Posted on Mar 19, 2024

Maximizing ROI: Analysis of Native vs Display Ads

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In 2024, display ads have an anniversary — the first recorded example of digital display advertising was launched in 1994 (as a banner advertisement). This time-tested ad format still remains popular, and its programmatic market value is expected to exceed $1459 billion by 2030. 

As for the native advertising market, its value is forecasted to reach around $87 billion by 2029. Do these statistical facts mean that native ads are less effective than the display ones? Not really. In this article, we will thoroughly review both native and display advertising, compare them, identify use cases for every approach, and not only. Keep reading to learn more and discover how to monetize programmatic business and maximize your advertising ROI.

Explore more details in our guide about the mastering ad operations.

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Understanding Native Ads

First of all, let’s figure out what native advertising is. The term “native ads” speaks for itself, meaning such advertisements fit the webpage natively without standing out. They have a similar look and feel as other content on the page, so they are less intrusive, which means a greater user experience. 

Native ads come in a variety of forms, including banners, videos, product listings, promoted search results, etc. Most likely, you have encountered content recommendation widgets after finishing reading the article and in-feed promotional posts on social media — these are native ads as well. Enter any search query in Google, and you will see them, too. Let’s imagine that we are going to look for a new laptop, with a search query “laptop buy”. The first result we see is a native ad from Dell. While being marked as “sponsored”, it still looks the same as the rest of the search results.

The main advantage of native ads is that they do not look “pushy” to potential customers. They blend with the rest of the content, making website visitors or app users more likely to engage with them. This statement may sound controversial, but a lot of people perceive ads that are too noticeable as annoying. They often do not pay attention to them. In turn, when advertisements mimic the content they are viewing at the moment, the chances for interaction increase. Let’s summarize the benefits of native advertising:

  • Since native ads do not interrupt the user journey, they tend to have higher click-through and conversion rates and be more cost-effective in comparison with other ad types.
  • For the same reason, native ads help marketers drive brand awareness. Besides, native ads are less frequently blocked by ad blockers. 
  • The variety of native ad formats allows advertisers to deliver their messages efficiently.
  • Native advertisements add value to the information a user is interacting with at the moment. Therefore, many customers consider them more credible, which simplifies the process of building trust. 
  • For marketers, launching native advertising campaigns also means better relationships with publishers. Again, such ads are not intrusive, so there is no need for publishers to worry about the experience of their visitors or users.
  • Native ads are more shareable, which implies an opportunity to reach new customers without additional investments.

Since native ads are cost-effective, they can be a perfect choice for advertisers with tight budgets. Besides, due to higher ad blocker resistance, native advertisements can help maximize reach. Another great use case is when a campaign requires extensive tracking. Native ads usually record conversions only after the click, meaning they are easier to measure.

Explore more in our overview of the top-6 the most popular ad formats and sizes, and their effectiveness.

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Exploring Display Ads

Display advertising is an umbrella term for multiple ad formats, including banner ads, pop ads, and others. In general, such ads combine a visual element (an image, video, or GIF), copy, and a call-to-action button leading to a landing page. They are usually placed on the top or sides of the website, although sometimes you can also see them in the middle of the content.

Unlike native ads, they look different from the rest of the content, so users clearly understand that this is an advertisement. Here is an example of a banner ad placed at the bottom of the screen. It remains visible while scrolling, so users do not have to read the article till the end to see it. 

You might also be interested to explore these 5 programmatic advertising examples that will Inspire your next campaign.

Let’s take a closer look at several types of display ads:

  • Banner ads are the most common type of display advertising. Usually, they are static images, but they can also include some dynamic elements.
  • Pop-up ads suddenly appear over the existing content as small windows, so they can be very effective in terms of grabbing attention.
  • Interstitial ads are full-screen advertisements covering the interface of a website or an application. Most often, they are displayed during transition points, for instance, between the game levels. 
  • Rich media ads incorporate video, audio, or other elements to deliver an immersive experience and ensure interactivity. 
  • Mobile display ads, obviously, target smartphone users. They are created for smaller screens so that users will have no issues when viewing or interacting with them. 

In terms of use cases, display ads can be effective when the company has low brand awareness (for instance, when only entering the market). When designed properly, they can give a strong first impression. Display advertisements also work well for products that require visual introduction instead of text and for retargeting campaigns. If a user has already interacted with a brand somehow, a display ad can easily remind them about the company and its products. 

Display ads can also be an effective solution if it is essential to target a niche audience. If targeting is set up correctly, the ads will get right in front of potential customers, resulting in an increase in conversion rate. 

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Comparison of Display Ads vs Native Ads

To clarify the difference between display vs native advertising, we have prepared a table outlining key distinctions between these ad types.

Display AdsNative Ads
User experienceMay get disrupted as ads clearly stand out.Not interrupted since the ads blend with the rest of the content.
RelevanceDisplay ads are usually irrelevant to the platforms’ content.Native advertising prioritizes delivering content that is relevant to the platforms’ context.
Selling approachHard sell; ads are aimed at convincing customers to make a purchase.Soft sell; potential customers are not forced to take action.
Targeting Display ads often lack contextual relevance, so they require accurate targeting settings.Thanks to contextual relevance, native campaigns allow for precise targeting.
Cost and CTRDisplay ads are cheaper, but their CTR rates are often low. Native ads are usually more expensive, but they also have higher CTR rates, making them cost-effective.
Traffic typeCampaigns tend to generate lower-quality traffic.Campaigns usually drive high-quality traffic.
EnvironmentDisplay ads are more effective (and slightly less intrusive) on desktop devices.Native ads can work well both on desktops and smartphones, but mobile devices are still better suited to the native advertising concept.
Works best forRetargeting campaigns and promoting those products that require engaging visual introduction.Driving high-quality traffic, educating the audience, and gaining their trust. 

It may seem that native ads are much more effective than display campaigns. However, this does not mean that marketers have to focus solely on the native technique. The choice should be made according to the specific campaign’s objectives, and it is okay for marketers to experiment with different ad types to identify the most effective approach. This requires continuous monitoring and analysis of the results. 

ROI Metrics for Display and Native Advertising

Now, let’s focus on the key performance indicators required to analyze the performance of display and native ads. 

ROI Metrics for Native Advertising

The selection of KPIs for any campaign depends on its goals. However, here are several common indicators for native ads:

  • Engagement metrics (e.g. shares, comments, etc.) are essential to understand how the ads are resonating with customers. Monitoring them allows marketers to define what content delivers better performance. 
  • Conversion rate indicates the number of users who clicked the ad and then took a desired action (for instance, purchasing a product or filling out a form). Tracking this rate is the way to understand if the ad actually brings results. 
  • CTR (a click-through rate) is the number of clicks compared to the number of ad impressions. A high CTR indicates the relevance and effectiveness of an advertisement.
  • Reach is the number of unique users who have seen an ad, while impressions refer to the number of times the ad was displayed. Tracking these programmatic metrics is essential to understand the “spread” of an advertising campaign.
  • ROI (return on investment) describes the overall success of the campaign, as it measures the generated revenue in comparison with the relevant expenses. 
  • Bounce rate involves measuring the number of users who have entered the website but left before interacting with it. For instance, a user clicks an ad, gets to the landing page, and simply leaves it. The lower the bounce rate is, the better, and calculating it allows for identifying potential issues.
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ROI Metrics for Display Advertising

Again, marketers need to identify KPIs for display ads with their goals in mind. At the same time, the following metrics are among the most important:

  • Impressions indicate the number of times the ad was served, although this does not mean that users interacted with it every time. However, tracking impressions allows advertisers to understand the campaign distribution. 
  • Viewability refers to the impressions delivered successfully (a user saw an ad). 
  • Measuring the number of interactions, CTR is a more practical indicator than impressions and viewability.
  • CPC (cost per click) is a metric specifying the amount of money advertisers pay when someone clicks their ads. Monitoring this metric is required to understand the overall expenses.
  • Conversion rate must be monitored for any type of advertising campaign. 
  • Ad frequency is the average number of times a user sees an ad. Analyzing the ad frequency allows for adjusting the strategy so that the same users will not see the same ad too often. 

While native ads are the least intrusive type of advertising, display advertisements come with specific pros and cons. For instance, they are effective in terms of catching attention, which can help ensure high viewability and increase brand awareness. 

At the same time, display ads may not be the best solution if the goal is to increase sales. Yes, they draw attention, but they are often invasive, meaning that the conversion rate can be rather low. Talking about native ad vs display ad, the native technique allows for minimizing such risks due to higher relevance and an ability to fit in with the rest of the content. 

Best Practices for Maximizing ROI

Effective advertising heavily relies on continuous optimization. While monitoring the selected metrics, marketers can identify both weaknesses and opportunities and, as a result, refine their strategies and campaigns. 

A/B testing is one more approach essential for making data-driven decisions. For instance, marketers can experiment with the ad’s copy, button placement, size, and other elements and features to define the most efficient version of an ad. However, it is important to remember that only one element should be tested at a time. Otherwise, it can be challenging to identify the change that affected the results. 

Optimization and A/B testing play a crucial role, but these are not the only activities that can help maximize advertising ROI.

Here are several suggestions for marketers who are going to launch native campaigns:

  • Create catchy but honest headlines. The ad’s headline is often the first element a user sees, so it should be short, clear, appealing, and match the platform’s style and tone of voice. Instead of using clickbait techniques, it would be more appropriate to address customers’ pain points or offer them a specific benefit.
  • Work on the body copy. It should be concise but valuable at the same time. Besides, it must be relevant to the headline. 
  • Add a CTA. The ad copy has to include a clear call to action that will tell potential customers what to do next. It would be helpful to use words of action (like “get”, “learn”, and others) and create a sense of urgency when appropriate. 
  • Adapt the ad to the platform. Since native ads mimic the platform’s content, marketers are required to understand the specificity of the chosen channel. Then, these insights can be used to adapt the copy. For example, a sponsored post on social media can be equipped with emojis and hashtags, while a native banner for an online magazine about business and technology may require a more professional tone of voice. 
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Regarding enhancing display campaigns, the following tips can be helpful:

  • Work on the design. Display ads can be effective in terms of drawing attention, but their design should still be simple. For instance, using too many different colors within the same visual can affect the user experience. Besides, instead of leveraging stock images or videos, it would be more effective to prepare custom creatives.
  • Adapt to the format. Since display ads come in numerous forms (banners, interstitial ads, etc.), marketers have to adapt the design and copy to the selected format. 
  • Maintain consistency. To improve brand recognition, it is essential to keep advertising materials consistent, which involves using the same color palette, tone of voice, overall style, etc. Adding a logo would be helpful, too.
  • Optimize for different devices. On desktops, display ads look less intrusive, but on small screens, they can become really annoying for users. Therefore, it is essential for advertisers to make sure that their ads are optimized for mobile devices. 

Note that any type of advertising campaign requires a deep understanding of the target audience, as well as clearly identified objectives. With this information in mind, advertisers can prepare effective creatives, come up with the right copy, select relevant advertising channels, and so on.

Consider SmartHub Your Trusted Partner

Advertisers invest in both display and native campaigns, while publishers are ready to meet their needs and provide relevant ad inventory. For ad exchange owners, this means an opportunity to earn on media trading. Therefore, it is essential to make sure that your platform supports these advertising formats. 

With SmartHub, this task gets simple. Since it is a white-label ad exchange solution, you do not have to build the essential features from scratch. The platform is ready to use, so you will be able to start earning within a week. And if you require a specific feature that is not available at the moment, our team is always ready to customize the solution. One more thing to mention here is that the platform is regularly updated with new features (8-10 per month) so that it remains competitive and effective.

Coming back to advertising formats available on SmartHub, they are as follows:

  • native ads
  • video ads
  • banner ads
  • pop ads
  • audio ads
  • push ads
  • CTV ads

This our guide is for you if you are excited to know about the top ad formats on SmartHub that make advertising more efficient.

As an ad exchange owner, you need to match your demand and supply partners effectively. As a result, advertisers will reach their target audience while publishers will monetize their inventory and improve user experience. On SmartHub, this can be done with endpoints. You only have to create an endpoint for each of your partners and specify the ad format, traffic type, and other settings. 

After deploying SmartHub, you can achieve a significant increase in revenue within only several months. For instance, Take1ads reached 585% revenue growth in 4 months, while ExplorAds, within the same period of time, managed to double the revenue. 

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So, display vs native ads — which type is more effective? As you can see, there is no universal answer to this question. Both native and display ads have their specific benefits and more suitable applications, so marketers need to make a choice with their objectives in mind. For instance, for a retargeting campaign, display ads are likely to be more effective, while native advertisements can deliver better performance in terms of driving high-quality traffic. 

However, clearly identified goals are not enough to ensure effective performance. Marketers also need to optimize and continuously monitor their campaigns to detect issues and opportunities. 

For ad exchange owners, the popularity of native and display advertising means a chance to increase media trading income. Therefore, it is essential for an ad exchange platform to support these formats. Choosing SmartHub implies simplifying this task and being able to start trading straight away. 

Does SmartHub seem to be the perfect ad exchange solution for you? Then contact us to start earning on a white-label ad exchange!

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