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Native Ad Units: Jargon or Welcome Change?

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Posted by Garrett McGrath on April 28, 2014
Native Ad Units: Jargon or Welcome Change?
In the last year or so there's been a lot of talk about "Native" advertising in the ad tech world. Most of this has come from the media, as is often the case in our industry: an idea suddenly becomes news and then becomes -- maybe -- something actionable and valuable. That might seem a little cart-before-the-horse, however if you're reading this you probably know there's a lot of jargon and vapor out there to go along with our very vibrant, dynamic industry.

So what is a native ad unit? The simplest explanation is that it's an "in-stream" advertisement. Stream as in stream of content, frequently, but not always, on a mobile device. Whereas most ads sit above, below, or beside content, native units attempt to join (or interrupt, depending on your perspective) content. One of the most common executions of this is on the Facebook wall: post, post, Suggested Post, post.
Another key characteristic of native ad units is that they are styled to more closely resemble the content of the site or app on which they are presented. An ad unit that tries to look like content. You may think this is misleading or you may think this is less interruptive or more visually pleasing.
Removing the subjective considerations, what this really means is that native ad units are custom-size ads that are somewhat custom formatted, in that they look like the content on the site or app on which they appear. Custom size and they inherit some styling. Given that neither of those items are unusual or complex, you might begin to wonder about all excitement.
That excitement actually comes from a very legitimate place. Both publishers and advertisers place a high value on ads that users perceive as contextually relevant and/or interesting. Likewise, users are much more tolerant of 'paying' for the free services they consume with advertising when that advertising is at least not annoying; better yet if it's actually interesting. All pretty basic stuff, but the opportunity to make it real instantly gets the attention of both buyers and sellers.
By extension this means that native ad units are really most effective when the unit can be closely tied to the user and his/her preferences or affinities. Said another more common way: these units need good data. Deep data about both the user and the content they are consuming, plus any number of other preferences, Likes, etc. that the user has voluntarily shared with the publisher.
Which brings us to the native ad unit's real challenge: scale. Native ad units are very difficult to execute from the content-matching perspective outside walled gardens like Facebook or Twitter, publishers whose business is built on knowing about their users. These publishers have petabytes of specific, actionable user data because we log in and then tell them all about ourselves via our interactions.
Outside these huge, inclusive publishers the other major selling point of the native ad unit (looking like content) is also more difficult to execute at scale. Especially in RTB, which is where you get mobile advertising at scale. Direct buys, where you can design and traffic creatives ahead of time, are less of an issue but are of course then severely limited by scale.
For native ad units to really perform they need to be contextually aware, creatively dynamic, programmatically digestible and, most importantly, biddable.

Written by Garrett McGrath

Garrett is Smaato's Senior Vice President, Product.

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