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Native Advertising Predicted To Dominate Digital In 2014

1/13/2014

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by Gavin O'Malley, Thursday, January 9, 2014

Say goodbye to the stigma associated with native advertising.
 
Following The New York Times’ official embrace of the once-controversial ad format, J.P. Morgan is predicting that native will take over digital channels in 2014.
 
“We believe native ads are quickly becoming the de facto ad format on mobile and increasingly moving into desktop,” lead analyst Doug Anmuth wrote in J.P. Morgan’s annual “Nothing But Net” report, released on Thursday.
 
It is significant that Anmuth and his colleagues are tying the success of native to mobile, considering that they expect ad dollars devoted to the channel to overtake desktop dollars this year.
 
As for what makes native ads so special, J.P. Morgan calculates that they deliver a huge bang for the buck. Indeed, according to the securities firm, native ads represented just 5%-to-10% of Facebook’s impressions in 2013, but accounted for more than 60% of the company’s revenue.
 
“We think native ads also have significantly higher click-through rates than traditional display ads, which leads to higher pricing over time,” according to Anmuth.
 
But, what makes native so well-suited for the mobile medium? “Native ads are ads embedded in a [Facebook] NewsFeed or [Twitter] stream and in many cases closely resemble organic content, making them much more likely to get clicked on compared to historical banner display ads,” according to Anmuth and his team.
 
As a result, “we believe a growing interest in mobile advertising from brand advertisers coupled with improving mobile ad formats suited for smaller screen sizes should help to bridge the gap between time spent on mobile and mobile marketing spend.”
 
Moreover, “while the majority of Facebook and Twitter ad revenue is now generated through native or feed ads, we believe other publishers, such as LinkedIn and Yahoo, are also increasingly shifting inventory to the format.”
 
Last year, eMarketer predicted that the native niche would hit $2.85 billion by 2014. Yet industry thought leaders have implored publishers and brands to rethink their use of native advertising.
 
“Publishers should say ‘no,’ more than ‘yes’ to native,” Steve Rubel, executive vice president of global strategy and insights at Edelman, told attendees an the OMMA Native conference, in November. “As an industry, we’re going way too fast.”


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US Total Media Ad Spend Inches Up, Pushed by Digital

8/22/2013

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TV remains top ad medium in the country
eMarketer expects US advertisers to spend $171.01 billion on paid media this year, up 3.6% over 2012 spending levels, according to our most recent forecast of US ad spending.

The 3.6% growth rate will be down somewhat from last year’s 4.3% increase, attributable largely to boosts from the Summer Olympics and a national election season. Spending growth for 2014 will be up, with help from the Winter Olympics, midterm elections and the FIFA World Cup, as growth rates hover between 3.1% and 4.1% for the rest of the forecast period.

eMarketer expects TV to continue to capture the largest share of paid ad spending in the US for the foreseeable future, though its percentage of total spending will drop slightly, from 39.1% in 2012 to 38.8% this year and 38.2% in 2017, as spending on TV ads grows more slowly than spending on paid media as a whole.

Digital media will gain the most share during the forecast period, rising from 22.3% of total spending in 2012 to nearly a quarter this year and 31.1% by 2017. Mobile alone will grow ad spending even more quickly than digital as a whole; mobile is expected to account for 15.8% of all ad spending by 2017, or $31.1 billion.

Among digital formats, video remains the fastest-growing—though still from a small base compared to giants like search or banners. And even with the rapid rise of digital video viewership and ad spending, levels of spending on online and mobile video fall far below spending on TV. Even by 2017, eMarketer expects digital video spending to reach only around one-eighth of what is spent on television ads.


eMarketer forecast in June 2013 that total media ad spending would be up 3.4% this year to $170.69 billion. The upward revision to the forecast was primarily a result of upward revisions to expected spending on mobile advertising this year.

eMarketer bases its forecast of US ad spending on the analysis of various elements related to the ad spending market, including macro-level economic conditions; historical trends of the advertising market; historical trends of each medium in relation to other media; reported revenues from major ad publishers; estimates from other research firms; consumer media consumption trends; and eMarketer interviews with executives at ad agencies, brands, media publishers and other industry leaders.


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