Agencies and content marketers failing to capitalise on native advertising’s supply-driven revenue opportunities

Flagship survey finds that brand marketers and publishers are leading the way

London, 31 October 2013: Native advertising exchange Hexagram, in collaboration with specialist research and public relations consultancy, Spada, have today published the results of the most comprehensive survey conducted on native advertising to date.

The report, titled “The State of Native Advertising 2014”, has found a significant divergence between supply and demand within the sector:62% of publishers surveyed are already offering native advertising, whereas only 34% of agencies are offering it as a service.This is despite the fact that 84% of agencies believe that native advertising adds value for consumers.

Hexagram (http://hexagram.com) Spada (www.spada.co.uk)

Agencies currently not offering the service are therefore missing out on significant opportunities to acquire powerful and high-quality inventory. Furthermore, 41% of brands are already engaging in native advertising campaigns and over 66% are creating the content themselves, suggesting that agencies are lagging behind their own clients in capturing opportunities.

Despite this, the general consensus from the more than 1,000 respondents – drawn from across the publishing, advertising, marketing and PR industries – is that brands and agencies’ take up of native advertising is significant and growing. 20% of brands and 12% of agencies currently not engaging in native campaigns are planning to start using it within the year.

However, the continuing need for transparency and a duty of care to consumers were cited as crucial issues for the reputation of native advertising. 79% of publishers already clearly label native advertising campaigns to distinguish them from editorial content. As a result, the majority of publishers (82%) and brands (71%) surveyed had not received complaints as a result of native advertising campaigns.

Other key findings include:

• Native advertising represents an average of 20% of total current publisher revenues and publishers expect it to represent 30% of their total revenues within a year.
• The vast majority of publishers (84%), agencies (81%) and brands (78%) believe that native advertising adds value for customers. The survey also found that sponsored content is viewed positively by 56% of brands and 50% of agencies.
• Blog posts (65%), articles (63%) and Facebook (56%) are the most popular forms of native advertising. The most popular way of signposting ad content was through the use of the tags ‘sponsored’ (64%), followed by ‘brought to you by’ (34%) or ‘featured’ (29%).
• Publishers are driving current use with 62% offering native advertising and another 16% planning to do so within the year.

• Budgetary resources are the biggest obstacles to increased use of native advertising (cited by 44% of respondents), closely followed by a lack of information about traffic sources and other metrics (30%).

Chris Ingham Brooke, Founder & CEO of Hexagram, commented on the survey findings:

“As with any new market, there are entities that are quick to realise potential, and those that get left behind. Importantly, it can take time for new formats and media to catch on – this happened with display advertising and it is happening now with mobile. Faced with commoditisation from display advertising, combined with an ability to create content, it’s no surprise that publishers are leading the way.

“The survey clearly highlights some major concerns for agencies. Brands feel comfortable generating content and managing native ads internally, and indeed expect this to be a bigger part of day-to-day operations than agencies do. Agencies need to envisage how they can add maximum value for their clients’ campaigns, and in turn establish their most viable business model as this multi-billion dollar marketplace becomes fully liquid.

“However, it is imperative that brands and agencies also recognise that it will not serve their interests to invest in advertising that deceives consumers under the guise of impartial editorial. Brands, agencies, publishers, regulators and the ad tech community must work together, and in consultation with consumers, to establish best practice around when and how it is appropriate to label sponsored content and other forms of native advertising.

“The State of Native Advertising 2014” survey has been released in co-ordination with the launch of Hexagram, a technology platform that empowers publishers, brands and agencies to build, manage, and optimise their businesses around native advertising.”

For more information or a copy of the “State of Native Advertising 2014” please visit http://stateofnativeadvertising.hexagram.com or contact Emma Pickering or Hollie Conway at Spada on 020 7269 1430 or emmapickering@spada.co.uk / hollieconway@spada.co.uk

“The State of Native Advertising 2014” is one of the most comprehensive surveys to date of those involved with, and affected by, the rise of native advertising. A questionnaire was distributed, in September 2013, to a cross-section of professionals working in publishing, advertising and PR agencies. 1013 responses were received and analysed.

About Hexagram

Established in 2013, Hexagram (http://hexagram.com) is an extensible and distributed technology platform that empowers publishers, brands and agencies to build, manage, and optimize their entire businesses around native advertising.

Their first product is the Hexagram Native Ad Exchange, which matches over one thousand buyers and sellers of native advertising. Think of it as a stock exchange for content distribution.

About Chris Ingham Brooke

Chris Ingham Brooke is the founder and CEO of Hexagram.

Before founding Hexagram, Chris founded environmental news website, Environmental Graffiti, and traffic exchange, Scribol.

About Spada

Spada (www.spada.co.uk) is one of the UK’s top communications and research advisers to professional, financial services, property and to corporate clients in the high stakes arena.

Spada’s ability to shape corporate reputation derives from a unique fusion of issues-based media relations, policy, research and crisis communications advice.

Established in 1994, Spada has a team of 30 in London, as well as a network of more than 50 associates around the globe.