Remember a few years back when native programmatic advertising was one of the industry’s hottest topics? In those days, industry players were loudly proclaiming that the process of assembling and distributing native ads would finally be scalable due to the benefits of automation inherent in a programmatic context. Well, that truly turned out to be a pipe dream perpetuated by naive ad-tech entrepreneurs and venture capitalists.
While native programmatic may no longer be a viable concept—at least for the time being—native advertising still has a significant role in the marketplace as a premium ad vehicle that emphasizes quality of consumer engagement over the inconsistency of the open exchanges, which are rife with fraud and challenges to brand safety and viewability. Let’s ring in 2019 with the hope that advertisers and publishers will stay the course in growing the native ad market. I predict they will not only stay the course but will expand.
To put the effectiveness of native advertising in perspective, it’s important to note that in-feed placements have been and should continue to be a key driver for Facebook’s revenue. Furthermore, outside of the duopoly, native content recommendation widgets are driving the majority of native ad traffic. Content recommendation widgets represent 60–65 percent of the native ad market, and if the ecosystem can overcome the current lack of transparency in the supply chain whereby much inventory is being held back for exclusivity reasons, growth should continue in an upward trajectory.
This should come as no surprise, as native ad formats have been improving over the past several years. Units have gone beyond simple headline and image elements to elegantly integrate description fields as well as incorporating video, which allows brands to provide more information. This level of audience consideration is miles from the cynicism of advertiser clickbait that has plagued the industry in the past. As a result, there has been an increase in adoption and implementation of these new native formats. There are also additional publisher opportunities beyond straight CPMs. The widgets can now effectively provide audience development, yield management, content syndication and internal content amplification (re-circulation) benefits.
Pursuing this less scaled approach to native advertising is ultimately in a publishers’ best interest. Native programmatic was inherently an unhealthy path to take. When you lose the ability to fully control the demand-side relationship, you are essentially debasing your brand as a premium publisher. Automation for a high-touch, high-involvement ad vehicle can ultimately be damaging. By automating as a publisher, you lose the ability to not only prioritize positive user experience but to also leverage a multitude of internal solutions. In this way, native programmatic would have been a commoditizing force.
Essentially, from a monetization standpoint, the publisher would lose its brand’s premium by going programmatic. Conversely, within a more curated paradigm, publishers can consistently rely on 100 percent fill rates, unlike 40–50 percent undersold premium inventory, which would need to be backfilled with lower paying demand.
In summary, we don’t know for certain what the future will bring. Artificial intelligence is driving advancement and breakthrough at an unprecedented pace, and it’s not inconceivable that native programmatic could have a sustainable second chapter. However, for the foreseeable future, high-engagement branded content efforts will still require a more traditional approach to collaboration between brands, publishers and the technology companies that facilitate.
The overall outlook is very positive for the native advertising space. Like the ambitious college student who doesn’t get into Harvard or Stanford but winds up getting a great education at a less prestigious school, the native advertising ecosystem has no reason to be disappointed that the first draft of native programmatic didn’t work out. Native advertising is still a highly important strategic imperative for digital advertising.