EMarketer: Native ad growth will dip to 31% this year

Dive Brief:

Native ad spending will account for 58.3% of the digital display market, or $32.9 billion, this year, according to eMarketer forecasts made available to Marketing Dive in an email. The projection is $4 billion higher than previous forecasts but points an overall slowdown in native advertising growth, which rose 63.7% in 2016 and 50.1% in 2017 but is expected to increase just 31% from last year in 2018.
Native ad spending in the U.S. will continue to grow faster than the overall digital display market after marketers spent most of their display budgets on the format last year. Mobile is driving growth in native ad spending, as 76.9% of all mobile display dollars will go toward native this year. Native ads will account for nearly 96% of social ads in 2018, but social growth is slowing and will be lower than the total native growth this year. Social will comprise 73.5% of all native display spending this year compared to 80.9% last year.
Nonsocial native ad spending will increase more than 80% this year to $8.71 billion, representing 26.5% of all native expenditures. Amazon is a driving force in nonsocial native ad spending. eMarketer forecasts that, as nonsocial platforms like Amazon keep adopting native ads, the share of native ads on social will continue to drop.

Dive Insight:

Marketers value native advertising — most often sponsored posts that closely mirror the form and feel of editorial content — because it blends more easily into the media that it supports and is less interruptive than other digital formats like display ads. EMarketer uncovering a trend toward slowed growth points to how some of the social media platforms that most support native ads such as Facebook are starting to reach a new level of maturity that can't accommodate native ads as much as in the past. Facebook at the start of the year also adjusted its News Feed algorithm to downplay the prominence of posts by brands and publishers in favor of those shared by friends and family.

Native formats have other issues as well when it comes to delivering on value for publishers and brands. MediaRadar reported that native ad renewal rates from 2016 reached just 33%, with 20% of advertisers using the format posting renewal rates below 20%. The findings underpinned how publishers still struggle to find ways of implementing and measuring their native efforts for advertising partners.

One strong spot for natives ads is video, and mobile-oriented video, in particular. As 78% of marketers plan to increase their production of digital video ads this year, much of those budgets are expected to be put toward native video ads, according to recent survey results from Clinch. Other online platforms including LinkedIn have also recently launched native ad options and sponsored content tools.

Another player to watch from eMarketer's report is Amazon. In its Q4 2017 earnings report, the e-commerce giant said that its "other" revenue category, which includes advertising, grew 60% year-over-year to $1.7 billion. Ad spending on sponsored product ads through Amazon Marketing Services increased 64% and headline search ads increased 75% quarter-over-quarter.