Get the most important digital marketing news each day.
Native ads to make up 63 percent of mobile display ad spend by 2020, Facebook & IHS study finds
Facebook also released new stats on native advertising on its Audience Network.
A new study on native advertising from Facebook and IHS Inc. accompanies new stats from Facebook on its Audience Network — the mobile ad network that recently branched out from in-app to mobile web publishers.
According to the new report, by 2020, media buyers will spend $84.5 billion on mobile advertising, with mobile accounting for 75.9 percent of all digital ad spend globally. Native will be a significant driver of mobile ad growth.
Native in-stream ads will drive 63.2 percent of all mobile display advertising at $53 billion by 2020. The study anticipates third-party in-app native advertising (ads not running on Facebook) will be the fastest-growing ad format in digital advertising and will grow at a 70.7-percent compound annual growth rate between 2015 and 2020, to account for 10.6 percent of mobile display ad spend.
The key driver for the significant rise of native ad units is that they have higher engagement rates than traditional banners. The report finds that engagement rates are 20 to 60 percent higher on native ads than on banners and drive retention rates that are 3x higher. On the Facebook Audience Network, the company says CPMs are seven times higher for native units compared to banners. Additionally, the report anticipates that third-party in-app advertising will grow as more publishers shift to programmatic selling, more ad tech providers establish capabilities to handle native ad formats and the popularization of mobile commerce drives more advertisers to increase mobile ad spend.
Facebook also announced that 83 percent of the ads running on the Audience Network are native, with more than 50 percent of the apps on the network using native advertising units exclusively. The use of native ad units by apps in the network has increased by a multiple of 10 since Q1 2015.
The social network has largely staked its success in mobile advertising on the continued adoption of native ads by advertisers. Facebook now dominates the mobile display market, with 44 percent market share globally, according to the new report.
The study was conducted by IHS Inc. and included more than 70 interviews with industry stakeholders — including publishers and app developers, agencies and advertisers, trade associations, ad tech vendors and networks — in 25 countries.