New figures from Yahoo and Enders Analysis predict spend on native advertising will grow 156% over the next five years to account for 52% of Europe’s digital display advertising.
Expected to reach €13.2 billion (£10.3 billion) by 2020, the report forecasts the majority of native spending to be on mobile (€8.8 billion/£6.87 billion) – almost six times the €1.5 billion (£1.17 billion) spent in 2015.
In the UK alone, native advertising is forecast to grow to €3.9 billion (£2.8 billion) in 2020, rising from €1.7 billion (£1.2 billion) in 2015.
“The explosive rise of native advertising is a huge opportunity for advertisers, because it’s a creative and measurable format which works effectively on smaller screens,” said Nick Hugh, vice president EMEA, Yahoo.
“It’s a scalable solution for publishers and importantly provides a contextual and relevant experience for consumers. Native advertising is a powerful solution for all sides of the equation.”
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Increasing content discovery via social media platforms will be a major growth factor, driving more than 300% growth in native social network advertising by 2020, from €2 billion (£1.56 billion) to €6.3 billion (4.92 billion).
In addition, surging digital video consumption will more than double the investment in in-stream video ad formats, increasing from €2.4 billion (£1.87 billion) in 2015 to €5.1 billion (£4 billion) by 2020.
Joseph Evans, a digital media analyst at Enders Analysis, said: “Native advertising looks like a rare win-win for the industry: more effective for advertisers, more valuable for publishers and more acceptable for users.
“Its suitability for mobile, social and video contexts means that growth in native will contribute the large bulk of increased digital display spend.”
However, despite the findings, not everybody is convinced.
Warc analyst James McDonald said that while the figures may not be “wildly off the mark”, they are likely optimistic.
“For the European display market to be worth €25.4bn in 2020, as suggested by Yahoo, it will need to double from 2015 levels,” he said.
“This is not completely unreasonable to assume given social and video spend should continue to balloon during this time. It would require a compound annual growth rate of around 14% which would be a hastening from the growth seen in recent years, though roughly on trend. Still, it’s an optimistic outlook.
“The Internet Advertising Bureau recorded native adspend of £500m in the UK in 2014, and we believe this will have risen to approximately £650m in 2015. £1.2bn is unlikely, therefore; it would mean native was larger than the UK’s out-of-home industry last year.”
McDonald added that a lot will come down to how native advertising is regulated.
“Guidelines for advertorial content are being flouted to a degree at present,” he said. “Were they enforced, consumer cynicism for the format may knock investment.”
This article was updated on 23 February 2016 at 9.30am to include a comment from Warc.
