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Programmatic Native Advertising Platforms vs. Native Ad Networks

The native advertising industry continues to boom. In the US alone, eMarketer predicts $4.5B in 2015 to go towards content sponsorships, native ad integrations, and programmatic native channels. What is particularly notable is the growth rate. The industry that piggybacks on the massive trend of content marketing, is expecting to grow 45% from 2014, and continue growing at the 25% rate for 3 years after.

It is not surprising that more marketers are catching up on the terminology trying to make sense of the ever-evolving landscape of digital advertising. It seems as though new companies claiming to do Native Advertising is popping up every week, and as more buyers starting to invest in it for content distribution, more clarification is needed to distinguish the two fundamentally different buying and selling concepts: Programmatic Native Advertising Platforms vs. Native Ad Networks.

Native Ad Networks

A natural stage in scaling new ad formats a.k.a. solving ‘chicken and egg’. It always starts the same way — buyers want to buy a new ad format which isn’t available on publishers’ sites since they don’t yet see the dollars for such ad formats. Ad networks help aggregate supply and demand to start pushing new formats forward.

Ad networks dominated early 2000’s in banner advertising, and Native Ad Networks were brands’ go-to partner to buy and sell native until late 2013. Traditionally they are characterized by working directly with both publishers and advertisers. While this is certainly a step up from having advertiser directly reach out to publishers for advertising campaigns, Native Ad Networks are limited by:

  1. Conflict of Interest. Advertisers look to get the lowest CPM rates, while publishers look to get the highest CPMs possible. Ad networks have to constantly juggle the two sides without bringing 100% efficiencies to just one side.
  2. Arbitrage. Ad Networks don’t operate on dynamic CPM model, hence, there are opportunities for arbitrage and sky-high margins. An Ad Network negotiates the CPM price for ad inventory, which it later resells to advertisers.
  3. Limited scale and targeting. Because inventory price is pre-negotiated, impressions are not sold on impression-by-impression level. Which means advertisers pay even for users they aren’t interested in advertising to.

Aside some obvious drawbacks, Ad Networks bring value in offering custom units that aren’t often sold through programmatic channels. They also are able to guarantee impressions, which platforms can’t do in a real-time bidding environment.

 

Programmatic Native Advertising Platforms

Unlike ad networks, platforms are characterized by:

  1. Focus. Represent either supply-side (publishers) or demand-side (advertisers). This allows a platform to have laser-focus on maximizing returns for the party they represent. Publishers make more money with supply-side platforms (SSP), while advertisers get stronger return on investment when working with demand-side platforms (DSP).
  2. Real time. Buying and selling of Native Ads happen on impression-by-impression level in a real-time bidding marketplace type of environment. This allows buyers to leverage 1st and 3rd party data to bid only on an audience of interest. For example, being able to buy native ad impressions only for males 25-34 in Toronto who are actively looking for a new mid-size vehicle.
  3. Tight control over impressions. Programmatic platforms allow for frequency capping to ensure users aren’t overly exposed to the same message. This ensures good user experience on publisher site, as well as strong ROI for advertisers.
  4. Scale. Because programmatic platforms are heavily relying on technology, their buying and selling capacity is much more scalable. That mean DSPs can work with dozens of Native Ad exchanges to buy native ad inventory, and SSPs can plug into dozens of DSPs to sell native ads.
4 min read

What Is a Native Ad?

When we start diving into the topics of Native Advertising, it comes as no surprise that the fundamental question that needs to be answered first is: “What is a native ad?”; and this is the question that we’ll kick off our series with. First, let’s try to distinguish two similar sounding terms — Native Advertising versus a Native ad.

  • Native Advertising is a strategy to seamlessly present branded content to a consumer.
  • Native Ad is the product of the strategy.

Native Ad is a paid advertisement that resembles the form of the content that appears on the publisher property or a platform. As a strategy Native Advertising is largely dominated by content-driven message from an advertiser. An advertiser produces branded content (articles, videos etc.) or works with a publisher’s editorial staff to develop sponsored content, and then seeks ways to distribute it to reach the target audience. (Stay tuned for follow up posts to learn more about the difference between Branded and Sponsored content). To get the content in front of the target audience, an advertiser can approach Native Advertising in two forms of the ad units:

  • Distribute branded content through snippets of content preview natively integrated in the publisher’s site or a platform.
  • Integrate sponsored content entirely on the publisher’s property.

Here is an example of an ad (content preview) on a social media platform. Volkswagen works with Twitter to drive users to their content hub:

 

Content snippets are called In-Stream Native Ads. Here is an example of this unit from ContactMonkey on a publisher’s property:

 

Here is the ad that comes in a form of sponsored content that is fully integrated in the publisher property. GE works with The Economist in this example:

 

To summarize, a Native Ad, regardless of where the content is hosted, is an advertisement that preserves the ‘look and feel’ and closely aligns with the property that it is displayed on.

Native Advertising is a way to present either entire sponsored content or a snippet of the branded content. The fundamental differentiator of Native Advertising is that unlike other forms of disruptive advertising (think popup ads, or page takeovers), it presents advertiser’s message without interrupting user experience on the site or platform.

4 min read

Creating Great Video Content. The ‘Goose Bump Test’

The first time I heard about the ‘goose bumps test’ was when I listened to one of my favourite radio shows, Essential Mix on BBC Radio 1. A former megastar electro ensemble, Swedish House Mafia, explained that they use it every time they write music. “Goose bumps never lie” – claimed the musicians. (Listen to that show here.)

Back in 2010 I didn’t think much of it, but as time passed ‘Goose bumps never lie’ started to mean a lot more, now that I am trying to dig deeper and deeper into the topic of content creation and distribution and understanding how users engage with brand messaging when it is presented in an interruptiveformat (pre-roll, pop-up, interstitials) vs. involvement (native advertising).

First thing’s first, why do we get goose bumps when we listen to music or watch a video?

‘In 2001, neuroscientists Anne Blood and Robert Zatorre at McGill University in Montreal provided an answer. Using magnetic resonance imaging they showed that people listening to pleasurable music had activated brain regions called the limbic and paralimbic areas which are connected to euphoric reward responses.’ – BBC.co.uk

‘A Team of Canadian researchers suggest that when we are moved by music, our brains behave as if reacting to delicious food, psychoactive drugs, or money. The pleasure experience is driven by the “reward” chemical dopamine, which has been linked to addiction. It produces physical effects known as “chills” that cause changes in the skin’s electrical conductance, heart rate, breathing and temperature.’ – cmuse.org

So it comes down to two elements when it comes to creating content – be it video or music – that evokes goose bumps: buildup and a sudden change. It is all about tricking the brain into thinking that it knows what is coming up and then introducing a sudden change – new instrument, new plot line, unique perspective to a common topic etc.

Let’s see it in action. This recent Nike ad from Wieden+Kennedy takes a unique turn during a basketball game:

 

P&G puts things in the perspective in this touching video:

What is interesting is that sad themes that give you goose bumps can often induce positive feelings. ‘One of the most intriguing explanations for music’s “chill” effect has been offered by neuroscientist Jaak Panksepp. Neurobiologist Jaak Panksepp found that people more often feel chills or goose bumps when listening to music when the music evokes a sad feeling or is compounded by a sad memory, as opposed to happy feelings or positive memories. He thinks this may be due to evolution – this response may be similar to those our ancestors felt when they heard the cry of a lost loved one bringing about a desire for close physical contact and keeping families together.’ – Mental Floss

And to prove that you don’t have to be a mega brand to create content that is both amazing and touching, here is an example of an amazing piece created by a small shop – Green Shoe Studio:

4 min read

Marketing Magazine names Vitaly Pecherskiy to its 30 under 30 list

The StackAdapt team is very proud to have our Co-Founder, Vitaly Pecherskiy, named as Marketing Magazine’s 30 under 30.

Below is the entry, as published by Marketing Magazine on October 7th:

Last year Vitaly Pecherskiy set out on a mission to exploit the intersection of native advertising and programmatic media. He co-founded StackAdapt, a platform for publishers to create custom ad units that match their editorial content and put them up for auction on a real-time ad exchange. The only native programmatic company in Canada, StackAdapt represents 3,000 publishers globally, and has worked on campaigns for Ford, GE and Sport Chek.

“Vitaly’s not afraid of thinking big and taking the risks necessary to accomplish those big-thinking goals,” says fellow Toronto entrepreneur Alex Smith, founder of ContactMonkey. “He’s definitely not risk-averse, and he’s thought a lot about how to grow a business very large.”

Like a lot of entrepreneurs, Pecherskiy’s entry into emerging tech was serendipitous. He immigrated from Russia initially to attend school at Lakehead and the University of Ottawa, receiving a degree in finance, and then settled in Toronto to look for work. Down the street from his home was a hot social ad startup called AdParlor. Pecherskiy knocked on the door, chatted with some folks, and ended up with a full-time position.

A year later, AdParlor was acquired by AdKnowledge, a global digital ad network. Pecherskiy moved on to Xaxis, the programmatic trading arm of WPP. There he met Ildar Shar, a fellow Russian immigrant working at Mindshare, and got to talking about the industry’s weak points. Web advertising was fundamentally flawed, they agreed – ads weren’t performing, consumers weren’t engaging, and at the end of it all, advertisers just weren’t that interested.

The problem was the web’s dominant advertising format – the banner. It’s boring, irrelevant, ignorable. Yet advertisers have come to rely on it as the best way to get large scale for low cost.

Pecherskiy and Shar left WPP in 2013 to investigate the problem, together with Yang Han, an engineer who’d just finished working on real-time stock trading technology at Bloomberg. At first they tried to save the banner – finding ways to adaptively scale it or change its size to better fit its context. But eventually the team realized that the banner would have to be thrown out.
“It’s fundamentally not performing,” Pecherskiy recalls. “So we thought maybe we could take on something more challenging, more speculative. Take a little bit more risk, but then build something that could potentially change the way advertising is done.”
Their solution was a native ad unit that adapts all its parameters – font, size, colour scheme, even content – to the content around it. Advertisers would submit raw text and images, which would be poured into a template designed by the publisher to match the design of the site.

Programmatic was the natural next step. The process for translating advertiser input into finished native ads was already automated – which meant it could be tacked on to automated ad buying. Pecherskiy and Shar decided the platform to implement their solution was a real-time programmatic ad exchange, where buyers could bid on the most relevant and cost-effective placements, using data. With enough publishers on board, an exchange could give buyers access to a mountain of specialty native units across hundreds or thousands of sites.

The StackAdapt platform rolled out in spring 2014 (then under the name Collective Roll), and has since grown to 15 staff and launched a U.S. office. Pecherskiy, as VP publisher relations, was (and still is) in charge of building out the exchange’s supply base. Since then he’s roped several thousand publishers into adding StackAdapt’s native units to their sites, like Songza, Jango and The Christian Post.

As native advertising gains steam in the digital ecosystem, Pecherskiy’s confident he chose the right corner of ad tech. “The trend that I think is really going to make a difference in the coming years is the shift from disruptive advertising towards involvement advertising,” he says. “Users no longer respond to direct-response messages where they’re being bombarded with ads… that whole approach is dying out very fast. I think the future of advertising lies in brands producing engaging and meaningful content, where they enrich users lives.”

4 min read

StackAdapt Raises $900K To Fuel Growth

StackAdapt announces $900K seed round. Additional capital will help fuel StackAdapt’s growth and help bring its scalable Native Advertising technology across the web.

Ildar Shar, CEO:

I am excited to announce today that we have closed our Seed Round of financing. Aside from receiving external validation for the work that we have done to date at StackAdapt, I am thrilled to see the rapid change in the online world. From the raw and somewhat chaotic Internet as we came to know it in the 90s and 2000s, we see it turning into a transparent, safe, and a fair playground for human interaction and digital innovation. We are honoured to be one of the companies to help shape it this way.

Financing, totalling $900K, was lead by IAF (Investment Accelerator Fund), Slaight Communications, and complimented by the debt financing from BDC (Business Development Bank of Canada). These funds are primarily aimed to fuel further growth and expansion of their development team in Toronto, and to support the growth of their satellite offices in New York and London.

Background

It is no secret that virtually no one is clicking on banners. Banner advertising has been around nearly as long as the Internet itself, so it comes as no surprise that we all got really good at ignoring them.

With media consumption shifting online, media companies struggle to monetize their online properties due to poorly performing ad units. Adding mobile to the mix introduces a recipe for an online publisher to run a charitable organization.

Some of the most progressive technology companies such as Facebook, Twitter, and LinkedIn have embraced native advertising as the new emerging format of monetization. However, for non-technology focused media companies it is not scalable to build their own technology to sell their native inventory. StackAdapt introduces the technology that powers their capability to sell that native ad inventory at scale.

Unlike existing banner ad infrastructures that support only static imagery, StackAdapt’s technology is built to support responsive, dynamic units that vary from site to site, making the user experience seamless for everyone on the web.

With clients spanning 4 continents, StackAdapt’s scalable technology powers the programmatic native advertising ecosystem globally.

4 min read

Native Advertising Examples

What is native advertising?

If you’re following advertising industry news, “native advertising” seems to be the latest buzzword. As is usually the case with new technologies and their implementations, the term is thrown around loosely. While the “native ad” is fairly easy to define, the term ‘native advertising’ is a lot more broad.

Below is an overview of the many forms of native advertising seen today, some work better than others, depending on the platform, the content, and how well they integrate with the user/viewer native experience. 

We’ve narrowed down a few methods of native advertising examples with emphasis on the most common forms of native ads seen across the web today.

 

In-feed native ads

Simply put, “in-feed” native ads exactly what they sound like, native advertising units that are created to match the website’s look, feel, and format of the site that in which they appear on. These native ads are probably the most commonly seen native ad units. From a publisher’s perspective, In-feed native ads allows the monetization of sections of their website where they previously couldn’t, while advertisers and marketers can regain premium advertising placements with greater value.

 

Advertorials, Branded Content

With origins in the print publishing industry, Advertorials are the most complex form of native advertising. Rather then having a simple native ad with minimal to no actual “branded” content like other forms of native advertising, advertorials pack content marketers and brands are looking to get across their audience. Advertorials are most effective when they uphold high quality writing standards, and when the advertiser is well aware of the publisher’s audience, their psychographics and demographics.

 

Advertorials – “sponsored” content

The other side of advertorial content is similar to branded content, but it’s much more about real promotion of the brand itself.
Rather than a written piece that mimics original articles on a site or is directly relevant to the type of stories that are common to the publisher’s site, sponsored content is more promotional material written to specifically convey the brand marketer’s message.

 

Content Recommendation Widgets

These are one of the most used forms of native advertising examples you’ll see on the web today.

 

Sponsored Social Media Posts

These native advertising examples allow brands to utilize their social media to reach their audience directly. They use the form of in-feed units to promote their brands and usually it’s always accomplished by targeting their users behaviorally.

4 min read