Native is eating the advertising world. This week, eMarketer put out its first native advertising specific industry report that puts detailed numbers to this story: predicting 40 percent yearly growth for native advertising on the open web, beyond the social platforms, and $12 billion in growth for native across 2017 and 2018.
At Sharethrough we’re seeing that traditional display and outstream are transforming in the market into native display and native outstream. eMarketer’s detailed projections are strong proof that within a few years we won’t even be talking about ‘native,’ it will just be how advertising works.
Here are some key takeaways from eMarketer's new report.
Traditional Ad Budgets Are Being Turned Into Native Spend
eMarketer’s projections through to the end of 2018 point to aggressive growth in the native advertising market: from $16.21 billion in 2016, to $22.09 billion in 2017 and $28.24 billion in 2018. It predicts in its report that much of this extra $12 billion in funding across the next two years will come from buyers transitioning traditional digital display, print and TV budgets across to native, but that there also is a “healthy portion” of new digital advertising investment coming from budgets created specifically for native.
On our side, we've been seeing this trend with agency trading desks and traditional media teams: taking legacy display dollars and applying those budgets to active display. We're also seeing video teams taking standard outstream budgets and applying them to native outstream. We saw $140 million in gross native spend through our platform in 2016, roughly double 2015 levels.
Native Advertising on the Open Web is Growing and Holding Its Own Against the Facebook/Google Duopoly
The new report breaks out "social" native (Facebook, etc.) from "non-social" native (native for the open web, run through platform like Sharethrough). With the dominance of major social platforms, understandably social native spend accounts for a large part of the overall market (84.2 percent in 2017). However eMarketer projects strong growth for non-social native, expected to grow from $3.5 billion in spend in 2017 to $5 billion in 2018 and increasing its overall native market share, from 15.8 percent in 2017, to 17.8 percent in 2018. This is strong proof that there’s a lot of life and growth outside of the much talked about Facebook and Google duopoly.
As long as there's a strong, thriving open web (which most people would argue is in everyone's best interest), people are always going to be using tools like Sharethrough to reach audiences while they're on their favorite publisher sites and in the discovery mindset.
Mobile Advertising Is Native Advertising
Mobile investment in native display will increase 39.6 percent this year, eMarketer estimates. The report also projects that 90 percent of new dollars coming into native in 2018 will be spent on mobile.
Bill Simmons, CTO and co-founder of DSP DataXu is quoted in the report talking about how the nature of the mobile home screen dovetails in nicely with the benefits of native advertising: “Mobile is going to drive publishers to use more in-feed native, and it’s going to drive more silent video with captions as a dominant format moving forward...There is no right handrail in mobile. There’s no room for banner ads. It needs to be in-feed, as people scroll by.
As our own company President Patrick Keane said in The Wall Street Journal recently: "native is the only viable advertising solution for mobile." Interruptive advertising was never great on desktop, but on the mobile phone screen it really, really doesn't work.
Programmatic Native is Real and Having a Native Strategy Isn't Optional
eMarketer cites an Advertiser Perceptions report from February 2017 estimating that 90 percent of US marketers and agencies have a native strategy now. Programmatic native has already been utilized by a significant portion of the market too, showing that it’s not just a concept anymore and there’s real demand for the new DSP integrations Sharethrough has been rolling out. Advertiser Perceptions said that almost half of all marketers have utilized non-social programmatic native (47 percent). In 2016 we saw 1300 percent growth in RTB-demand on the Sharethrough Exchange from third party DSP partners, and are adding in new demand partners each month.
There Is A Lack of Investment In Proper Native Measurement
eMarketer’s report quotes a need to develop better measurement, with marketers still falling back on basic traffic analysis to gauge success. It cites a Native Advertising Institute and International News Media Association report stating that while 60 percent of marketers look at traffic details to measure the effectiveness of native ads, less than a quarter (22 percent) used brand awareness as a measure of success. This is part of the market that Sharethrough is actively investing heavily in, setting up new partnerships with Kantar Millward Brown and Placed to update native ad measurement for the modern era. Brands need to be able to gauge how their native campaigns are effecting real business outcomes and optimize for those results in as close to real time as possible.