Commentary

Optimizing Native Ad-Serving

If the price paid for an advertisement is commensurate with its engagement, and all else held equal, publishers stand to make more money from a native ad in lieu of a banner ad. Of course, it isn’t the case – at the moment – that every publisher can swap every banner ad out, move to native ads, and expect to make more money in absolute terms. Issues like liquidity, latent demand and technology infrastructure can still stand in the way. Given the above constraints, publishers need a guide to optimize for dollars and engagement.

Evaluating the “right” way to optimize depends on the particular objectives of the customer. For the archetypal publisher, there are concerns about overall monetization and user retention. This means publishers are balancing the overall dollars made from advertising with the number and frequency of users visiting their site. Of course, this grossly simplifies the publishing business, but is nonetheless useful as a point of discussion.

Native demand comes in two forms: direct sold (generally requiring significant customization) and programmatic. The former will likely achieve roughly the scale of custom rich-media campaigns, as they require one-to-one relationships and custom content production. From the publisher’s perspective, this is the most custom and most lucrative campaign that can be sold. Just as many large publishers have healthy businesses from custom rich-media, the same will probably be the case for native. But just like banners and rich media, there is still a huge and burgeoning market for native, and publishers need to make sense of programmatic.

The publisher’s agenda fits in two broad buckets, monetization and traffic. The more native the advertising, the higher the engagement: meaning the advertiser should be willing to pay more. Similarly, the less disruptive an experience is, the less it will have a negative impact on traffic. So when publishers evaluate native, they should evaluate the most native format as it relates to overall yield.

If there were no cost in defaulting to different adservers,  publisher would likely be best suited setting up their system to the following path: 1) direct sold native campaigns; 2) programmatically sold native campaigns with highly native experiences; 3) programmatically sold native campaigns with templated experiences. Then, if it makes sense for the ad slot, 4) banner ads.

The strategy above creates a system in which publishers can capture the maximum marginal utility (the native-ness – positively impacting engagement and user experience), and thus the maximum yield, based on availability.

The reality is that there is a cost to defaulting between different advertising servers. So publishers and advertisers need a technology vendor to develop a solution that predicts yield for each step in the process above and automatically creates the highest valued path, normalized for the number of hops that will be required. Once this technology is perfected, both publishers and advertisers will benefit tremendously – pushing forward the state of native.

3 comments about "Optimizing Native Ad-Serving".
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  1. Satish Polisetti from Polymorph, May 7, 2015 at 11:35 a.m.

    Good post Eric, two quick observations - 


    1. Publishers who are selling direct and creating custom content creation programs aren't really thinking about the same units to be populated with in-direct or programmatic demand. There are few who might but for majority editorial controls the units when they have a healthy direct sold deals. I think that will change with more tools for editorial to vet non-direct native. 


    2. And the path you suggested is one among many ways. It need not always be linear - from direct-sold to in-direct to programmatic. In an ideal world the maximum fill-rate at any CPM level is a function of the number of impressions made available. 


    A smart publisher knows that he needs to control his inventory and maximize yield and one of the core focus of AdsNative has been powering publishers with tools to get highest returns stacking direct, in-direct & programmatic native revenue sources. 

    http://adsnative.com/take-control-of-your-native-inventory/

  2. Kevin Pike from Rank Fuse Interactive, May 7, 2015 at 12:01 p.m.

    Before publishers get too greedy here, they really just need to understand their advertisers mind set around native ads. "Engagement" to a publisher starts and stops with a click, but as an advertiser I'm looking at different engagement metrics (bounce rate, pages/visit, time on site, converions, etc.) to understand where I should place future buget. Native ads are largely attractive becuase they can spotlight your content (aka SEO helper) and put traffic on your site for cheap. I'm not sure they are ever going to perform like search or banners, but they do have a time and place for sure.

  3. Walter Sabo from SABO media, May 7, 2015 at 12:24 p.m.

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