The Native Ad Fallacy

All of this is not surprising. The hatred for the much-maligned banner has grown steadily over the years. It is an uninspiring ad format, akin to putting to saddle on a donkey. And yet it’s what most publishers are left with as their bread and butter. There’s long been a hope that something will save them from the fate of banner ads traded as pork bellies, where publishers’ role becomes little more than the providers of empty vessels for data-rich targeting systems to find their preferred audiences.

Much of this faith in “native” is based on a very false premise. It’s that slapping the label native on an ad offering increases its value. Silicon Valley, with its typical herd mentality, has fallen in love with the idea of native advertising mostly as a consequence of falling out of love with advertising. During the go-go days of Web 2.0, advertising was seen as a quick buck. Companies were in the business of getting to scale, at which point they’d “turn on the revenue faucet” through ads. The problem came when that revenue was tiny. All the MBAs over there should have noticed the imbalance between supply and demand that’s been the hallmark of a display ad world that will pump out 4 trillion impressions this year in the U.S. alone.

Couple that with the rise of programmatic ad buying, and you’ve got one tough row to hoe for ad-supported businesses. Programmatic buying is often misunderstood. But at its base it’s about stripping out “inefficiency.” That means taking money out of somebody’s pocket, which is more often than not publishers that can’t really do much about it considering all the options buyers have nowadays.

Despite what many content publishers may wish, native ad systems are not an alternative to this trend. Twitter and Facebook’s “native” ads will surely be traded programmatically in 2013. One top holding company CEO this week dismissed the hand-to-hand ad buying practice as a relic on par with the guys in mustaches in red coats on the Chicago Mercantile Exchange. “You have to wonder if they knew Nasdaq was changing everything,” he said. In his estimation, 90 percent of ad buying will move to programmatic channels.

At some point, native ads for content publishers will go back to what they’ve always been: custom programs. Platforms, which by definition have scale, will dabble in exciting new formats. Most content publishers will continue to rely on what they always have: deep integrations with brands wanting to reach their audiences. Is that native? Maybe, but that doesn’t really make it new.