• by Lon Otremba , Op-Ed Contributor, November 12, 2014

As the digital advertising industry continues to search for better performing and more engaging formats, many have turned to native advertising. Advertisers embrace native because the ads produce results beyond what they have come to expect from banners, and publishers like the format for the same reason.  Moreover, consumers have shown a real willingness to engage with these ads, as several recent studies have demonstrated. (From eMarketer: “A study by IPG Media Lab and Sharethrough reveals that consumers view native ads 53 percent more frequently than banner ads.”)

Here are five major trends we’re observing today in native: 

1.     A rapidly shifting ecosystem from publisher-centric to brand-driven.  This trend was inevitable given native’s core ability to engage consumers, but it belies the humble beginnings of the approach.  Native advertising began as a cost-effective means for publishers to drive traffic back to their own websites, where they could arbitrage the traffic by selling their own higher-priced inventory against it.  The approach worked so well that many publishers began offering their own native ad slots, thereby further expanding the ecosystem.  Once publishers could see firsthand how well the ads worked, they began to approach their own advertisers about taking a native approach.  The only catch the majority of technologies developed to support the ecosystem have been aimed at publishers, not advertisers.  Now the ecosystem is catching up as it “follows the money” to where the big bucks are: brands.

2.     Brands are becoming content publishers. Native advertising requires compelling material. Marketers are discovering that they can provide valuable, engaging content directly themselves, and in doing so can create awareness, affinity, and even purchase intent for their brand. 

3.     Increasing standardization of formats.  While the very concept of a “standard” native ad is likely still being debated in some circles, ever since the IAB published its “Native Ad Playbook” in December 2013, advertisers and publishers have been consolidating its approaches Moreover, three of the six approaches -- content recommendation, in-feed, and in-ad -- have become defacto standards, as they are the formats the vast majority of publishers are implementing on their sites. Watch over time as variations of these, as well as new units, bump into this mix. It’s likely that the market -- as it always seems to -- will consolidate onto three or four popular formats.

4.     The rise of exchanges and RTB.  The concept of native inventory exposed to real-time bidding by advertisers is growing rapidly. IDC recently reported that by 2018, native programmatic will grow to over $5 billion, nearly matching programmatic TV buying.

5.     The use of Big Data to improve relevance will hit native.  We’ve been talking about Big Data all year, as third-party data providers and native ecosystem participants have been working together to find ways to integrate. When Facebook announced in early October that the Facebook Audience Network would open up its data to third parties, the rush was on to put that data to use in native. That is kicking open the doors to third-party data overall in the native space.