Programmatic native: Tragedy of the commons?

An emerging new trend in native advertising combines the value of native with the easy placement of programmatic. But who is this favorable for?

Programmatic native is already technically possible. You see companies like Xaxis placing native programmatically inside Disqus’s communities. There are hot startups in Silicon Valley, California, such as AdsNative, and just in the last few weeks we’ve seen TripleLift and PubMatic make their own announcements that they will pursue programmatic native. But the real question is not technical capability, it’s whether any brand name publisher should want to offer programmatic native.

Yes, it’s the right idea to create the convenience of buying programmatically with native. There are concrete benefits: This will lower the friction of buying a desirable media format with very attractive response rates and will allow native to move from a niche business to a scale model . Additionally, companies like OpenX correctly point out that publishers can retain significant control over what gets sold.

However, the world is awash in ad inventory, and programmatic native will only continue this trend. This has been wonderful for middlemen and buyers who seek scale and demographic targeting at the lowest possible price. But is programmatic native good for ad sellers?

B2B and consumer brand name media companies with established audiences and limited inventory need to be wary about commoditizing what, today, is high CPM advertising. There is a herding effect coming to native advertising. What was once the purview of BuzzFeed and a small cast of players is going completely mainstream. At MediaRadar, we see that almost half of the largest 10,000 national advertisers have already sampled native. The ANA also reported that two-thirds of their 640 members polled will place native in 2015. Like all markets subject to supply and demand, this will lower prices.

I’m a huge fan of programmatic, but I’m not a fan of knowingly commoditizing your own ad sales business. Like Garrett Hardin’s “Tragedy of the Commons,” it may be that publishers, each acting in their own best interest to automate native advertising, are in fact reducing their share of pie and creating downward pressure on price. What was once novel will no longer be.

Tim Armstrong of AOL follows a balanced “barbell strategy” when it comes to programmatic, and I agree with this approach. Publishers should have high-end, high-touch CPM units in addition to programmatic options for ad buyers. This way you’re able to service both kinds of buyers. But I see native advertising quickly moving from one side of the barbell to the other, and publishers will soon need to find another solution that is unique.

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