2020 has brought a lot of changes in the advertising industry. Economic shifts, regulatory changes, the stay-at-home mode, and new consumer behavior are just a few forces altering the market landscape for the foreseeable future. How did they affect the native advertising ecosystem?
It’s easy to see why interest in native advertising is growing. The digital duopoly of Google and Facebook has led to the saturation of both content and ads within these channels. Advertisers are now looking for new ways to increase their reach and engage users in the most optimal way. From this perspective, native is seen to be among the most potent forces that allow publishers to compete with over-invested channels like Google and Facebook.
Let’s look at the key native advertising trends that you need to be aware of in 2021.
Native ad spend is set to reach new heights
Advertising budgets took a big hit in 2020: while usually, we would talk about the annual growth of advertising, this year ad spends decreased by 4.2%-4.4% on average. Native ad spends, however, rebounded pretty fast and even managed to grow by 2.3% compared to the previous year. In 2021, native advertising is predicted to increase by 20%: ad spends will grow from $10.67 to $12.75 billion (according to eMarketer)
Contributing to this trend, a lot of local businesses had to go online this year at a faster than usual pace. U.S. e-commerce ads jumped nearly 40% from 2019, and this acceleration is expected to continue. Also, more customers are purchasing online even as stores reopen and the pandemic restrictions end. So far, we might expect more eyeballs and demand in the digital ecosystem, as well as more companies interested in native advertising capabilities.
CCPA and other privacy regulations came into effect this year, as well as earlier Mozilla defaulted their Enhanced Tracking Protection which prevents cookie tracking unless Firefox users individually allow it. In 2022, Chrome is stopping 3rd party cookies altogether, and the retirement of the old ways of targeting seems to be inevitable.
As the major tech giants discontinue 3rd party cookies, advertisers’ abilities to track and retarget users will be affected in a great way. In 2021, industry experts still try to figure out what a world without cookies will look like and how they can adapt to these changes.
First of all, it does not mean the end of all tracking altogether, as 1st party cookies or other user identifiers available through the owned channels are still here. To use them in an efficient and ethical way, publishers, vendors, agencies, and brands have to build 1st party relationships with their audiences. Consumers clearly will get more privacy controls, and market players will have to implement transparent consent management systems.
Second, tech vendors and advertisers will test new targeting techniques based on the privacy-first principle. Marketers may be offered to test cohort-based advertising in some form, which targets groups of people rather than users or devices. A much more viable solution, however, is targeting by context rather than by audience, which is seen to be the new promised land of the cookieless future.
Without third-party cookies, contextual intelligence is the tool that is expected to solve the targeting dilemma. Advanced AI and other technologies had made it far more sophisticated than in the earlier days of the web. Today, it becomes possible to analyze page sentiment, visual components, and language nuances and evaluate whether website content is relevant both in terms of brand message and site visitor’s interest.
With contextual, advertisers can match the surrounding web content with the ad in the most appropriate way, fine-tune a consumer’s journey, and hit a user’s intent on-site. AI-powered methods allow marketers to compare the performance of different context categories, simultaneously react to what is performing best, and adjust the campaign settings in a blink of an eye.
For example, placing ads in a positive context is more effective on average to get users motivated and excited about the promoted brand. During the pandemic crisis and political turmoil, many consumers faced anxiety, a lack of confidence in societal institutions, and other negative pressures, and giving campaigns a positive spin was often crucial for their performance. A recent study conducted by Pinterest has proved the efficacy of positive context: 6 in 10 consumers feel positive toward brands they encounter in positive environments.
This strategic approach promises to integrate branding and performance marketing efforts. Brandformance campaigns rely on performance channels where efficiency can be easily measured, but aim to optimize the brand’s image, notoriety, and purchase consideration. Thus, advertisers can build brand awareness without missing out on performance optimization and the targeted cost of attracting a client.
Brandformance as a marketing tactic is likely to intensify in the next few years. Today, consumers expect businesses to take a social stand, clearly express their mission and values, entertain or support causes they care about, etc., which is usually achieved through branding campaigns. On the other hand, companies feel the need to optimize advertising budgets, track the performance of channels in use, plan and analyze KPIs, and the brandformance approach provides just the right amount of flexibility to satisfy both sides.
In 2021, there will be more brands online and more customers purchasing online, even after the lockdown measures are lifted. As brands and agencies are looking for new under-invested channels with significant advertising potential, the anticipated rebound of ad spending is even more relevant for native: it is projected to grow by 20% this year.
Contextual targeting is deemed to be the most adequate solution to replace cookies, but it’s still a work in progress to be implemented by key stakeholders in the advertising ecosystem. Numerous studies confirm that placing ads in certain contexts does have an impact on consumer behavior. So far, we may expect an enforced revolution with meaningful emotion-based interactions with ads in contextually relevant environments.