Since 2013, spending on native advertising has grown by more than 200 percent according to some estimates, and is expected to double again to $21 billion by 2018.
This is great news for programmatic buyers who are already taking the digital advertising industry by storm—using their technical skills and data-driven knowledge to deliver impressive results.
Indeed, as the programmatic native advertising industry grows even bigger and more important, buyers are apt to become even more indispensable to the advertisers and agencies that hire them. In light of these facts, here are three reasons why so many programmatic buyers are jumping into native advertising.
1. There's a growing demand for data specialists within creative teams
Conventional thinking has it that advertising agencies are divided into two camps: creative and media.
While creative teams write, design and produce advertising campaigns, it’s media teams that are in charge of distributing those campaigns along various channels. But as we enter the Technology Era of digital advertising, the line between creative and media is growing finer.
Scale, buying power and cost savings were some of the promises that lead to advertisers placing billions of dollars in media each year. But the great advantage of efficiency that once bolstered media teams is being dismantled by a focus on real-time performance rather than up-front cost savings. And one of the biggest reasons for this change has been the advancement of programmatic buying.
Programmatic buying has essentially leveled the playing field by taking human negotiation out of the equation and creating an open market for bidding on everything from search keywords to paid media channels. The formula for success, it appears, is no longer about negotiating lower CPMs, but having a quick and effective programmatic buyer who can use data to affect the real-time bidding decisions of every campaign.
But rather than working on the media side of the business, many of these programmatic buyers are finding themselves working alongside creative teams. The reason? A second development: the rise of content marketing and its close cousin native advertising.
Content marketing and native ads fall on the creative side of the business—content creation is an inherently creative task. But because creative teams historically haven’t been very data-driven, they’ve had to rely on programmatic buyers to distribute what they produce. And programmatic buyers, for their part, are jumping into native advertising because they see the value they can bring in terms of optimization and analytics—audience buying, geo-targeting, day-parting, frequency capping, and more.
Driven by their skill and core competency with data, programmatic buyers help creative teams by lending their expertise and ability to optimize based on hard numbers.
As we see more conversions between creative and media, programmatic native is emerging as the new beast where creative meets programmatic.
2. More consolidation is needed as more players emerge in a channel
As publishers in the early 2000s started gaining more traffic, they began to look for ways to monetize their holdings.
But since most publishers could rarely sell more than a fraction of the available space on their sites with a sales team, they started to sell off what was left over to a handful of ad networks—companies whose sole purpose was to aggregate publishers in order to provide advertisers with low cost ad space that could reach a lot of people.
Through these ad networks, advertisers could nab up spaces for very low prices—as little as 5 to 10 percent of what publishers might charge for the exact same space on a direct buy.
The problem was that these ad networks were unscalable and required hours of human effort in planning and execution. Advertisers had to reach out and make initial contact with the ad network, negotiate and plan the insertion order, email ad tags and creative back and forth—all in preparation to launch an ad campaign.
A few developments revolutionized this process. The first was the advent of programmatic buying which, with the help of technology, automated and optimized the media buying process in real-time. The second was the creation of demand-side platforms (DSP), which allowed advertisers to centralize their buyings (at scale) under one platform, and buy ads on an impression by impression level.
DSPs incorporated much of what ad networks previously offered, including access to a wide range of advertising inventory and targeting capabilities. But the advantage of using a DSP lies in their ability to buy, serve and track ads using one central tools, and to optimize campaigns more easily as a result.
Over the past few years, a third trend has shaken up the digital ad buying world: the development of native advertising.
As advertisers began to see higher engagement and ROI for ads delivered in-feed, they realized the value of native ads as a monetization channel. In-feed native advertising emerged as a solution to deliver branded content to users without disrupting their user experience.
Not long after, with the rise of programmatic native advertising, advertisers were able apply such features as audience targeting, frequency capping and scaled growth—features which historically had only been available in the banner advertising world.
This is a big reason why DSPs are being widely adopted, and why programmatic native advertising in particular has grown to become such a big part of what programmatic buyers do.
3. Programmatic buyers demand placement transparency
A recent report from the Interactive Advertising Bureau (IAB) stated that: “If programmatic is to become an efficient tool to unlock true market value of publisher inventory, the industry needs to ensure that the business rules and practices evolve to reflect this shift.”
Transparency and disclosure are certainly a trending topic of 2015—and for good reason. Publishers that mask ads by removing any prominent disclosures risk losing the trust of their readers and readers may foster negative associations with a brand if they feel like they were tricked into clicking on an ad. Essentially, lack of disclosure and transparency results in erosions of trust, reputation, and brand equity.
But why do programmatic buyers care? Because they aren’t looking for random inventory online. They use software to find precise combinations of audience, context, and price to best engage consumers, and to push their competitors away from those opportunities. This is highly skilled work that requires a great deal of knowledge and concentration, and all of it falls to pieces when ads aren’t disclosed properly.
According to a recent poll by Digiday, nearly three-quarters of programmatic buyers said placement transparency was essential, and more than three-fifths of publishers said unsatisfactory placement transparency was the primary barrier preventing them from moving more spending from direct to programmatic.
One of the major reasons why programmatic buyers are moving to native advertising is because, unlike banner ads where you can have up to 80 percent undisclosed inventory, in native advertising it's common practice to have full disclosure.
Indeed, clearly indicating that content is advertising so that consumers don't feel like they're being tricked has become an industry standard in native advertising, and a major force behind why programmatic buyers have developed such a love for the distribution channel.