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Native ads drive mobile growth

News, 06 April 2016

MENLO PARK, CA: Almost two thirds of all mobile display advertising will be native within five years, according to a new study which also highlights the rapid growth of in-app native advertising.

Research from IHS, commissioned by Facebook Audience Network – the service that enables advertisers to extend the scale of their Facebook campaigns beyond the social networking site itself and into other mobile apps – predicted that global expenditure on mobile display advertising will amount to $84.5bn by 2020.

Within that, some 63.2% ($53bn) will be accounted for by native in-stream ads, Marketing Land reported.

The figure is already higher for ads served through Facebook Audience Network, according to Social Times, which reported that 83% of the network's ads use this format.

Further, more than half of applications on the network use native ads exclusively.

This area is growing particularly quickly, with the percentage of apps using the native ad format on Facebook Audience Network having increased tenfold in the past year.

More generally, the IHS research indicated that third-party in-app native advertising is increasing a CAGR of 70.7% between 2015 and 2020. It expected that this would account for 10.6% of mobile display advertising in 2020 and would be worth $8.9bn.

Regionally, North America will lead the way in third party in-app advertising, generating $3.9bn in revenues by 2020, followed by Asia-Pacific on $3.6bn and Europe on $1.3bn.

Overall, the Asia-Pacific region will see the largest increase in native advertising spend in next five years, with a CAGR of 177% to reach a total of $14.1bn.

The most important factors driving native advertising growth are the significantly higher engagement and retention rates that it commands.

Compared to traditional banner ads, engagement rates are anywhere between 20% and 60% for native ads, the study found, while retention rates were up to three times higher.

Data sourced from Marketing Land, Social Times; additional content by Warc staff