Programmatic versus Native

The two key buzz words in the digital media space over the last few years have been programmatic and native advertising.

They may have shared the spotlight but native advertising only shared annual buzzword honours with programmatic buying. Programmatic is expected to account for nearly 30 percent of all display ad spending by 2017.

Let’s explore the basics of each of these forms of advertising.

Native advertising:

Matches the form and function of the platform on which it appears. The word “native” refers to the content’s coherence with other media on the platform.

One form of native advertising, publisher-produced brand content, is similar in concept to a traditional advertorial, which is attempting to look like an article.

Formats for native advertising include promoted videos, images, articles, commentary, music and other media.

Why focus on native advertising?

In a survey commissioned by Adyoulike, 83% of UK agencies have stated that they have included native advertising in their 2015 budgets. Currently native advertising accounts for 9.2 per cent of total digital display spend, but that figure is estimated to reach 15 per cent by 2015. The 17 per cent of agencies which don’t yet incorporate native advertising into their media plans, stated that they are planning to do so.

They survey did also highlighted general concerns about how scalable native advertising would prove to be and the lack of / limits to current regulations.

Key take-outs from the survey include;

– 25% more consumers looked at in-feed, native ad placements more than standard banners.

– Consumers looked at native ads 2% more than editorial content and spent the same number of seconds viewing.

– 97% of mobile media buyers report that native ads were very or somewhat effective at achieving branding goals.

– Native ads registered 18% higher lift in purchase intent than banner ads.

Programmatic marketing:

Programmatic marketing campaigns are automatically triggered by any type of event and deployed according to a set of rules applied by software and algorithms. Human skills are still needed in programmatic campaigns as the campaigns and rules are planned beforehand and established by marketers.

A programmatic marketing platform allows marketers to better organize their data and execute highly targeted marketing campaigns. A programmatic marketing platform combines multiple facets of traditional programmatic technology platforms. An example would be the combination of the data management capabilities of a DMP (data management platform) with the media buying capabilities of a (DSP).

Programmatic buying and selling of advertising, real-time bidding, automation, and the buying and selling of digital media is changing rapidly. Approximately 20% of all digital advertising is sold by one machine talking to another machine according to a recent study carried out by the IAB.

This study also showed that significant opportunity to create efficiencies and new markets—and continue to drive advertising spends to digital. However, it also raises potential implications and concerns for both the buy and sell-side in the digital advertising ecosystem.

Including:

Significant confusion in the marketplace over terminology regarding programmatic, RTB, programmatic direct, programmatic premium, and other terms being used interchangeably.

A lack of clear technical standards to ensure interoperability across different platforms and concerns with the limited transparency and proliferation of vendors involved in the programmatic transaction.

So who wins? The scalability of the programmatic advertising model or native advertising that gets results through engaging and relevant experiences for their audiences.

James Green who is chief executive officer at search retargeting leader Magnetic was I think going in the right direction when he said “Where programmatic and native are most likely to intersect is through programmatic premium, where publishers and marketers may be able to combine each of their strengths, instead of separating the two, and offer high quality content, enhanced relevancy and unobtrusive advertisements at scale”.

As he clearly points out there have been announcements from ad tech companies (OpenX, Nativo, TripleLift) that offer products and technologies aimed at bringing together native and programmatic in a more efficient and scalable way.

Both will have an impact large impact in 2015 and well into 2016. Programmatic will continue to help drive down the price of digital advertising which in-turn will force publishers into an ever increasing fight for page views and impressions. The medium term may see better engagement stabilizing CPM rates and make native advertising a more sustainable and viable option.

Time will tell…..

Grant Saxon Rowe
GM – Submission Technology

grant@submissiontechnology.co.uk