Native advertising will be majority of mobile by 2020

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 $53bn in total advertiser spend. The growth of the native ad market is a mandate against bad ads. Native is the best experience for people because it respects their experiences, especially on mobile. For publishers, this can mean longer time spent on your property and increased revenue. For advertisers, native can mean more value for your business. On Audience Network alone, which is 83% native, we see CPMs seven times higher for native, compared with banners.

While first party in-app native, such as ads 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 ($8.9bn) by 2020.

We are seeing this trend play out right now at Facebook. The percentage of apps using native ad formats on the Audience Network has grown ten times 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.

Positive impact on the user experience

Mobile is the most personal device and people expect great experiences. The study also found that consumers engage with native ads 20-60% more than standard banner ads. People have trained themselves not to look at the top or bottom of an app. An ad that is well integrated within the app or site design and naturally fits into the user flow has a much better opportunity of catching a user’s attention and ultimately leads to higher conversion rates. 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

• By 2020, 75.9% of all digital ad spend will be mobile.

• In EMEA, native advertising will amount to $9.6 billion by 2020 (1.3 billion third party native).
• In APAC, native advertising will amount to $14.1 billion by 2020 (3.6 billion 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

The full results of the study, “The Future of Mobile Advertising is Native,” are available to read now, click here.