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Native advtg will be majority of mobile by 2020: FB study

With the growth of mobile as a medium faster than any other in the last four years, advertising formats on the medium have also grown. Unlike the borrowed banner ad format from desktops, native advertising has shown the most astounding growth rate and has been the most successful for marketers. This was highlighted in a new research study conducted by global business analyst IHS Technology and commissioned by Facebook’s Audience Network.

According to the research, nearly two-thirds (63.2 per cent) of all mobile display ads will be native by 2020, summoning USD 53 billion in total advertiser spend.

As part of its research methodology, IHS conducted a series of in-depth interviews with leading publishers, app and game developers, trade associations, agencies, music services, ad networks and tech vendors in 25 countries across Europe, Asia-Pacific and the Americas.

Acoording to the study, by 2020, 75.9 per cent of all online display advertising revenue will be mobile at USD 84.5bn.

Third party in-app native advertising is growing quickly, the research indicates. It is forecast to increase at a 70.7 per cent compound annual growth rate between 2015 and 2020 and amount to USD 8.9 billion and account for 10.6 per cent of mobile display advertising.

While first party in-app native — like the ads you see on Facebook or Instagram — will continue to be the largest mobile native revenue driver, third party in-app native — operated and served into an app by an outside partner such as Facebook’s Audience Network — will be the fastest-growing. Third-party is expected to grow at an annual rate of 70.7 per cent, and will account for 10.6 per cent of all mobile display ads ($8.9 billion) by 2020.

Facebook’s own data shows that the percentage of apps using native ad formats on the Audience Network has grown 10x from Q1 2015, and they now make up 83 per cent of their entire network. Today, more than 50 per cent of apps on the Audience Network are using native ads exclusively.

While North America is the leading region in third party in-app native advertising both in absolute and relative terms; it is APAC that will record the largest increase in the next five years at a 177.0 per cent compound annual growth rate between 2015 and 2020.

Utilities, news and social apps are the champions of in-app native advertising, while games are more hesitant to adopt new ad formats.

The study also found that consumers engage with native ads 20-60 per cent more than standard banner ads. Native is less likely to lead to user churn and ad fatigue, and drives higher retention rates (up to 3x), eCPMs (up to 2x) and click-through rates.

As more traffic moves to mobile, more and more advertisers are shifting their budgets in kind, study participants said. These include not only digital-first retailers, but larger brands as well. The publishers, developers and advertisers who stand to benefit the most from native will be those who move fastest to adopt.

Shubhi Tandon

Shubhi Tandon is the Assistant Editor at Digital Market Asia. Fascinated by the evolving digital media industry, she has focussed on tracking developments in the Asia Pacific market since 2014.
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