Marketers in US and Europe continue to flock to native and programmatic advertising formats.
Native advertising is fast becoming a powerful digital marketing strategy, as traditional display and banner ads become less and less effective. With internet users increasingly ignoring overt sales tactics, average click-through rates (CTRs) for display ads have fallen over time to 0.17 percent, according to Google. In contrast, native ads enjoy much higher CTR and conversion rates, because they offer visitors more than just a hard sell.
A native ad is a piece of content that looks and feels like an editorial article. Advanced algorithms enable advertisers to dynamically position their native ads next to similar or related content on the web. Consumers are more likely to engage with a sponsored article that provides them with relevant new information than with a traditional banner ad, and they are more likely to share it with friends.
Website publishers can customize ad widgets on their site so the ads blend in seamlessly with their regular content. This increases CTR for advertisers — driving as much as purchase intent and brand affinity — and enables publishers to monetize their web traffic more effectively. CTRs for premium native ads can be two to three times higher than for banner, rich media or sponsorship ads, and mobile devices enjoy up to 4x higher CTRs than traditional, non-native display ads, according to the most recent Business Insider reports.
More than half the apps on Facebook’s Audience Network are now using native ads exclusively, and according to BI Intelligence Forecasts, native advertising will account for 74 percent of total display ad revenues by 2021, up from 56 percent in 2016.
The rise of programmatic and RTB
Digital ads are increasingly being sold through programmatic platforms, where algorithms determine the best target sites for ads, depending on a consumer’s interests, location and browsing history. According to Business Insider, programmatic transactions represent a majority (52 percent) of non-search digital ad spend in the US, and the percentage is growing at around 20 percent annually.
Real-time bidding (RTB) — where digital ads are auctioned off in milliseconds before a page loads — is the fastest-growing type of programmatic advertising. RTB spending is growing even faster than programmatic advertising in general, with a five-year compound annual growth rate of 24 percent expected through 2020. By year-end 2020, US-based RTB revenue is expected to surpass $26 billion, up from $8.7 billion in 2015, Business Insider reports.
European RTB adoption lags that in the US but is now growing fast, led by the UK. International Data Corporation predicts European RTB spending will grow from a projected $710.3 million in 2016 to $2.7 billion in 2018.
Demand-side platforms (DSPs) facilitate RTB for buyers, brands and advertisers looking to extend their advertising reach. DSPs automate the ad-buying process by providing access to vast amounts of data from multiple sources, resulting in a more efficient, targeted and economic ad buy. In a matter of milliseconds, a DSP will analyze the data and determine which ad impressions are worth bidding on, based on an advertiser’s targeting requirements.
Supply-side platforms (SSPs), on the other hand, enable publishers to manage their advertising space inventory and fill it with ads that will generate additional revenue. SSPs enable publishers to leverage data they have about users at the ad impression level, providing more targeted information for potential ad buyers.
If you build it well, they will engage
The ultimate key to success with native advertising is to deliver engaging content that will provide value to the reader. Unlike straight display advertising that affords a very short window of time to grab attention, native ads offer the potential of longer user engagement.
When done well, native advertising can deliver a targeted, relevant experience that will enhance brand awareness and generate new prospects. When done poorly, however, it can have a negative impact on both the brand advertiser and the platform or publisher delivering the ad.
Source: Marketing Land