What happened to native advertising?

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Native advertising has been around half a decade, but campaigns are still as successful as ever, if not more. Because they don’t “feel” like traditional ads, consumers are more likely to consume and explore native advertising efforts. In fact, consumers view native ads over 50% more than banner ads.

I haven’t been a fan of native advertising from the beginning. It was a deceptive practice then, and it remains so today. When I saw that Hubspot named native advertising a marketing trend in last year’s The Ultimate Guide to Marketing Trends in 2018 (link), I decided to dig a bit deeper.

Back in June 2015, we had looked at deploying a native advertising strategy, only to realize the end result would create a poor view of our brand:

We assumed the majority of people clicking those native ads would be confused and ultimately upset that we tricked them into following a link that was part of an actual story. There was too much confusion and potential for degrading our collective efforts.

Given Hubspot’s 2018 guide that “consumers view native ads over 50% more than banner ads“, I’m surprised I don’t see as many native ads as I do banner ads. Maybe native ads are more discreet these days? Given the example provide by Hubspot, I can’t think I’d miss these:

With the swell of advertising backlash over the past year, I wondered where the demand (and experience) of native advertising was these days.

The one native advertising company I recall back in 2015/2016 was Criteo. While not exclusive to Criteo, let’s use them as a sample to better understand native advertising then and now.

Then

From memory, it seemed like everything was going right for native advertising in 2016. On May 31, 2016, Criteo’s stock sat at $45.85 and nearly one year later on May 22, 2017, the stock hit a five-year high at $54.90.

Year-over-year revenue ($,000) between 2013 and 2017 looks impressive.

However the annual revenue growth during that same period isn’t impressive.

While on a downward growth trend, the future outlook still looked good heading into 2017 as viewed by the company’s stock price.

Still, 2016 looks like it may have been an inflection point in the company’s revenue growth.

Could 2016 be the turning point from native advertising = good to native advertising = no good?

The company’s Business Overview includes this description of its product line (from the company’s 10-K filing for the 12 months ending December 31, 2015):

The Criteo Engine delivers advertisements through multiple marketing channels and formats, including display advertising banners, native advertising banners (including on social media platforms) and marketing messages delivered to opt-in e-mail addresses.

There it is. Right in the middle the overview of the company’s product: “native advertising banners”.

Now

Fast-forward a few years and the stock price has settled at $22.66 on December 24, 2018, 12.2% above its five-year low of $20.20 set a few weeks prior.

Let’s take a look at the company’s 2018 reported revenue ($,000) by quarter. While the quarter-over-quarter revenue trend is negative, revenue growth over the same period tells a different story.

While 2018 revenues remain negative quarter-over-quarter, June 30 may have been the point at which revenue growth stopped growing at a negative rate.

What else changed during this period? It seems searching for the phrase “native advertising” in the company’s December 31, 2017 10-K filing results in 0 returns. In fact, this is how the company describes its product line:

Criteo technology addresses the entire consumer journey (customer acquisition, conversion and re-engagement) and works seamlessly across digital devices (desktops, laptops, smartphones and tablets), digital environments (web and mobile applications), platforms and operating systems, marketing channels (Display Advertising, including social and native, video, and sponsored products advertisements on retailers’ websites) and publisher networks (Alphabet Inc. (“Google”), Facebook, Inc. (“Facebook”) and thousands of publishers and mobile application developers in the open web). The Criteo Commerce Marketing Ecosystem, as we define it, is available as a unique and comprehensive offering and cannot be broken down and purchased as separate services, except for individual products.

With a change in business focus and an upswing in the company’s revenues, it feels like 2016 was the inflection point for native advertising.

Today

Back to the original question: “What happened to native advertising?”.

These days, I’ve seen native advertising mostly used in print but hardly ever online. I wonder if it’s because we’re talking about it differently or maybe another ad type is replacing it (influencers, anyone?).

Either way, I wonder if Hubspot will include native advertising in its 2019 outlook guide.

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