Native Advertising Will Be the Majority of Mobile by 2020
By Yoav Arnstein, Facebook
6 April 16: Native advertising is growing at an astounding rate and today’s most successful mobile marketers have already made the switch, according to a new research study conducted by global business analyst IHS Technology and commissioned by Facebook’s Audience Network.
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.
According to the research, nearly two-thirds (63.2%) of all mobile display ads will be native by 2020, summoning $53 billion in total advertiser spend.
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%, and will account for 10.6% of all mobile display ads ($8.9 billion) by 2020.
We’re seeing this trend play out right now at Facebook. The percentage of apps using native ad formats on the Audience Network has grown 10x from Q1 2015, and they now make up 83% of our entire network. Today, more than 50% of apps on the Audience Network are using native ads exclusively.
The study also found that consumers engage with native ads 20-60% 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.
Key Statistics (from the research)
- By 2020, 75.9% of all digital ad spend will be mobile.
- Native advertising will generate 63.6% of all global mobile display advertising and amount to $53.0bn by 2020.
- While first party in-app native, like those served on Facebook or Instagram, will continue to be a major revenue driver, third party in-app native (like those served on outside publishers through AN) will continue to grow, at an annual average rate of 70.7% and will account for 10.6% of all mobile display advertising at $8.9bn by 2020.
- In EMEA, native advertising will amount to $9.6bn by 2020 (1.3B third party native). In APAC, native advertising will amount to $14.1b by 2020 (3.6B third party native)
- APAC will record the largest increase in native advertising spend in next five years at a 177% compound annual growth rate between 2015-2020
Native + Audience Network (not from this research – by Facebook)
- The percentage of apps using native ad formats on the Audience Network has grown 10x from Q1 2015, and they now make up 83% of our entire network.
- Today, more than 50% of apps on the Audience Network are using native ads exclusively. It is the largest native ad network in the world.
- CPMS are 7x higher for native compared with banners.