LONDON: Most agencies believe that native advertising adds value for their clients but few are actually offering it as a service and are ceding that territory to publishers and brand marketers, a new survey has claimed.

The State of Native Advertising 2014 report from Hexagram, the native advertising exchange, and Spada, the PR consultancy, was based on a survey of more than 1,000 respondents drawn from across the publishing, advertising, marketing and PR industries.

It found that while 84% of agencies thought native advertising was a valuable service for clients only 34% offered it themselves.

In contrast, 62% of publishers surveyed were already offering native advertising while 41% of brands were engaged in this activity with two thirds creating the content themselves.

The report suggested that agencies not offering a native advertising service were missing out on "significant opportunities to acquire powerful and high-quality inventory". But it also noted that this situation was being recognised and addressed as 20% of brands and 12% of agencies currently not engaging in native campaigns were planning to start using it within the year.

Publishers meanwhile were planning to push on further with another 16% planning to offer the facility in the coming year, a period during which the sector expected native advertising's share of their revenues to rise from 20% to 30%.

Chris Ingham Brooke, founder & CEO of Hexagram, noted that brands were comfortable generating content and managing native ads internally and said this presented a challenge to agencies.

"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," he said.

He added that it was also important that all parties involved – brands, agencies, regulators, the ad tech community – worked to establish best practice regarding the labelling of sponsored content and other forms of native advertising.

Some 79% of publishers were already clearly labelling 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, but that still left a minority of complaints that had the potential to damage the reputation of the technique.

Data sourced from Hexagram; additional content by Warc staff