Asia a ‘late bloomer’ with native ads but making up for lost time

The study noted that native advertising remains nascent in the APAC region. In 2015, native advertising amounted to US$2.4 billion, of which only US$22 million was third-party native, corresponding to just 0.2 percent of all APAC mobile display advertising revenue.

The adoption of third-party, in-app native advertising in APAC has been slower than in the other two regions due primarily to the lack of infrastructure to facilitate selling native ads at scale.

The study, which covers 25 countries, reported that the global native ad market is expected to grow to US$53 billion by 2020 with mobile accounting for 75.9 percent of all digital ad spend.

In APAC, the analyst firm is forecasting that native advertising will amount to US$14.1 billion by 2020.

As the technology develops, APAC third party in-app native ad revenue will increase faster (at a 177 percent CAGR between 2015 and 2020) than in North America and Europe, recording triple digit growth rates until as late as 2018.

This growth will be further reinforced by the growth in smartphone penetration in ‘mobile-first’ countries, whose consumers will access the internet for the first time through their mobile device.

As a result, digital ad budgets in India, Indonesia, Malaysia and other high growth APAC markets, much like consumers in those countries, will go straight to mobile, boosting mobile display advertising.

The firm is predicting that APAC will overtake Europe in terms of third party in-app native share of mobile display advertising in 2019 to reach 10.3 percent in 2020. IHS forecasts third-party in-app native advertising to amount to US$3.6 billion by 2020.

In response to queries from Campaign Asia-Pacific, Yoav Arnstein, head of EMEA published sales at Facebook said there is no doubt that mobile is growing exponentially.

The “most encouraging finding” from the study for him was that native ads drive three times higher user retention for publishers.

“Which actually wasn't that big of a surprise," he said. "To me, this is a mandate against bad ads. Native is the best experience for people because it respects their experiences, especially on mobile, and now we have the research to prove it.”

On both the publisher and advertiser side, Arnstein said the industry will continue to see major adoption, especially in Asia.

“Look for many publishers to go 100 percent native," he said. "In fact, 83 percent of our Audience Network is already native, and over 50 percent of our publishers are native-only."

Asked what advice he had for brand advertisers, Arnstein said they must “ruthlessly prioritise quality.”

“Do not just port over content that was created for banners and expect it to work in native,” he added. “Also, make sure you are using the right technology to make sure your ads are delivered to real people and are relevant.”

Arnstein said that since native performance is rooted in relevance, delivering the right ad to the right person is crucial.