Native Programmatic Growth Challenged By Tech And Standardization Limitations

Lon Otrema BidtellectThe phrase “native programmatic” gets thrown around a lot, but for most advertisers and publishers, it’s still not a reality.

Native, by definition, defies standards, though the IAB has identified six types of native formats: in-feed, paid search, recommendation widgets, promoted listings, in-ad with native elements and custom “can’t be contained” units.

But this variability makes it difficult to serve dynamic ads in a biddable environment. Different native ads often have common components: a headline, a picture and text.

Native programmatic on the demand side requires a system that breaks up creative units and reassembles them in the right place quickly, usually in less than 90 milliseconds.

On the supply side, publishers must create ad slots in sites that might not be optimized for the addition of native tiles or in-feed ads. Then an exchange must connect the two, feeding in that demand supply.

Bidtellect started building the technology to create a native programmatic platform in 2011, eventually encompassing both buy and sell sides as well as an open RTB exchange. Bidtellect renders three of the six IAB native formats: content recommendation, in-feed/in-ad and video.

A year after opening the exchange’s doors, CEO Lon Otremba said Bidtellect now sees 200 auctions, with 500 million bids a day, a fourfold increase from a couple of months ago, when Bidtellect handled 50 million to 100 million auctions a day. While most inventory flows through Bidtellect programmatically, the company still buys some of its inventory the old-fashioned way in the interim.

“In some cases those supply integrations … are pre-programmed to be delivered using specified parameters, such as context, audience target, floor price, configuration,” Otremba said. “In other cases, the inventory is exposed in a more manual way, where individual inventory units are set up.”

Bidtellect’s integration partners include Rubicon Project, PubMatic, Yieldmo, Outbrain, Gravity and AdsNative.

Otremba spoke with AdExchanger.

AdExchanger: What is the working definition of native programmatic?

LON OTREMBA: In a broad sense, programmatic is the process of planning, scheduling, optimizing, measuring, buying and selling of digital media using technology to improve workflow. In some cases that can include complete machine executable operations. In other cases it can include human involvement in various steps of the workflow. So we view native programmatic as using programmatic processes specifically applied to native advertising executions.

What are the misconceptions agencies/advertisers and publishers have around native programmatic?

The biggest misconception (though it is rapidly dissipating) is the idea that native programmatic isn’t really possible. There has been a belief in some circles that native is all about custom, one-off executions. What’s been lacking in the ecosystem, until we and a few others in the industry came along, are the advanced technologies required to bring programmatic processes to native advertising.

How does native programmatic need to evolve? What can you not do today that you hope to be able to do next year?

In any ecosystem, a balance evolves where all participants – in our case demand, supply and exchange — reach a sort of equilibrium, where the connections and integration points are equally efficient. Today, the ability of many demand- and supply-side players to integrate and execute native programmatic campaigns is still somewhat limited, mainly because they are only now realizing that robust technologies and tools exist. And as they shift greater portions of their demand budgets from display into native, and as publishers create more native inventory, their capabilities will also improve.

What will happen in native advertising in the year ahead?

This will be the watershed year that big brand advertisers fully embrace native. If you look at our advertiser list, you’re starting to see that. Advertisers are realizing that the approach of engaging users directly is more effective than straight ad banners. They are going to start expanding native buys because they work, and access where they can get scale in native.

The second part of this is mobile. The audience has always far exceeded the economic benefit. Mobile is a place where native works better. If you look at how websites are designing even their desktop product, it’s to be a feed, because it works so well in mobile.

What kind of advertisers and publishers have been early adopters to your platform?

Looking at our top 10 advertisers from November to January, half of the group is in the financial services category. We have advertisers like Farmers Insurance, Dell, Coldwell Banker. We have a software client who is probably on their 15th campaign with us. These guys are fairly modest with the campaigns, but every renewal is bigger. It shows they’re moving more of their ad budgets into a native approach, and that’s pretty good validation.

How would an advertiser supply the creative for all those types of native ads?

If you’re an advertiser and wanted to run a native campaign, you would use our tool and list the headlines and graphics and images you wanted. Our technology would take those elements, identify inventory sources that meet the criteria you wanted, figure out what inventory sources where it needed to go. If it’s Pampers, maybe it’s a mommy blog or CNN, or whatever our system deems most effective, and would render it natively, whether it’s in-feed, or content recommendation, or for whatever format.

What kind of native units would be passed through an exchange like Rubicon, which doesn’t have native capabilities?

The in-ad ad unit. It’s kind of like native lite. It’s a standard ad banner size, but the content is configured in that dimension to be native-looking. Our system knows what to do to make that ad look native. It’s a way for advertisers to get access to lots of inventory sources they wouldn’t have access to with in-feed.

That’s why the IAB identified the in-add approach as one to expand scale rapidly.

The in-ad approach really started in mobile. The first programmatic inventory source we plugged into was Yieldmo, which is all mobile, and you can make it look somewhat native.

What technological challenges has Bidtellect encountered in creating a native marketplace?

The biggest thing is that while standardization helps in the display world, and a standard ad banner is going to run in the same dimension no matter where it goes, it doesn’t work in native. It’s got to look and feel native and custom to the page. That really was the genesis for building the technology stack, to create a technology that would enable this programmatic and efficient marketplace, and still make the ads show up native. It wasn’t an easy thing to do. We had to build the marketplace in a more advanced way than we envisioned originally.

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