Are you using banner ads now in your marketing, but thinking about switching over to native ads?
Or maybe you’re new to mobile advertising and want to know what all the hype is surrounding native ads? Perhaps you’re a digital advertising veteran, and you remember all the excitement around Flash and you’re skeptical of trendy new ad technology?
The TapSense team has been involved in mobile advertising innovation since the release of the first iPhone. We’ve experimented with a variety of mobile ad formats, including full screen interstitials, in-app download ads, rich media, mobile video, and native ads. While the simple banner ad is currently the most popular format, due to its sheer abundance, the emergence of native ads on mobile has taken the industry by storm. Its popularity and effectiveness is undeniable.
Facebook has scaled its native ad business to more than $1 billion in the first year, and it is now on track to be worth $4 billion. Yahoo recently announced that it will remove banners from all of its mobile properties and focus exclusively on native ads.
Our own early test with native yielded great results, and it’s now a large percentage of our business. But banner ad demand remains strong. There are clear strengths and weaknesses of each format, and we believe both will continue to coexist for some time. To help marketers keep up with the rapid pace of change in advertising technology, we developed this comparison of both ad formats.
Mobile Banner Ads: Strengths
• Massive Reach: Mobile banner ads are currently supported by a large numbers of publishers. The format is also standardized and managed by trade associations like the IAB (Internet Advertising Bureau) and MMA (Mobile Marketing Association). This means advertisers can get massive reach through the format. Billions and billions of banner ad impressions are available on mobile daily.
• Inexpensive Format: Relative to most channels, banner ads remain low cost. Search, sponsorships, print, and television all have high price points and are almost impossible to buy in low quantities. Banner ads can be purchased easily in small amounts and are available to advertisers with the smallest budgets.
• Highly Flexible: The format supports a multitude of unique targeting options. There are retargeting options, look-alike targeting options, data segmenting options, publisher-specific targeting systems--all available in almost every country around the world.
Mobile Banner Ads: Weaknesses
• Accidental Clicks: Some estimates put the number as high as 50 percent. This number is not a huge surprise when the touch screen nature of most smartphones is taken into account. It does pose a problem for marketers; since a significant portion of those clicks are wasted, it skews brand measurement down and drives up cost.
• Tiny Sizes: The limited screen real estate offers brands and advertisers a sub-par creative experience at best. It’s a challenge to communicate any message more complex than a logo and tagline. The rich and captivating experience of television is the reason that the format still commands the bulk of advertising dollars.
• Poor Performance: On mobile, banner ad performance overall has seen low click-through rates and even lower engagement metrics. Performance starts to look really bad once you see that some of the clicks you do get are in fact accidental. One study found that the average CPM payout to publishers in mobile is a meager $0.75 (Kleiner Perkins). Another study found that you’re more likely to die in a plane crash than click on a banner ad.
Mobile Native Ads: Strengths
• Strong Performance: While the format is still new and data is limited, early tests have shown strong performance and significant return on investments for marketers. In only a year’s time, Facebook has been able to scale its native ads business to over $1 billion in revenue, which means mobile native ads must be working extremely well for a certain segment of advertisers.
• No Creative Development: Most mobile native ad products don’t require a significant investment in creative resources. This is great for marketers who want to test with a limited budget and have limited resources. Creative development for digital advertising is a significant barrier for many marketers.
• Targeting Options: Most native ad products have rich first-party data targeting options that can be difficult to access through another method. For example, accurate male-female targeting is possible, as is relationship status targeting.
Mobile Native Ads: Weaknesses
• Currently Limited: Scalable native advertising models are limited. Outside of Facebook, most native ad products are still new and in early testing stages. At-scale native ad buying and campaign management tools are still emerging.
• Fragmented And Nonstandardized: The formats are not currently managed by the IAB and MMA. Each publisher is free to create its size and style, with different functionality and options, which makes at-scale campaign management tough.
• Still Just A Trend?: Are mobile native ads here to stay? Or will they fade away like so many other promising and exciting technologies? Investing too early into a technology that goes the way of Betamax or Flash is a problem. But if they take off, they could provide a massive competitive advantage for your product or company.