• by Todd Krizelman , Op-Ed Contributor, January 14, 2015

The adoption of native advertising has continued to increase rapidly.  Based on our tracking of this segment from June 2014 on, we found a big increase in the number of brands placing native ads. More importantly, each month an average of 638 brands have placed native ads for the very first time! This is enormous growth.

However, despite native advertising’s ascent, there is unequal penetration in the marketplace. Here are more key findings for the second half of 2014:

1. Industry verticals with the greatest percentage of advertisers placing native ads:  food, alcoholic beverages, and pet brands. In these categories, an average of 20% are already placing native ads.  This is significant adoption, especially in such a concentrated period of time.  This is just over twice the penetration for the average of all other product categories (20% vs the average of 9% across all categories). The bottom verticals are medical, retail, professional service, and home furnishing brands.

2. Industry verticals with the most native advertisers.  The top three industry verticals by the number of brands placing native advertising are technology, media, and financial service firms.  While none have the highest percentage of adoption, these are giant product categories.  Each has more than 250 individual brands placing native.  The bottom three verticals are pharmaceutical companies, beverages, and athletics.

Additional Considerations:

•       It's no surprise to us that technology companies have been early adopters. After all, tech companies are familiar with short product life cycles and the urgent need to re-invent. For example, Samsung, one of the most active buyers of native advertising, introduced a new phone almost every week in 2014, according to CNN/Money. Also, the Internet is rich in technology content -- video tutorials for software, walkthroughs of new video games, and of course reviews of products and gadgets – and since native ads often resemble editorial, it makes sense that technology companies have embraced native advertising.

•       Conversely, it’s not surprising that pharmaceutical and medical device brands have been slow to embrace native advertising. Marketing in these verticals are highly regulated by the FDA. Additionally, there may be greater perceived risk of public and legal response by blurring the line between editorial and marketing.

•       Apparel and athletics brands scored low on their current embrace of native advertising, with 7% and 8% respectively of the total brands in their category placing native ads. Although these industries generally target a younger demographic who would be responsive to this kind of marketing, these industries are not known for being early adopters.   However, with consumers checking the stats for their favorite sports teams or looking up tutorials on a hot new exercise craze, the opportunities for sports and fitness native ads are significant.

If you’re working with a brand product, what’s your current native advertising strategy? Will you be spending more on native ads in 2015?