In-app advertising ad revenue to generate $53.4bn by 2020

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IHS Inc., the analytics firm, together with Facebook Audience Network, just issued a new report which estimates that in-app native ad revenue will be generating almost two-thirds of mobile display ad revenue to $53.4bn in 2020. The future of mobile advertising is native report finds that mobile advertising now makes up a large proportion of online advertising revenue.

Mobile native display ad revenue rising to 63.2% by 2020

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Source: ihs.com

Last year, mobile app downloads amounted to 53% and total consumer spending on apps has grown from $9bn in 2012 to $40bn in 2015. With the rise in app usage, it seems only plausible that in-app advertising spend is reaching new heights.

Mobile app downloads continue to grow

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Source: ihs.com

Overall, the global mobile share of display advertising is set to reach 54.8% this year, growing to almost 76% over the coming four years.

Display ads on mobile growth trajectory

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Source: ihs.com

The study further highlights that Facebook holds the largest share of the pie in mobile display ads (44.3%), followed by Alibaba and Google.

Facebook ranks top for mobile display ads share

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Source: ihs.com

Eleni Marouli, Principle analyst, IHS Technology and Co-author of the study, explains:

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“Initially, we saw mobile advertising struggling to match the success of mobile app usage and consumer spending. Now, native advertising is booming and today’s most successful mobile marketers have already made the switch. The future of mobile advertising is native.”

Third-party in-app mobile display ads are set to generate almost $9bn in revenue by 2020 or 10.6% of mobile display ads. This is being driven by North America and Europe. However, the APAC region is considerably pushing third-party in-app ads and will likely spur growth further in the future.

Third-part in-app native share of mobile display ads

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Source: ihs.com

Marouli adds:

“When analysing mobile advertising revenue by company, two patterns can be observed. Companies which focus on mobile in-app advertising command the majority of the mobile advertising market, and companies which focus on native advertising as a primary revenue stream are the most successful at monetizing through mobile.”

However, there are some challenges when it comes to implementing native ads, including lack of awareness of formats, restricted infrastructure or technology, limited scale, as well as universal pricing and measurement.

IHS recommends that publishers focus on the user experience and enable better targeting. However, flexibility as well as the mobile context matter too.