The Native Advertising Proposition

“2014 is seen by most of us in the industry as the move towards better post-install integration between publishers and advertisers, and CSPs can play a big role here,” Radic says. “The idea here is to communicate the relative lifetime value of installs back to the ad providers. This helps advertisers fine tune user acquisition bids and rewards quality publishers.

“Most of the attribution companies like Tapstream that track ad-click-to-install behavior have expanded into post-install events, allowing that data to be used to fine tune ad delivery,” Radic adds. “CSPs are in great a position to uniquely color this data and make it even more valuable to the advertiser.”

Social media platforms are also providing a growing opportunity for native advertising.

BIA/Kelsey's U.S. Social Local Media Forecast says native social advertising is growing significantly faster than social display, the predominant social ad format. The native category experienced a 77 percent jump in revenues this year, from $1.4 billion in 2012 to $2.4 billion, driven by the surge in social media activity across mobile platforms, where native is the preferred format.

"Display remains the most prevalent form of social advertising throughout our forecast," said Jed Williams, VP, consulting, BIA/Kelsey. "At the same time, native advertising formats are quickly emerging as alternatives to display that can generate better engagement and performance. The rapid growth in native is further accelerated by the widespread usage of social networks on mobile devices."

According to the forecast, social display ad revenues will climb from $4.3 billion in 2013 to $6.8 billion in 2017 in the US. During the same period, native social advertising, spurred primarily by Facebook's Sponsored Stories and Twitter's Promoted Tweets, will more than double, from $2.4 billion to nearly $5 billion in the US. Also driven by Facebook and Twitter, Social mobile ad revenues are expected to grow from $1.6 billion in 2013 (up 250 percent from 2012) to $3.5 billion by 2017. Mobile clearly represents the fastest-growing social advertising segment. BIA/Kelsey also projects total US social media advertising revenues will grow from $6.7 billion in 2013 to $11.9 billion in 2017. Locally-targeted social advertising will grow at a 22.6 percent, from $1.7 billion in 2013 to $3.9 billion in 2017.

But beyond sponsored stories and Twitter feeds, major brands are increasingly including online video buys in their marketing plans. The Internet Advertising Bureau, an industry association which tracks all manner of online advertising data, released a recent report which found that digital video alone took in revenue totaling $1.3 billion in the first half of 2013 alone--up 24 percent over the first half of 2012.

“This report not only confirms that brands are making a greater commitment to interactive, but also points to the fact that mobile and digital video are being identified as integral elements of the marketing mix,” said David Silverman, a partner at PwC US, which conducted the research on behalf of the IAB. “Internet advertising’s ability to impact and engage is evident across digital screens, whether big or small.”

Communications service providers and network operators need to think about the opportunities and revenues video native advertising is likely to provide. It might be easy to dismiss native video advertising as another fad, but it's much more than that. From hosting to monetizing analytics and network assets in a new way, native video ads are a great way to get in on the billions of ad dollars looking for targeted audiences and peeling away from traditional broadcast. The numbers don't lie. No one knows the user better than their service provider.

Anything Amazon can do, service providers can do better. CSPs have the data, the technological know-how, and the stomach to grab hold of native video advertising and show the rest of the field exactly how it's done.