Reddit cofounder Alexis Ohanian. Theo Wargo/Getty Images "Native" advertising is expected to drive 74% of all US display ad revenue by 2021, up from a 56% share in 2016, but Reddit cofounder Alexis Ohanian isn't a fan.

Native advertising is paid content that fits a specific publication's style and editorial guidelines. The idea is that unlike standard banner ads — which users can become blind to and easily overlook — people are more likely to engage with content that looks like the rest of the content on a site.

Speaking at a small press conference at Web Summit in Lisbon, Portugal last week, Ohanian described native advertising as something "nobody actually reads but everyone has just bought into."

Marketers have been fooled into thinking people are reading their native ads, when instead, Ohanian believes they've simply been tricked by "Facebook arbitrage."

He explained, in response to a question from Business Insider, that Facebook tends to be the biggest channel from which users consume native ads. One of the reasons it's a huge driver of traffic to websites is that page owners pay for ads to promote the content to big swathes of Facebook users.

Ohanian said: "The way so many of these milestones get hit is because the promise is that content gets made, and it will get a certain number of views, and mission accomplished ... Facebook has done a great job of making it easy [for publishers] to say: 'We need to get to this goal and as long as the amount of money we spent promoting this content [is less than we] get paid for it, we win."

He added: "But if I put a marketer hat on, if I'm responsible for spending money to get people to be influenced about the brand, I want to do extra diligence to make sure people are actually being influenced. I want to make sure I'm going right to the source of where people are making up their minds and I want to make sure people are engaging with this ad content I'm creating."

Purveyors of native advertising would argue the format is effective. Data from the Mobile Marketing Association, rounding up third-party studies, found that mobile native ads perform 10X better than mobile display ads and that users spend 40% more time interactive with native ads than standard formats. And BuzzFeed — a company that has built its business almost entirely on native adveritisng — reportedly generated a healthy $170 million in 2015 (although the same report suggested it had missed a $250 million revenue target).

Reddit itself offers a native ad product. Its ads look just like Reddit posts and allow advertisers to target users by interests, a collection of subreddits, or a single subreddit. They can opt to post a link that redirects to a website, or text that encourages discussion.

Earlier this year, Coca-Cola ran an campaign on Reddit, asking its users which Marvel superheroes it should feature in its forthcoming Super Bowl ad. The thread received 422 comments, 97% of which "demonstrated positive statement," according to Ohanian.

That might strike some people as unusual. Reddit's 250 million users don't have to give their real identity when they sign up and an environment of unidentifiable alter egos doesn't seem like the safest place for brands to attempt to advertise their wares. There are even subreddits like /r/HailCorporate, where users call out posts they suspect are advertisers promoting their products but attempting to disguise themselves as members of the public.

Ohanian said, regardless of whether people are using their official identities or not, Reddit is where people are having conversations about companies and brands — and nothing is more powerful than word of mouth. Users engaging with the Coca-Cola ad, for example, spent an average of 12 minutes on the thread.

Ohanian added: "Our native ads are a conversation started instead of telling a brand to write 500 words that nobody is going to read. We say: Come up with an interesting conversation starter. You're at the dinner table, you've invited 500 people, the drinks are being poured, the food is coming out to the table, and you're asking [the guests]: 'What do you think about X?'"

He said: "We try to take them out of the mentality of being a marketer and back into the mentality of them as marketers that get invited to dinner parties."