How Mobile Native Ads Are Turning The Digital Ad Industry On Its Head

How Mobile Native Ads Are Turning The Digital Ad Industry On Its Head

BUSINESS INSIDER AUG. 29, 2013, 10:58 AM 1,151 1

regional mobile ad share by formatma

The advertising industry can’t quite seem to figure out how to advertise effectively to audiences on smartphones and tablets. Many mobile ads are simply banner or search ads bought inadvertently as advertisers aim for broad digital audiences. Native ads are being touted as the new formats that will bring real depth and differentiation to the mobile ad market.  But what exactly is a native ad on mobile? Is it just an ad unit that was designed to show on a mobile device? In a new report from BI Intelligence on native ads and native ads on mobile, we interview a half-dozen industry experts, we explain away the confusion surrounding native mobile ads, we categorize the various types of native ads that have gained traction on mobile, and we examine the growing role played by publishers and agencies in nurturing the native-mobile ecosystem and upending the traditional banner ad and the ad networks that deal in them.

Here are the main facets of the emerging world of native ads on mobile:

Getting the definition right: We don’t consider an ad to be “native” simply because it’s only possible on a mobile device, like an ad with a touchscreen interface. A native ad has to be an integral part of a site or app experience.

The scale issue: The one downside to native ads. By definition, since it is inventory created by publishers based on their unique characteristics, they don’t scale well. They likely won’t be traded in automated exchanges.

The price and cost issue: The price of showing a mobile ad has famously being pegged at just 75 cents for every thousand impressions, compared to $3.50 on desktop — and much higher than that for premium PC-based publishers. Native is aiming to be premium and raise the price bar for mobile.

The brand challenge: Advocates for native ads on mobile argue they’ll bring brands deeper into mobile advertising since they are a perfect showcase for brand messages. But brands aren’t only after native formats, they’re also after better tracking and audience data.

The impact on the broader ecosystem: Native ads present publishers and native-focused ad companies with a unique opportunity to command higher prices and exert more control over their inventory. For ad buyers, they’re a mixed bag: higher-cost, difficult to scale, but powerful vehicles for certain campaigns.

The main categories of native ads on mobile: We distinguish between native ads on mobile and mobile-only native ad formats. And we dive into the particularities of  the main types of native ads: branded content, in-stream ads, activity-triggered ads, and mobile-only native ad formats like click-to-call paid search results.

In full, the report:

Offers datasets on the mobile advertising industry and puts numbers to the main trends.

Explains how the rush to native ads is driven by the consumer distaste for banner ads on mobile.

Refocuses attention on the debate over scale, and whether an overemphasis on reach is a factor in driving low-quality ad buys.

Shows how the ad industry will bifurcate between premium and publisher-driven ad formats like native ads and programatically purchased conventional ad units like banners.

Discusses some of the risks associated with native ads, including the danger of backlash if users perceive ad partners as unpopular or unsavory.

Explains how mobile ad networks will be bypassed by the trend toward native ads on mobile.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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