Why New Industries Are Finding Success in Native Advertising
Last year, native advertiser Nativo released the results of a native advertising study spanning 2014 through 2016. The study provides valuable insight into ad spend and breaks down native ads by vertical, showing some surprising results.
Because native advertising was only recognized by the IAB in 2013, the study is some of the first significant quantitative data advertisers have on the subject.
Between 2014 and 2016, native ad spend increased 600 percent. Now, in 2018, it has become a 28 billion dollar industry. In another study, 70 percent of consumers said they would rather learn about a product through content rather than a traditional ad, and native advertising’s meteoric rise would seem to confirm this.
Native is advertising in the form of content, which makes it more appealing to consumers than traditional ads. Consumers are 53 percent more likely to look at native content than they are at banner ads due to banner blindness and fatigue. This leads to a higher click-through rate on native ads and makes them an ad format to be reckoned with.
Nativo’s study found that food and drink was one of the verticals that showed the most growth, with a spend that now accounts for 9 percent of overall native ad spend. Travel and business also displayed significant growth, with travel making up 15 percent of overall native spend and business accounting for 7 percent.
Early adopters — mainly those in Automotive, Tech B2B, Entertainment, Tech B2C, and Finance, and Insurance — have slid in terms of market share, but maintain spending. This is because fast movers in verticals such as Business, Consumer Packaged Goods, Travel, and Food and Beverage amped up spending to capture 45 percent of the market share by the end of 2016.
As of 2017, Automotive, Travel, and Finance and Insurance held the three top positions in ad spend, with Automotive taking a 17 percent share, Travel holding a 15 percent share, and Finance and Insurance at 13 percent.
The different verticals have fluctuated since 2014, which is understandable as advertisers figure out which methods work best for them in this native landscape.
One possible reason that automotive, travel, and finance industries have built such a successful presences in native advertising is that native’s use of in-depth content is a natural fit for these topics. Decisions regarding travel, finance, and major purchases tend to be more heavily researched than, say, what brand of cereal to buy at the grocery store.
The benefit of native advertising for these verticals is that it gives brands more space to connect with audiences. Something like a video or advertorial naturally gives advertisers more space to explore the benefits and features of their product. Consumers get a fuller picture of what the product is and why it could work for them, and can easily decide if they want to buy. The content is contextually relevant to what the audience is already reading, making it more engaging to interact with.
Content that feels more like a conversation than a hard sell draws younger audiences, too. Millennials and Generation Z are gaining massive buying power, meaning advertisers should be looking for ways to connect with those demographics — and native provides an outlet. These generations are ad averse, but native ads don’t look like ads.
Native caters to other things that Generation Z values in its advertising, such as personalized messages and ads with story or humor. The ad-but-not-an-ad format is much more appealing to consumers at large; studies show that 86 percent of users favor native advertising, especially since they’re less invasive than traditional ads.
Native advertising is set to account for 74 percent of all U.S. ad spend by 2021, so while it looks like early adopters are petering out of the native ad market, the industry is becoming more and more diverse as new advertisers enter the fray.