• by Chris Sukornyk , November 14, 2013

Everyone's getting excited about the possibilities of sponsored content, and it's pretty easy to see why. A recent Forbes study showed that sponsored content increases intent to buy by 41% and favorability by 28%, and publishers are increasingly viewing native ads as their best chance to close the mobile ad revenue gap. It's no surprise, then, that companies Federated Media, OneSpot, and PulsePoint are gunning for a future where sponsored content is bought and sold at scale through the automated mechanisms and laser-focused targeting of programmatic RTB exchanges.

Advertising that works at scale! It sounds great, but it’s an extremely tricky endeavor. Currently, these ads are handcrafted units, the result of careful collaboration between publisher and advertiser, and thus completely antithetical to advertising at scale.

So, how, exactly, do you automate sponsored content?

In short, by changing it pretty drastically.

First off, the dynamic between advertisers and publishers is going to change. Native ads are proving incredibly effective on the sites of publishers like Forbes and Mashable, which sees its readers engaging longer with branded content than its regular editorial. Some in the industry find this dynamic absolutely crucial.

“The notion that you could potentially automate that process goes against what native is at its core,” Andrew Gorenstein, chief revenue officer at Gawker Media, recently told Mullen. “A piece of content that is native to Gawker, by definition, cannot be native to another site, even if it has a similar audience or editorial content.”

Gorenstein's point is fair enough, but if you think about it, automated sponsored content couldn’t actually live on Gawker. It will prove extremely difficult to automate sponsored article pages, so, in this new world of native at scale, native ads, once clicked on, would lead to the sites of other publishers -- similar to how sponsored content widget works. That will change the sponsored content experience as well.

You also have to recognize that, unlike display ads, there's no way to guarantee the look and feel of sponsored stories. The very point is that they're native -- so they would have to look different on the sites of different publishers. That means advertisers and publishers will both need to preview what their native ads will look like, which could prove quite challenging and throw a wrench in the automated process.

The solution is likely private exchanges that will sell native inventory for groups of publishers, where each native ad would have to be submitted for both approval and a custom price. It's still an automated, RTB experience, but just a bit more manual in the sense that bids are pre-negotiated before an advertiser is allowed to buy on a given publisher's site. And though it slows things down, this kind of process would also allow publishers to ensure that the native sponsored stories they run don't destroy their editorial integrity (see: The Atlantic's Scientology debacle).

It's not clear how these exchanges would be priced, but it will either be a cost per engagement (ideal) or based on a CPM for the promotion of that advertorial.

With those challenges in mind, it's worth remembering that we do have a lot of automated ways to distribute content-rich ads already, particularly via social media.

More and more people are turning to content discovery, and Twitter and Facebook have already built proprietary native networks where advertisers use real-time auctions to serve content-rich ads at scale. Similar sophistication is coming to Instagram, Twitter, Tumblr, and Pinterest. And content distribution widgets like Outbrain, though maligned by some publishers, work well.

So, an RTB-infused utopia for native advertising is coming -- eventually. But the industry has a lot of kinks to work out first.