- Native ads, or ads that take on the look and feel of the content surrounding them, have taken off over the last few years. Native ads first gained prominence on social platforms, but now publishers have embraced the format. In addition, programmatic technology is making it easier to buy and sell these ads.
- Four main factors are driving up native ad spending: the overall rise in digital ad spending; the dominance of social, particularly on mobile; higher native engagement rates; and the threat of ad blocking.
- Native-display ads, including social native and native ads in-feed on publisher sites, will make up the bulk of native ad revenue from 2016-2021. Native display ad revenue in the US will rise at a five-year compound annual growth rate (CAGR) of 17% between 2016-2021 to hit $36.3 billion, according to BI Intelligence estimates.
- Native-display ads will also account for a rising share of the total display market. By 2021, native will account for 74% of total US display ad revenue, up from 51% in 2016.
- Social platforms generate most of their revenue from native ads and will continue to dominate native ad spending overall through 2021. Social ad revenue in the US will grow at a 15% CAGR to hit $30.8 billion by 2021, according to BI Intelligence. Social native ads make up the vast majority of social ad spend.
- Facebook, Instagram, Twitter, and Snapchat are rolling out new native formats and analytics to increase native ad inventory and spending.
- Sponsored content should be the fastest-growing native format. We estimate sponsored content will drive US ad revenue at a 31% five-year CAGR to reach $12.6 billion by 2021.
- High engagement rates have made sponsored content attractive to brands, but the high cost to produce these ads could limit the format.
- A number of important trends will drive the native ad format going forward. Video, native on TV, and new platforms, including live streaming and virtual reality, will offer new native experiences.
Native Advertising Is Taking Off
Native ads — or ads that take the look and feel of the user-generated or editorial content surrounding them — first gained significant traction on Facebook and Twitter, where brands could easily leverage the newsfeed format and gain further reach through capabilities like likes and shares. Today, publishers are embracing the format by creating in-house departments responsible solely for creating adverts that resemble editorial content. And now major ad exchanges, like Google and Yahoo, are offering publishers a way to programmatically buy and sell native impressions.
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