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What is Programmatic and how does it relate to native advertising?

Here at the Native Advertising Institute, we like to think that native advertising is the most important phenomenon taking place in the world of marketing right now. We are THE Native Advertising Institute, so you can't really fault us for that, right? However, we do recognize that we are far from alone in this universe. There are other forces to be reckoned with.

One of those forces is Programmatic. The short story on Programmatic goes something like this: Ads being bought and sold using automated systems and processes. The long story is, well, longer.

In this post, we'll try to find that middle ground between the short and the long story. And we'll clarify how Programmatic relates to native advertising. Because, yes, they are indeed related.

In basic terms: What is Programmatic?

At its very core, Programmatic equals using machines to buy ads. That's it, basically. Programmatic ad buying is the process of using software to purchase digital advertising as opposed to the old days where human beings did the negotiating and manually placed the insertion orders.

As you might have figured, Programmatic excels because machines are able to reach levels of efficiency and automation that man-made operations can't achieve. Programmatic advertising technology streamlines the ad buying system and takes advantage of data to tailor dynamic advertisements that adjust to the individual customer. Data, including demography, buying behavior and brand affinity are computed in an automated process that makes it possible for marketers to engage with a very specific target group through their programmatically bought advertisements.

How popular is Programmatic?

Very popular!

You know, there are many different numbers that can be used to explain just how big Programmatic has become over the past couple of years. For example, let's take a look at the latest report from the Internet Advertising Bureau UK, which was published earlier this week.

According to the report, almost half of online display ads - worth just under 1 billion GBP  - in 2014 were purchased through Programmatic technologies. 2.13 billion GBP were spent on display ads across the internet and mobile units in 2014 and 45 percent(960 million GBP) were traded programmatically.

If you think these numbers are impressive then consider the following: In 2013 the percentage of online display ads that were traded programmatically was 28 percent 28 percent! The same figure was 45 in 2014 so the use of programmatic ad buying is pretty much skyrocketing.

Why is Programmatic so popular?

Quite simply, because it helps advertisers engage with consumers more effectively.

Programmatic leaves out the manual labor that used to be a part of ad buying and instead relies solely on automation and technology. It's a similar transition that many other industries have gone through.

Automation and technology provide more than just the ability to work at a higher pace than human labor would ever be able to. Programmatic software is able to compute enormous amounts of data which allows advertisers to target audiences much more accurately than previously possible.

Finally, Programmatic can actually help advertisers save money because it cuts out complex manual operations that used to be part of ad buying.

How does Programmatic relate to native advertising?

The automation principles of Programmatic might sound at odds with native advertising and, you know what, maybe they are. Basically, the original NATIVE idea of native advertising is commercial content that resembles regular content in style and substance on any given platform. Programmatic relies on software and automation, but if you want to make true NATIVE native advertising, people and not machines need to produce the content once people and not machines, have identified what characterizes the style and substance of content on a given platform.

So why even try to make a link between Programmatic and native advertising? The answer is scale.

We have written about the issue of native advertising's scalability and tried to understand the pros and cons. The concept of Programmatic includes elements of automation and targeting based on data. Elements that could, theoretically, apply to native advertising and thus solve the problem of scalability. Advertisers could buy native advertising using Programmatic the same way advertisers buy display banners using Programmatic.

The keyword is "could". The entire idea of Programmatic applied to native advertising depends on whether or not you believe that one identical sponsored article is useful on several different platforms. If you believe that to be the case, then native advertising could be bought and inserted programmatically the same way that display banners are.

On the other hand, if you believe that sponsored content needs to be made specifically with one unique platform or publisher in mind, then the combination of native advertising and Programmatic doesn't make any sense.

Until significant empirical data is gathered, it is pretty much a matter of belief(and interests of course) if you subscribe to the idea of programmatic native advertising. We will say though, that the idea of programmatic native advertising conflicts with the original concept of native advertising. If it works, however, such idealistic shortcomings won't keep anyone from using it. We know that much.

Anders Vinderslev is a trained journalist and former editor and key contributor to the NAI blog. He has, according to himself, produced some of the most thought-provoking and impactful reporting on the state of native advertising. Today he works as a content creator and editor at Brand Movers, but from time to time he will deliver spicy takes on native advertising and sponsored content here at the NAI blog.

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