Latest AOP Figures Are Bad News For Native Advertising

The news is in. Video still has legs and is going from strength to strength -- but native, not so much.

That is the takeaway from delving into the latest figures from AOP and Deloitte which show that in general, digital publishers are having a good time of it right now. From third-quarter 2016 to third-quarter 2017, revenues are up 6.7% online and the general feedback indicates that confidence is up.

I have been writing about a flight to quality in digital publishing, and it looks like this is having a substantial impact on the bottom line. Digital display across those two periods is up 37%, and subscriptions are up 21% too. Much of this is being driven by our old friend -- mobile. It is seeing a 52% increase in digital revenue when comparing both third-quarter periods, and tablets are up 11% too. 

For me, however, there was always a story lurking in the figures that could not be immediately explained. Comparing entire year-on-year periods for 2016 and 2017, sponsorship was up 0% and video a massive 34% However, if you look specifically at third-quarter 2016 versus third-quarter 2017, you get startling figures. Sponsorship is down 29%, while video takes a 33% drop.

But after a bit of digging, it seems both are the victims of their own previous success. Video had such a meteoric rise in the past two years that a slowdown in that massive growth can appear as a negative, even though it is simply a plateauing. In fact, third-quarter 2016 saw a 400% increase on the same period in 2015 so a decline was almost inevitable.

So I don't think we have to think about video. It' has had a massive spike that is flattening out, but that's not a bad place to be. 

For me, it's native that we need to be talking about. As part of sponsorship, it has had a spike in the past too, but as AOP and Deloitte confirmed in an online talk about today's figures, the long-term growth prospects are flat at 0%. That's probably the more reliable figure than the dip in the third quarter last year. The takeaway is that native is flat -- and it's expected to stay flat. 

The AOP and Deloitte offer as an explanation that one potential answer is that sponsored content is struggling to make it to the small screen. Mobile is seeing a massive surge in spend -- and, it would appear, publishers are finding that brands are preferring digital advertising and video to native articles and sponsoring sections. 

I must say it's a surprise to me. I have always thought native was the way to get attention in the news flow, rather than from outside and around it. However, when you look at the figures, it's display and subscriptions that are driving revenue growth, particularly in mobile.

I would be very interested to see if we still see the same poor growth performance from native because, again, one would just imagine the small screen is more suited to native. If anything should drop off in the transition from desktop to mobile, we could probably assume it should be display.

But, for now, there you have it. Video is still showing good signs of long-term growth and the big casualty in the transition to mobile would appear to be native. I'm off to be knocked over by a proverbial feather. I honestly did not see this coming.

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