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Ep. 115 Al Kallel, Founder and CEO of Nativeads.AI, on the Future of Native Advertising in the AI Era
00:21:42
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- [00:00]
A
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- [00:34]
B
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A
Welcome to the AdTech Godpod, your window into the world of advertising technology and the people behind it. I'm your host, AdTech God. Welcome to the AdTech God Pod, where we speak with some of the most innovative ad tech companies in our space. Today's guest is Al Khalil, the founder and CEO of Native Ads. Al's worked at products at Yahoo, Nokia, Skype, Amazon and more. He's a builder and so for anyone listening, that works in product. I think you'll really find this conversation interesting. What's most interesting to me was even just looking at the website, seeing what they're building, looking at the creative aspects of it really drew me to wanting to have him on the podcast. So I'm really excited to chat with you today. Al, welcome to the Pod.
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C
Thank you. Happy to be here.
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A
Yeah, same here. Al. Thank you. And a wow. Like, your background is really impressive. Not, not just because you worked at Amazon, but Yahoo, Nokia, Skype, these are all incredible companies and you've built products across all of them. So I would love to hear a little bit about your background, your experiences at those companies, and then maybe we'll dig into what AI and generative AI looks like for our space in the future. So I'd love for you to take it back from me. Al.
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C
Yeah, absolutely. Thanks for the opportunity. Yeah, I spent most of the last 20 plus years on the consumer monetization. Side early days Yahoo sponsored search on mobile this kind of for those who've been kind of in the early 2000 prior to even Google having a mobile search sponsored search product where we were the first sponsor search solution on the marketplace at the time it was all about ringtones and pizza delivery. We came a long way. So basically I helped drive the strategy for how do you put advertisement on a mobile device when consumers are looking for information on the go. Then joined Nokia the time Nokia acquired naftech to figure out how to deliver on location aware monetization experiences then joined Microsoft at the time acquired Skype to lead Skype monetization. So I led the monetization for Skype mobile and desktop through all the programmatic solution we offered on the Skype clients and most recently at Amazon led the monetization building the ad infrastructure for Fire TV and Prime Video from early days leading products and engineering. So I've been kind of you know on the driving the consumer experiences and advertising monetization and I kind of, you know it's been very exciting journey and really looking forward to what we're building next.
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A
So question for you. You've worked in the space for quite some time. You talk about the consumer experiences in their journey. That has really changed a lot over the last few years. Just in general on the open web, even the way you reach consumers has changed from television to streaming, from radio to streaming radio. The entire world has kind of flipped upside down. And this is all in the last maybe 10 years or so this change has happened. What have you learned about the consumer over time and creating those ad monetization products and solutions for them?
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C
Yeah, the consumer experience has shifted. The big shifts. Mobile was the big shift early in the early 2000s, then social, then with connected TV. In the last six, maybe 10 years we've seen a major shift to streaming services. From monetization perspective I think the big kind of lessons is how do we maintain the high bar for customer experience while driving great monetization. I think that's really kind of the hard trade off to do right. But if you do right, it's delightful both for consumers where they feel like advertising experience is part of the cx, it's not bolted in which is really hard to do when you're dealing with kind of restricting standards. And from an advertiser perspective it delivers the reach, the engagement, the performance that they seek. So figuring out that kind of balance of how much you go native and you lose scale versus how much you go like standard and you gain scale but you lose on some of the flexibility on the. The ad experience has been kind of a constant tension that in my roles I had to balance.
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A
Where do you feel in the last few years as you've been a builder and building products, where do you feel you are in terms of what is a successful product for you? What is a successful go to market? I ask because when, whenever you build, success is different and they vary. Right. It could be stickiness, it could be adoption, it could be, I don't know, publishers utilizing your solution. But what do you gauge as a success factor for you when working with, you know, native ads or any other company?
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C
Yeah, so with native ads, this is the problem we're trying to solve. I think AI offers like an unprecedented opportunity to flex those tension and build advertising experience that can scale while it can be native to experiences without giving away the, the control for brands and how they deliver on brand messages across, you know, large number of creatives that they can scale through AI and then for publishers to be able to monetize in a more native way. And I think we're going to see like a big departure in the next few years from destination URLs and destination apps to consumer experiences that are created through AI, whether it's an LLM or agentic experiences or augmented reality. There is a big shift around the corner and we're starting seeing some of the trends happening in the last few years. The scale of the transition is pretty like things are happening rapidly. Customer experience needs to be like in the context of what the consumer is trying to accomplish. I think that's the key unlock. I think the days of bolting in an experience on a UI and advertising being an afterthought. Like we build an experience and then how are we going to monetize it? Oh, we're going to need to basically like enable some of the creative available in the marketplace and try to fit them in the experience. I think that will not work on these future experiences. The advertising experience has to be native, whether in contexts in nlm. In the context of LLM, you're having conversation with an agentic experience and you're looking for information or you're looking to accomplish task. I think ads needs to be contextually relevant in the context of experiences like connected TV or augmented reality, where the elements of the UI looks very different, they're tiles and different shapes form of UI elements. Advertising experience needs to be embedded and part of the experience, both in formats and in content.
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A
You talk about something that's interesting to me over the Last ten years or so. And even just working in the space for some time, the ads always felt either out of place or forced. The metrics that we use today to measure things like click through rate, we're happy with decimal point performance, we're happy with relatively low retention rates for ads that we view and that we see. And the future of LLMs and the consumer journey overall has created almost like a new playing field, a new way to improve what was built 20 years ago to make the experience better, the engagement better and the outcomes better. But that also brings me to kind of a next question, which is with AI, there also seems to be a huge flood of what we call AI slop. And that's creating a flood of text, content, video content, imagery that is so quickly generated and flooding the web that it's creating a bad experience for most. How are you seeing AI slop? How are you seeing the safeguards in place that you have for quality? How does that impact your decisions that you make when you build a product?
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C
No, absolutely. I think, and this is kind of the whole kind of the premise of native ads is to figure out how to leverage agentic experiences without compromising the quality of the brand and having the brand voice. Sometimes we hear about the brand soul, like AI doesn't have a soul and it's most cases it's true. I think the way to kind of, you know, to leverage AI is to be able to use the AI as a kind of as the computation force behind it, but like fine tuning on brand data so the models actually understand the brands. Because general purpose models, I created general purpose tasks but they lack specificity and brand is all about specificity. So jumping too quick and like not having real wide guide rail, you can end up with off brand creative noise and not so great outcomes. So the way at native ads we're addressing this is we're building the infrastructure on top of LLMs to close those gaps from data collaboration, data sharing as LLMs are mostly wall gardens and obviously like brands need to share the data, understand the audience, be able to build content and messages catered to their audiences. So we built this kind of data collaboration data sharing layer. Fine tuning on brand data. It's crucial. Like you can see an ad and you cannot like it has to be on brand, it has to convey the brand soul. And that really comes from the brand brief, comes from creative style. The guidelines and models are pretty good when you train them on this type of data. And that's why we are offering brands to lean on and fine tune In a very intuitive way. And then lastly, there is no one model that does wonders. There's a lot of great models good at very specific things. So making sure we're using the right model for the right use case is also critical. I know it can be like complex and that's one reason we built native ads in a similar way. Cursor was built for engineering to basically have the greatest, the best models powering our technology and be able to invoke the right model for the right use case. So that's from a technology stack perspective, from best practices, I think we're still like on a kind of, you know, AI is still on the training wheels. The way we look at it like creative has to be reviewed by the brand. They have to be approved before they run in production. I don't think we're ready yet to let you know, AI just generate and serve on its own without some human in the loop.
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A
When you created this business SEO as the founder, where did you feel that other native ad companies were falling short? In particular, we talk about creative, we talk about placements, targeting, contextual, even just, just the adaption of creative depending on the environment we're in. Like you said, you know, here's five creatives, launch it if that dynamic ad is not working. Historically we would cycle through until something works. But now that cycling is unlimited, technically, right, we can, we can spin up thousands of creatives in a snap of a finger and make it relevant to the page or to the user. But where did you see the gap? Or are those the gaps that you saw and how do you think you're going to be able to fix it and fill in those gaps?
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C
Yeah, that's a great question. Yeah, that's true that AI can scale up theoretically infinitely. But I think what matters for personalization is as much as scale is the data. Like having the right signals from the publisher and from the brand to be able to generate creative that personalized to consumers. I think we see this happening a lot on the organic personalization. Like most services like Netflix or Prime Video, they have teams building sophisticated large language models and machine learning models to understand the customer behavior and be able to create personalized content. I think advertise from an ad perspective, the bar needs to be that high where the partnership with the publisher at a much deeper level. I think RTB standards are great, but they're not sufficient. Like it's not just about, you know, like the basic Geo demo that you can personalize on. I think understanding the customer journey better have a better Audience on the insights which most publishers do have and they're willing to share this data if it's set properly in a clean room environment where the value is clear. We're exchanging this data for create an advertising experience that's going to basically deliver a true personalization to consumers which will drive better CX and better engagement for Breath or for publishers and better monetization. At the end of the day, like if we can deliver creative that can perform, it's better yield for the publisher and it's a superior performance for brands.
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A
Some of the identifiers that we're used to in the world of advertising are disappearing and like you said, they're evolving, they're changing. Those identifiers, those signals that we utilize are slowly going away, some faster than others. How does that look like when cookies die, which we know is not going to be ripping off a band aid anymore. We know that this is a slow demise of cookies as users start to transfer into more privacy, safe methods. But how, how are you addressing this? How do you look at that overall at native ads?
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C
Yeah, absolutely. I mean kind of the ties also to the point, the previous point on the data collaboration like working directly with publishers and brands, that's kind of your high fidelity, your high signals to deliver a true personalized advertising experience. And this is done for mostly for the. For organic content. It just adds. It's been historically as kind of bolted into the experience which for many reasons I think kind of treating ad just like content. It has to be personalized. It has to both in formats and in content. Leveraging technology like AI to deliver scale and deliver relevance. I think this is the right time to lean on harder on AI solutions to deliver on true personalized advertising experience.
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A
I wanted to pivot a little bit. We've seen a lot of change. We talked about it earlier about consumer habits, consumption of content, content creation. But what are you generally excited about? Moving into 2026, moving into 2027? With all the technological advancements we're seeing leaps and bounds. This is not a slow change, this is definitely a fast paced change. But what really excites you about what's being built in the advertising ecosystem or just overall?
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C
Yeah, I think it's going to be a really exciting year ahead. The consumer behavior is shifting to agentic experiences. I think this is kind of unique. I think it's unique generational opportunity for technology solutions like native as to build really exciting solutions for brands to help them embrace this change and be able to leverage AI to deliver on truly personalized on brand creative with at low cost that can scale really well. I see it as an experimental, I think year, next year at scale. I think we've been kind of, you know, talking about AI and the, you know, the promise of the AI. We kind of went through the hype reality now kind of we're going back into what truly can be delivered through AI and it's going to be I think a year of experimenting with solutions that are very robust. I think where we came a long way in the last few years both from the technology through the ad tech, from creative to measurement to ad delivery and serving. So expecting better performance for brands, better roas. If you're on the looking at like a lower funnel performance for brands, you know, the bottleneck of content generation can be, you know, solved with platform like native ads. AI that we're building platform basically to offer brand advertisers to generate content on brand at scale. There's been unprecedented. So yeah, it's going to be a year of experimentation and growth.
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A
I think it's the year of AI, but we're not going to make it the year of mobile because we waited for that a long time. But I, I agree, I think it's incredible because I've spoken to, for all of the podcasts, close to maybe 300 people over the last two years, two and a half years. And one thing that seems to be becoming clearer and clearer over every single episode or every time AI comes up in conversation is the utilization of AI. I think initially it was a lot of hypothetical what may or may not happen with AI. And now I'm starting to hear a lot more focus on how AI will be used and how it is being used for buy side, sell side optimization, operational capabilities, et cetera. But there's one thing I wanted to ask you which is a personal question and personal opinion is one thing I cannot get behind is actually agentic commerce, which is the utilization of bots to shop on my behalf. Not necessarily recommendation engine, but more of, you know, it knows I need more milk, order more milk. I think it makes sense for staples, but it doesn't make sense for let's say luxury goods, clothing items. Where do you think agentic commerce is going? This is just personal opinion. And do you think that that's a scalable solution that we'll see rolled out across various e commerce sites?
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C
Yeah, that's a great question for like it's been a topic, topic of, of discussion among the retailers on how much to lean on agentic shopping and you know, different, different Retailers have a different position either leaning and harder and some leaning and harder than others. I think we've seen great successes with Walmart, Sparky and Amazon. Rufus I think on the building agent experiences on their on on their commerce sites. Customers may also look for shopping on LLMs and potentially on AI agent as AI agent becomes more federated. So I think that's where it's going to highly depend on the product. As you mentioned, some of the undifferentiated products where you don't really as a consumer we don't really look for a specific maybe brand or a specific location that could be more at risk than other differentiated products. Like where, like luxury for example, where you know the shopping cycle is it requires, you know, a little more exploration and agentic experience. It's more transactional. So depending on the category, I think there's some categories where they're more at risk to shift to agentic where especially the undifferentiated products and some other verticals may take a little longer. But I think it's the shift is inevitable and it's going to happen at different speeds.
- [21:09]
A
Al, thank you for being here. I wish you the best of luck with native ads. It sounds great. I hope people listening check it out. I appreciate your time and thanks for joining me today.
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C
Thank you adg.
- [21:20]
A
Thank you. Thanks for tuning in to another episode of the AdTech Godpod, a podcast for the people about the people. Stay connected with me for more insights, trends and interviews in the realm of adtech. Don't miss out on the latest updates. So follow me on X Instagram and connect with me on LinkedIn. Don't forget ATG Slack community has insights, networking opportunities and jobs. Keep the conversation going and stay at the forefront of adtech innovation.