Ad Networks

Why I’m Not Building a Native Ad Network

Kunal_GuptaKunal Gupta is the CEO of Polar (formerly Polar Mobile), a computer software firm based in Toronto. Polar originally focused on mobile, but has rebranded to expand its mission, now specializing in native ads. He has been recognized as a Top 30 Under 30, a United Nations Global Citizen and Ernst & Young’s Entrepreneur of the Year. Look for his post on The Makegood the third Wednesday of each month.

When Polar entered the native ads market, we had a big decision to make: do we focus on building world-class technology to help scale native advertising or do we focus on building yet another ad network — in this case focused on a new ad format? We decided that another ad network is bad news for publishers. And our customers agree with us.

Keeping the “premium” in premium publishers

The tremendous market excitement and buzz tied to native ads is that they represent an ad format that publishers can maintain a high premium for. Let’s face it: Native ads are one of the few remaining ad formats left where publishers can make a healthy margin.

Those publishers that continue to sell native ads in-house instead of relying on ad networks will continue to get top-dollar with a focus on quality. This rings true in the display world: Sponsorships that include banners, rich media, video and companion ads that are vetted perform higher than any ad unit that is populated through a network.

“Advertisers we work with at Quartz are interested in having genuine impact with highly sophisticated audiences – there’s not necessarily a commodity solution to that equation,” says Jay Lauf, SVP Atlantic Media at Quartz.

Keeping the “native” in native ads

The inherit definition of a native ad is that it is native — that it adapts to the look and feel of the content around it. But it doesn’t end there; there is also context. Native advertising works best when the content also matches the content around it, that it be targeted to the same reader, written in a similar journalistic voice as the publication. There is no promise that a native ad network is going to give a publisher quality, relevant content in that native ad spot.

“Native advertising content is attractive to the consumer when it’s well-written, informative and objective (versus self-serving),” says Ned Newhouse, corporate director, mobile for Condé Nast. “It’s just content that just happens to be clearly marked as sponsored. As long as the publisher is sincerely transparent, it can go a long way to helping the advertiser drive its brand and inevitable sales interests.”

Conflict of interest

Can your competitor really be your customer? I see a conflict of interest when a company is providing both an ad-tech platform for publishers to run their own-sold campaigns and is actively pitching the same (premium publisher) inventory to agencies and marketers. Now the ad buyer has two channels to reach the same inventory, but can you guess which one is cheaper? We’ve already seen this in both mobile and video, where ad networks are undercutting the publisher’s own inventory.

Content recommendation networks are different

The network model is working for content recommendation engines like Outbrain and Taboola because they are paying the publisher for traffic back to the marketer’s site. This model differs from a premium native ads business, in which a publisher wants the reader to stay on their site longer, to engage with the content, to share it, which will in turn bring new readers back to the site.

Let’s NOT repeat the banner experience

Some may say ad networks will help scale sponsored content the way it did for banners all those years ago. But look at the decline of the commodity of the banner: with ad fatigue and declining click-through, the banner isn’t driving the revenue in for the publisher it once did. And when was the last time you shared a banner ad with your friend?

Creating value as an entrepreneur

As an entrepreneur, I’m accountable to our customers and shareholders and responsible for working with my team to create value for all. The track-record of ad networks creating sustainable, scalable, recurring and profitable value for their customers and shareholders pales to that of technology companies.

We are a technology company, focused on helping scale the native ads industry. We do this by providing a best-in-class platform that is rapidly adopted by premium publishers around the world who share our excitement for native advertising and content marketing representing one of the few premium ad formats left. Let’s not kill it.

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  • Adam Ben-Aron

    I don’t think the problem is the ad networks, they’re just filling a need. The problem is the metrics buyers use to determine where they buy ad space. If an ad network provides the advertiser with better “value” than the individual/premium publisher, then the ad network will win every time.
    Given that the main metric for branding/awareness campaigns has been $/impression, premium publishers have had a hard time competing with ad networks race to the bottom (ie cheapest $/cpm). This will continue to be true, regardless of the ad format, if relatively meaningless metrics, like impressions, dictate how buyers buy.

    Native ads are providing an opportunity to change the metrics that buyers use to determine campaign value. This is great of premium publishers. This is because advertisers can now see different (more valuable?) metrics than just impressions with native. Advertisers can see earned vs paid views, time spent, etc. So long as premium publishers provide better ROI than networks for these metrics, they’ll be fine. If they can’t, they’ll have to find a new, valuable, metric to beat networks with.

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