Major growth expected in native ad spending

Native advertising is generating more interest among brands, as spending on the format will increase 26 percent annually between this year and 2016, according to a new report.

Posted on Nov 27, 2012 by YuMe

Native advertising – ads embedded onto social media websites that are meant to appear more like customized  content – is generating more interest among brands, as spending on the format will increase 26 percent annually to reach $3.9 billion by 2016, according to a new report by local media consultancy firm BIA/Kelsey. This year, companies spent $1.5 billion on native advertising.

In general, all formats of social media advertising are expected to grow, according to the report. Total spending on social media is expected to increase from $4.6 billion in 2012 to $9.2 billion over the next four years.

Two other major drivers of the expected growth in social media ad spending are local spots and advertising on mobile, BIA/Kelsey reported. Local social media ad spending will rise 28 percent annually, while the total amount of money brands pay for advertising on mobile devices should increase from $500 million this year to $1.5 billion by 2016.

"The year 2012 can be viewed as social advertising’s ‘coming of age,’" Jed Williams, program director of social local media at BIA/Kelsey, said in a statement. "The continued development of native ads, such as Facebook’s Sponsored Stories and Twitter’s Promoted Tweets, and the acceleration of mobile monetization will be the primary drivers of social advertising growth through 2016."

Diversity of social media websites for brands to target
While Facebook and Twitter are perhaps two of the biggest social media websites for brands to target, companies may be wise to advertise on other emerging sites such as Pinterest, Reddit, Tumblr and Foursquare.

According to an August survey conducted by Pew Internet and American Life Project, sites like Pinterest and Tumblr are fast becoming more popular with online adults. While 66 percent of those polled said they are on Facebook and 16 percent said they use Twitter, other sites are close behind. Of the more than 1,000 people surveyed, 12 percent said they use Pinterest, including 19 percent of women. In addition, though only 5 percent of those polled use the blogging platform Tumblr, 11 percent of young adults indicated that they are on the site.

The Pew survey found that not only are Americans embracing a wider variety of social media channels, they are increasingly watching and sharing video content online. Of those polled, 41 percent said they had taken content found online and shared it with others.

"[A]s social media services continue to grow and expand, the tools are more visual and social, and that seems to be attracting special audiences of early adopters," Joanna Brenner, co-author of the Pew Research report, said in a statement.