In the early days of online advertising, companies were quick to spot the potential lucrative rewards that could be available were they to switch their attention to the new format. In 1993, Global Network Navigator became the first website to sell what later became known as “banner ads,” in this case to a law firm. GNN acted as an information portal, and within two years large companies such as MasterCard were purchasing advertising spots for over $10,000 per week.
What is Native Advertising?
The explosion in adware led in turn to the development of better software able to defend computers from unwanted advertisements. At the same time, users became savvier as to which advertisements they were willing to click, and more discerning as to the provenance of an advertisement. As such, native advertising is now the format of choice for many companies, in order to provide a user with a more natural experience. Defined as a “form of paid media where the ad experience follows the natural form and function of the user experience in which it is placed,” the key point is that the ads must look like natural content while also functioning like that content.
Native is the Future
For businesses to be able to promote themselves to twenty-first century consumers, a switch to native advertising is crucial. A Business Insider report from 2016 predicts that by the year 2021, native display ad revenue in the US will total almost 75%, a substantial increase from a 56% share in 2016. Social media platforms such as Facebook and Twitter are largely responsible for this increase.
Native Ads and Big Data
According to an IAB report, 2017 will continue to see native advertising grow, while virtual reality ads will become a more popular format. Acquisition, a term which in the world of advertising refers to the ability to attract new customers, will therefore have to be cognizant of the changes in the desires of customers. In order to best understand this, big data and the analysis of the data will become more crucial than ever.
Companies which specialize in the storing and analyzing of massive sets of data, are ideally placed to assist organizations in more expertly locating and targeting customers. Big data allows companies to tailor-make an advertising experience for each specific customer, and when this is tied to native advertising, a customer begins to feel part of the experience, rather than simply viewing a generic ad. On a different angle, one interesting solution we see is GPU database solution by SQream for big data SQL, is also designed to support AdTech companies by reducing latency of complex queries on large data sets. This allows Data Scientists to be more productive and to create models in a faster way while cutting down overall costs.
In Ad Tech, when the model is better, the fit is better for the user; the bid price is higher, and a higher price increases the bid/win ratio. The advertisers can spend their budget with a higher likelihood of conversion, and the publisher earns the most money on their inventory.
In an article which discussed the future of advertising in relation to the data revolution, Ad Age wrote that, “The data that sophisticated agencies are using to optimize their mobile marketing campaigns in 2015 is multichannel, multidevice data which provides actionable insights to better optimize marketing, according to metrics like lifetime customer value. We’ve moved beyond third-party data to better CTR or conversion rates on single campaigns toward holistic marketing data derived from a range of internal and external first-party data sources.”
Increased Revenue
Of course, while interactive personal experiences are all the rage, the key figure that interests companies is the revenue achieved through the ads. A recent study commissioned by Facebook with research firm HIS, shows that consumers interact with native ads 20% to 60% more than they do with standard banner ads. The same study found that the Asia-Pacific region will see a 177% compound annual growth rate between 2015 and 2020, and native advertising spend will reach $14.1 billion in the Asia-Pacific region by 2020. These figures alone will ensure that native advertising grows and grows.
