A native advertisement is an ad unit designed to be less disruptive than a traditional unit because it blends in seamlessly with the medium or platform it’s published on. Common native ad formats include editorial content like an article or in-feed video content. Per Federal Trade Commission (FTC) guidelines, native ads must be clearly disclosed as paid content. Insider Intelligence forecasts that US advertisers will spend $97.46 billion on native display advertising in 2023.

What is native advertising?

Native advertising is a type of paid advertisement that takes on the look and feel of its environment. A native ad will relate to the topic(s) of the surrounding content so as to not disrupt the consumers’ overall experience on a given platform. 

For example, a health and wellness brand may buy a native ad placement on a lifestyle site to promote its product or service. The ad unit is then designed to blend in with the surrounding content by matching its tone, style, and thematic elements. 

Benefits of native advertising 

Advertisers buy native ad units to benefit from an engaged audience on a particular platform. 

A native ad aligns with the site’s direction and its audiences’ interests. Relevance is key to ensuring the native ad unit fits in with the surrounding content and is not disruptive. 

For advertisers, a native ad captures the attention of like-minded consumers. It can be used to inform an audience of a product’s attributes, provide an overview of a service, or connect with a target audience on an interest-based level. Native video ads can be worthwhile because users, notably Gen Zers who have an aversion to paid ads, may be less likely to skip a video that is embedded within content.

For publishers, native advertising offers an additional ad revenue stream. Native ads may see higher engagement rates than traditional units—like banner or pop-up display ads—because they are less disruptive, more relevant, and more interesting to the audience. 

Types of native advertising

Insider Intelligence’s broad definition of native advertising includes the following formats: 

  • Sponsored content
  • Promoted content
  • Content recommendation widgets
  • In-feed units (e.g., TikTok, Instagram, news sites)
  • In-app rewarded video
  • Sponsored outstream video found within a feed or article

Native video ads on social media are very popular. On TikTok, for instance, brands will work with creators to film sponsored video content that will natively integrate into users’ feeds based on their interests and activity. Likewise, brand advertisers can produce their own video ads and pay for native placement in-feed.  

What advertisers and publishers need to know about native advertising

In 2023, Insider Intelligence estimates that $68.17 billion will be spent on native display ads on social media, while less than $30 billion will be put toward nonsocial native displays ads. Understanding current placement trends can ensure both the sell and buy side of the advertising equation benefit. Marketers have an opportunity to engage audiences more effectively, and publishers can see the returns provided by new revenue streams. 

Is sponsored content the same as native advertising?

Sponsored content is not interchangeable with native advertising. Instead, sponsored content is a category within the native advertising bucket.

In addition to sponsored content or sponsored video, terms used to refer to a native ad unit include advertorial, paid content, paid video, partner content, and branded journalism.

Do native ads require a disclaimer?

According to FTC guidelines, advertisers must include disclaimer language on native ads to clearly state that it is paid content. The disclosure must be located near the native ad and its language must remain consistent across the properties where the ad is featured. 

  • The FTC recommends terms such as “Ad,” “Advertisement,” “Paid Advertisement,” “Sponsored Advertising Content,” or other variations that are free of industry jargon and easily understood. 
  • To not mislead consumers, the FTC advises against the ambiguous use of “Promoted” or “Promoted Stories” because it is unclear if the publisher is endorsing the advertising content or not. 

Social media influencers have often come under fire for not properly disclosing when a post is sponsored. Without proper disclosures, consumers may make bad investments (like in the case of cryptocurrency), or purchase products that do not live up to the influencers’ claims.   

What are native advertising growth areas?

While written content is a mainstay of native advertising, native video has seen a surge in popularity as digital video time spent has increased. This year, US consumers will spend an average of 3 hours and 23 minutes per day with digital video, according to Insider Intelligence’s June 2023 forecast. 

  • Among social network users, video-based content like TikToks, Instagram Reels, and YouTube Shorts are popular. 
  • Almost 70% of Gen Z internet users will use TikTok monthly this year, according to Insider Intelligence’s Social Video Usage and Ad Engagement report forecast. As Gen Z’s spending power grows, many advertisers have gravitated to TikTok. 
  • TikTok’s share of US video ad spend is now only a few percentage points behind YouTube’s. Insider Intelligence estimates US marketers will spend $5.48 billion on video advertising on TikTok this year, versus $6.99 billion on YouTube. 

How much are marketers spending on native advertising?  

  • Insider Intelligence forecasts that US native display ad spend will close in on $100 billion in 2023. While native ad spend is high, it’s losing share. 
  • US native ad spend will account for 59.7% of total display ad spend in 2023 as advertisers pivot from social media, according to Insider Intelligence’s January 2023 forecast. In its place, connected TV and mobile in-app video are taking over, part of the greater trend of display advertising pivoting to video. 

How do you measure ROI on native advertising?  

Clickthrough rate is the most valuable industry KPI to measure the success of a native advertising campaign. From this metric, advertisers and publishers can see the percentage of people who saw and clicked through to the landing page’s content. Additional metrics to consider include conversion rates, impressions, bounce rate, cost per action, and cost per click. 

For native video ads, a view count is comparable to clickthrough rate. Other success metrics include unique views, interaction time, or how long viewers watch a campaign video, as well as replays. If placed on social, the native video’s total of likes, dislikes, reshares, and comments can also be taken into account to measure campaign success.