Firm direction from the IAB means almost two-thirds (63 per cent) of media planners are now confident that native ad formats are a safe media channel to invest in, but contrasts in the business models of creative and media agencies make execution difficult, according to a report.
The findings were revealed today (15 July) in the second annual report from FaR Partners, commissioned by Adyoulike, which revealed the vast majority of "agencies are now confident that the native market is well regulated", compared to just 33 per cent 12 months ago.
Controversies such as the ASA forcing Mondelez's Oreo to remove several YouTube videos from its channel on the video sharing site for failing to adequately label the content as marketing communications, and other areas of uncertainty had apparently left media planners wary of including native ads on their media plans.
Guidelines offer assurances
However, since then the trade body has issued explicit guidelines on how to denote paid-for native ad units - which are purposely designed to replicate the look and feel of a media owner's editorial content - from non-sponsored media for the first time.
For instance, marketers deploying native advertising must ensure that they provide “visual cues” that make it immediately clear the ads are paid-for content, plus such units must also be labelled using wording that “demonstrates a commercial arrangement is in place” according to the news rules, such as ‘brought to you by’.
As a result, media planners are now a lot more assured about using native advertising units to help raise awareness of their client's brands among consumers, with respondents reporting that native ads will account for an average of 18 per cent of their total digital display spend this year.
Native creative poses problems
Elsewhere, the study also revealed that 65 per cent of respondents agree that native addresses the creativity challenge in the digital ad market, but media agency respondents also reported that clients' sign-off processes were an issue when it comes to campaign execution.
In addition, media agency respondents also observed that creative agencies are still challenged when it comes to executing on the native opportunity. Some noted that creative agencies are often challenged by the remuneration model (which means they have less time and resource to deliver strong native executions).
Other observations recorded in the study were that creatives shops struggle with the collaborative element required for native executions, and that they also struggle with the contextual/environmental restrictions of native ad placement.
Francis Turner, managing director of Adyoulike UK, added: “A lot of the challenges that existed around native advertising last year, such as regulation and budget, have become less of an issue as brands and agencies fully grasp everything native can do for them."
He went on to say: "There are still challenges around native ads, mainly in bringing the creative opportunities that everyone can see to actual fruition. However, what’s very clear is that it’s an incredibly exciting time for the market, with programmatic trading and mobile at the forefront, and things are only going to accelerate over the coming months.”
Turner further noted that native ad formats were seen as a potential to "creativity gap" on mobile devices, where traditional display ads simply 'don't work', with 24 per cent of native ad spend predicted to be on mobile by the end of the year, according to the figures.
A further statistic unearthed by the study, which quizzed over 500 agency staff, was that 16 per cent of native advertising spend now comes from a dedicated budget, this is compared to 6 per cent last year.
ATDs eye programmatic native
The study also highlighted the prospects that exist for programmatic native, with Turner additionally identifying the recent publication of the OpenRTB 2.3 standard - which instructs advertisers on how to label their media assets when bidding on native ad units via an ad exchange - as buoying this confidence.
The survey found that 100 per cent of holding group entities such as WPP's Xaxis and Publicis Groupe's Vivaki (which are commonly referred to as agency trading desks, or ATDs) see programmatic native as a strong market opportunity. Although currently only an average of eight per cent of their budget goes on it (if they exclude social media spend).
The two key benefits of trading native ads programmatically were seen as reducing costs and scalability, though the main challenge highlighted by ATDs was the difficulty in making native content contextually relevant.
Turner added: “Programmatic native is a massive opportunity right now, thanks largely to the OpenRTB 2.3 standard that enables native ads to be delivered at scale. Once agencies are convinced that campaigns can offer both creativity and relevance, which they most certainly can, I’ve no doubt that programmatic trading budgets will skyrocket.”