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By adaptive - May 8th, 2017
Mobile advertising may more than double to $72 billion by 2020 as more ads move into the mobile-native social space. Hans Klis examines how one firm sees such exponential growth in a short period of time.
Banners failed to make an impression and pop-ups are terrible. Even marketing and advertising executives admit as much, but now ads are increasingly moving into the mobile native-social space, where the ROI is much better.
Advertisers prefer that you not install an ad-blocker, but even marketing professionals don’t blame you for using one. You should turn it on, WHOSAY co-founder and CEO Steve Ellis says, “Most ads are really bad.”
The banner-era of digital advertising is nearing its end, if it’s not already dead and buried. Click-through-rates (CTR) today are about 0.1 percent. That’s more than forty times less than when the first banner ads appeared in the nineties, marketing data analytics firm Adroll writes in its recent report The Blended Attribution Playbook.
Consumers have gotten wiser and wearier of these traditional digital ads since AT&T’s ‘Have you ever clicked your mouse right here? You will’ ad. In 1994 it was one of the first banners ever to grace the internet. Now even one of its creators admits to using ad-blockers to shield himself from the deluge of advertising he helped unleash.
That’s why more and more brands and digital ad agencies are moving into the mobile native-social ad space. That means fewer banners, take-overs, pre-roll content or pop-ups and more videos and images subtly embedded into the feeds of social networks or scrolling apps like the one for The New York Times. These ads are integrated into mobile space: less invasive, less frustrating and better yet: still immune to ad-blockers. A good example for the native-social format is Facebook News Feed Ads.
According to ‘Getting to $72 Billion’, a recent report by media and technology market research firm BIA/Kelsey, mobile is the fastest growing ad format among all location-targeted media. Current spending overall in ads is about $33 billion.
BIA/Kelsey Chief Analyst and VP of Content Michael Boland projects that the number will increase to $72 billion in 2020. For location-targeted native-social ads (about one third of the ad ‘pie’) the increase will be even bigger: from $10 to $24 billion in the next three years.
Millennials are partly driving this growth. They’re where the money is, Boland stresses to Open Mobile Media in an interview over the phone. That makes them influential. “Millennials like things that are genuine. They don’t want to be told what to wear and what to buy. Traditional ads are direct in their message: buy this product. Brands now are trying also to be more genuine and try to create a brand experience. For example with an Instagram campaign with highly artful photography that incorporates the product in some way.”
Subtlety works, a recent small scale Nielsen study shows. It found that consumers are more likely to ‘have negative brand opinions’ after seeing pre-roll videos on social media than native video ads in the case of a soft-drink product. Another CPG saw a lift of 42 percent in purchase intent after being exposed to a native ad. The pre-roll video had no discernable effect.
But of course the fact that we increasingly consume our media through a mobile device is also a big factor in driving the growth of the native-social ad format. According to venture capital firm Kleiner, Perkins, Caufield and Byers, people spent 25 percent of their time consuming media on a phone or tablet. Form follows function and vice versa.
A platform that is highly suitable for native ads, and used by ad agencies is Snapchat. Its IPO filing reveals that it has 158 million daily users that spend about 30 minutes a day on the app creating 2.8 billion so-called Snaps. Boland: “This platform has the ability to deliver a television size audience. That makes it appealing for advertisers that are looking for massive reach and the buying potential of Millennials.” The ad campaign for 2015’s Mission Impossible: Rogue Nation shows the potential of native advertising on Snapchat. On the movie’s channel users were given missions to complete within 24 hours, like posting a picture or video of them running (like lead actor Tom Cruise often does in the franchise). The best content was then showcased on other social media, natively, where the campaign got a total of more than 65 million impressions. Instagram offers a similar effective platform for advertisers with its Instagram Stories.
Boland says Facebook’s native ad infrastructure might be the key to finding the holy grail of advertising, getting the fragmented small and medium size business (SMB) marketplace onboard with ad agencies. “To get them to sign up for an ad campaign and manage it is really hard. Facebook has made it very easy to do it themselves,” he explains.
Owners most likely have a profile and know how to promote themselves and their business. And if SMBs opt to advertise on their own, that’s okay, Boland stresses. “Ad agencies won’t suffer if SMB promote themselves. Normally they’d be out of reach for these ad agencies anyway.” Facebook has made it easy to create and manage a business page. “In this way Facebook onboarded a lot of business, something like 70 million internationally.” Of which five million use the paid ad services the social network provides.
The targeting capabilities that digital platforms offer make native ads many times more effective than traditional digital ads, says WHOSAY's Ellis. “These platforms clearly offer better viewership and a greater awareness, engagement and CTR.”
WHOSAY, an influence marketing agency, touts a mean CTR of 15 percent from “more than 200 hundred successful campaigns”. One of them being the #Alldaybreakfast campaign for McDonald’s in which celebrities shared images of them with the signature breakfast items of the fast food chain.
“With Google, Facebook and Amazon you can pretty much reach every single person in Europe and North America,” Ellis notes, and in a very targeted manner, he says, adding, “They tell you what they like on Facebook, what they bought on Amazon and what they’re looking for on Google and YouTube.”
Once you look at those numbers, Ellis says, native ads are the way to go.“Although they’re still useless if you serve up terrible ads.” Even with all the technological levers at their disposal, the success of mobile native-social ads will depend on the quality of the content, the CEO stresses, before asserting, “Most ads are really bad.”
Using location data opens up an even more effective and lucrative way for ads to target consumers. Together with the preferences and behavior that users already share with advertisers, location adds up to a dataset that makes targeting of consumers even more accurate.
Google data show that 70 percent of holiday shoppers with smartphones last year researched gifts online before buying them. A quarter of them used the map function on their device to make the purchase. A reason, says the tech giant, for brands to experiment more with the ‘Promoted Places’-function in Google Maps next Christmas. “Call and Map buttons drive the increasing ad expenditure in native-social ads,” BIA/Kelsey’s Boland says. It’s a tangible result: “it makes ads trackable. Attribution is appealing for advertisers.”
Facebook’s native ad infrastructure also seems to focus more and more on local businesses. The recently introduced Events app and Recommendation bookmark makes users aware of what is going on locally: from local business openings and sales events. Some marketing experts see Facebook developing into a ‘peek through a virtual shopping window,’ but Google as a driver for consumers to actually visit these businesses offline. But that might change.
With Payments, a Facebook Messenger transaction functionality still in beta, the social network might push advertising in its ecosystem to the next level, making the jump to clicking-through and buying a product easier for consumers and even more trackable for brands and ad agencies.
“The technology is there: you’re starting to see more usage behavior where people are using Messenger interfaces not only to communicate with friends but also with businesses,” Boland says. Getting to $24 billion in native-social advertising in 2020 might be easier than it looks, and that would go a long way towards getting the mobile market as a whole to $72 billion.