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

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.

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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.

To access BI Intelligence's full report on Native Advertising On Mobile, sign up for a free trial subscription here.