Will Native-Social Ads Dominate Mobile?

Snap Inc.’s successful public market debut last week answered lots of questions and investor uncertainty, at least for now. One thing it clarified for me is native-social advertising’s staying power. After Facebook’s success with News Feed Ads, the format now has its second public torch bearer.

This is validating because I recently projected native-social to be the most opportune mobile ad format. It will reach $24 billion in the U.S. by 2021, overtaking the long-dominant search and traditional display (banners), whose utility on five-inch screens has always been somewhat debatable anyway.

Stepping back, what is native-social advertising? It’s defined as multimedia or textual content that’s graphically consistent with the organic feed-based interfaces of mobile social apps. So it can include scrolling interfaces like Facebook, Instagram, LinkedIn and a few others.

Among other things, this means inventory advantages. Mobile lacks screen real estate for traditional banner ads that ruled the desktop. A vertically scrolling feed (a la News Feed) holds greater capacity for ad inventory.

In addition to orientation, native-social ads can be defined by their targeting. They’re fueled by granular signals within the social graph such as past behavior (e.g., Facebook likes) and social connections to people and groups.

The classic example is a lifestyle brand like Ray Ban, which can incorporate artful photography in its own Instagram feed. It can also pay to amplify those posts to socially and behavioral-targeted individuals throughout the larger social graph.

The requirement to meet a narrative and aesthetic standard importantly resonates with millennials, who are famously drawn to things that are genuine. They don’t like being told what to do or think… and they don’t trust the jingle- and slogan-laden stuff of traditional advertising.

That brings us back to Snapchat, the king of millennial appeal. Though it isn’t a scrolling feed, its Stories format is seeing mass interest from brands to aggregate temporal Snaps to tell a genuine narrative. Heineken has seen lots of success doing this at Coachella.

And based on Snapchat’s reach, it can deliver television-sized audiences. That raises an interesting scenario where its competition isn’t necessarily Facebook or other native-social advertising — it’s television. And that’s exactly where it’s beginning to siphon ad dollars.

Though that’s brand-centric, it’s not without local implications. The relevance of Stories is grounded in a specific time and place, making it highly location-based. And other parts of Snapchat’s growing ad arsenal are even more localized: Geofilters.

The local ad world is starting to catch on to Geofilters, given location relevance. They’re also highly affordable at about $15 for 24 hours, thus attainable by individuals (think: birthday parties or weddings) and SMBs. The latter is where I project lots of growth.

Geofilters also hold lots of potential for multi-location businesses. And smart location tech companies like Yext have gotten in front of the trend by incorporating multi-location Geofilter creation and management tools.

But the larger question is if native-social will displace traditional display ads. Largely a holdover from a desktop era, the latter have somehow survived as a fish out of water. I count banners and pre-roll video ads in that allegation, which haven’t evolved much in a decade.

For those working with display, this isn’t a death sentence. There are ways to do display right and wrong. xAd has carried the torch of banner best practices for years; and Verve Mobile’s Walt Geer articulates it as well as anyone I’ve seen.

But the majority of companies that don’t evolve their janky and interruptive banner ads will be displaced. A new era of mobile ads will be defined by intelligent formats that speak to the affinities of buying-empowered millennials (who are now almost 40 by the way).

Whether it’s Snapchat or someone else — still an open question — my intentionally simplistic and tongue-in-cheek Law of Disruption could apply here. Just like with taxis and cable companies: “If a product sucks, disruption will find a way.”

Michael Boland is chief analyst and VP of content at BIA/Kelsey. Previously, he was a tech journalist for Forbes, Red Herring, Business 2.0, and other outlets.