another way, you have a choice to make: you can be either the water or the rock. The water is going to keep moving around you, so rather than standing still, get with the flow and start moving faster. Or as Bob Dylan so eloquently sang, “Then you better start swimming or you’ll sink like a stone / For the times they are a-changing”.
We know consumers are spending more and more time on mobile devices (3 hours and 14 minutes per day, over 25% of total time spent with media, according to eMarketer). [2] If this is how audiences are consuming the majority of their media, then the industry needs to become more conducive to mobile, and it needs to do so quickly. We’re all familiar with how Facebook is, as the kids say, “killing it” with their newsfeed ads. [3] While Facebook knows a lot about people’s interests and does a good job matching ads to eyeballs with that data, they’re not the only game in town. Plenty of publishers have great audiences that can offer similar if not better results. We should not let a few companies limit our choices and dictate our future. We have an opportunity to change the balance but we must take this challenge head on.
There are technical ways to help mitigate the challenges I described above. There are tools that can infer the context of editorial and therefore provide weightings that allow articles to be categorized beyond the simple and often-used URL parsing of site and section. Technology that can provide better image recognition and other ad quality tools to help increase publishers’ confidence already exists. This is in addition to simple white- and block-listing tools for advertiser and creative types. There’s no reason why we can’t train people to produce ads in the formats that are performing best and, as such, represent the future of digital advertising. This is not meant to be a top-down approach–OR a bottom-up one. Simply put, as an industry we must all recognize that we should each take responsibility for moving forward rather than standing still.
At PubMatic, we’re focused on delivering great native tools, strong ad and inventory quality solutions and superior analytics to help both publishers and media buyers see the value and opportunities available for the taking.
[1] eMarketer, “US Native Digital Display Advertising Forecast,” March 2017.
[2] eMarketer, “US Time Spent with Media: eMarketer’s Updated Estimates and Forecast for 2014-2019,” April 2017.
[3] Forbes, “Facebook Earnings Takeaways: Q1 Was Strong, Ad Growth Guidance A Concern,” May 2017.
