Only about nine months ago, I was attending an invitation-only digital media conference, with many of the industry’s top publishers, ad agencies, technology companies, and investors there. During a panel on the topic of programmatic advertising, in a room filled to overcapacity, a heated exchange broke out and quickly spilled into the audience.
On one side of the debate were a small but vocal group (yours truly among them) who believed that native programmatic was a concept whose time has come. On the other side, in vastly superior numbers, were those who believed that programmatic and native were completely incompatible, that the very term “native programmatic” was practically an oxymoron. They strongly believed that delivering native ads that were actually native to the page simply could not be done programmatically, since the very concept of native advertising implied custom, one-off campaigns that can’t really be executed or improved using programmatic techniques.
How quickly times have changed. This past October, IDC released a report predicting that by 2018, native programmatic as a category would reach $5.25 billion in revenue. Clearly, the shift of digital ad dollars from traditional display advertising into native is only accelerating, and since platforms have emerged to enable them, programmatic capabilities are now possible in native. And a key component fueling this growth is the emergence of native-only ad exchanges.
As we saw with display advertising earlier in the 2000s, exchanges -- particularly open exchanges -- have a way of dramatically opening up markets. That’s because when demand has open access to potentially hundreds of thousands of supply sources in real time, and the market prices the inventory at auction, two very big dynamics take hold: pricing efficiency and scale. Pricing efficiency because advertisers can specify exactly the type of audience they are looking for and bid for it, and publishers can offer their inventory in the same way. Scale happens because advertisers on an exchange can have unfettered access to huge inventory sources at once.
Exchanges are now rapidly growing in the native ecosystem. Helping to move things along, the IAB has released an updated version of the OpenRTB specification that is specifically addressing programmatically accessing native advertising. This spec, currently in public draft status, outlines specifically how supply and demand can programmatically connect, while retaining everything that makes native the exciting channel that it is.
In addition, the advanced technologies required to bring programmatic processes to native advertising are now deployed in the market. These technologies enable real-time rendering of ad executions to look native to the page, optimize matching of supply and demand using third-party data, and include provisioning and reporting tools that make it relatively easy for advertisers and publishers to connect on the exchange.
As we continue to see rapid growth in native advertising, look for the continued rise of exchanges. Efficient markets are, after all, the great equalizer.