Display advertising had almost been written off when native advertising made its mark against a backdrop of controversy.

While commentators wrangled over how wide a church-state gap was necessary between advertiser and editorial to skirt ethical issues, both advertisers and publishers assiduously collaborated on native campaigns for one simple reason: They work. By creating advertising that suits the consumption patterns, functionality, topical focus and format of its context, advertisers gave users substantial reason to engage.

Native advertising has grown by leaps and bounds, but why hasn’t it knocked out the lowly banner? It has not reached scale, whereas banner advertising, whether direct or via RTB, enjoys almost limitless application and scope. Programmatic has only reduced friction and enhanced targeting. Native ads might be worth caring about, but the lack of scalability has rendered them a niche player.

On cue and responding to substantial market promise, several players began launching native exchanges. MoPub, OpenX, TripleLift, Hexagram and Bidtellect, for example, have all recently announced exchanges that will trade native ads that feel like they belong on participating publishers’ pages.

But it’s still early days. You’ve got to give them credit for taking those first necessary steps, but there’s still a piece missing from the story.

Read the rest of Giles's piece at AdExchanger →