The Risky Business Of Programmatic Native

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Today’s column is written by Chris Rooke, senior vice president of strategy and operations at Nativo.

While some expect a surge in programmatic native this year, publishers must understand the risks that come with it and remain vigilant in guarding against the legal and financial fallout that can result from mismanagement.

At an AdExchanger Industry Preview session, where I was a panelist, my colleagues at The New York Times and Percolate unanimously agreed – and echoed from last year – that what makes native special and super premium is the ability for marketers to leverage publisher storytelling tools to distribute custom brand content in the exact same way site owners publish their own editorial. Said a different way, true native is custom brand content that is promoted in-feed and consumed on-site.

The industry, however, is bombarded with messaging aimed at blurring the line between native and other creative formats. Repurposed banners, rich media, search ads, Facebook exchange ads and now memes, animated GIFs and other mismatched content types are clamoring to cram into the editorial feed through newly plumbed programmatic pipes. These “native converts” don’t belong in the company of beautifully immersive brand content campaigns like the Times’ Women Inmates or Wall Street Journal’s Cocainenomics.

Be that as it may, for publishers that contemplate “programmatic native” this blurring definition of “native” represents a present and ongoing business threat. I see several key risks publishers should diligently address before activating any programmatic ad flow into their editorial feed.

Native Ad Disclosure Labeling

For direct-sold native programs, most publishers employ softer labels such as “Promoted Content,” which more appropriately reflect their investment in quality brand content with high editorial value. This is understandable for high-touch publisher-led campaigns, but programmatic demand quality is wildly unpredictable. It’s impossible for publishers to screen in-feed ad units and click-into pages in real time. As a result, publishers run blind, with no way of preventing deceptive ad experiences from third-party demand, leaving them vulnerable to potential scrutiny from the US Federal Trade Commission and legal liability.

Now that the FTC has released an enforcement policy statement [PDF] and business guide for native, ad quality should be top of mind to avoid the risk of a government enforcement action. To preserve the integrity of valuable native placements, publishers should recalibrate their in-feed fill strategy by limiting in-feed demand to direct-sold native programs and a select group of trusted third parties that adhere to explicit quality and user-experience control standards.

Alternatively, publishers dead set on enabling programmatic demand should just label everything “advertisement” as a blunt catchall to cover any automated ad that attempts to deceive the user. They must understand that by doing so they degrade the performance potential and perceived value of direct-sold content programs using the same in-feed ad units.

User Experience And Consumer Trust

For decades, publishers have conditioned users to discover content in the feed and click to site-hosted pages to consume that content. Most, if not all, programmatic in-feed demand clicks off-site (think: banners 2.0), so publishers immediately erode user trust by delivering an abrupt “ad” experience. This practice damages user experience, and banner blindness immediately infects the feed, as this Havas study suggests has happened with social.

Publishers must either thoughtfully curate the native ad providers and experiences they serve in the feed to ensure users remain open to engaging with brand content on their properties or accept the trade-offs and risk the consequences.

Ad Avoidance And Click-Through Rate (CTR) Performance

The net outcome of these risks is that publishers train users to universally avoid in-feed ad placements and stop engaging with them altogether.

When in-feed ad CTRs drop to the level of display, three major disasters are inevitable. First, programmatic buyers and automated demand algorithms abandon publisher feeds and allocate spend elsewhere. Publishers then lower CPMs to preserve fill – a race to the bottom. Second, price premiums, with CPMs ranging from $25 to $50 for publisher-sold native programs, disappear, minimum spend thresholds crack and packaging leverage is lost – a death spiral. Finally, a resulting loss of sales leverage swamps pricing across the ad portfolio, reducing all inventories to lowest-common-denominator economics – game over.

With stakes this high, publishers must employ pound-smart strategies to safeguard the native opportunity and defend its integrity and performance potential. By enforcing disciplined standards around native ad utilization, publishers will preserve user trust and bolster an openness to discover and engage with brand content. These actions work to ensure the long-term revenue health of a growing content advertising practice.

Follow Chris Rooke (@hchrisrooke), Nativo (@NativoPlatform) and AdExchanger (@adexchanger).


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