Before we delve into how Asia is facing up the next adtech wave, let us begin with the most basic question: what is programmatic? Programmatic buying, also known as automated trading, is “the buying of online media through the use of computers and algorithms”. It means that traditional media buying over business lunches and phone calls is now being replaced by automated ad biddings on an ad exchange which connect advertisers and publishers. Real-time Bidding (RTB) is the most widely known programmatic method – also, the most popularly adopted in Asia and hence the key discussion in this post.
A comprehensive report by Magna Global in 2014 quoted an impressive figure of US$21bn media inventory being transacted through programmatic methods, with US$9.3bn contributed by RTB. Growth is expected to be strong in 2014-2018, with an average annual growth rate of 27%, and a forecasted transaction value of US$53bn by 2018. Asia however is a newcomer to this programmatic race. MediaQuark reported a much lower adoption rate in APAC than in Europe and America, with 65% of APAC advertisers adopting but still assigning less than 25% of their digital budgets to the methods. Despite this, Asia is rated by Magna Global as the region with fastest programmatic growth in 2014 (73%) with US$500 million ad spending. The growing support by advertisers is simultaneously buoyed by an enlarged ecosystem with several ad tech players setting up or expanding their infrastructure in the region, including Adskom, The Trade Desk, Rocket Fuel, PubMatic and Rubicon Project.
The key inhibitors to adoption rate in Asia are the lack of understanding of programmatic process on the part of advertisers and publishers, and the lack of education or simplification on the part of programmatic intermediaries. The ecosystem as a whole is not yet strong and transparent with low trust level for third-party ad servers or data, forcing advertisers to continue their reliance on site-based advertising – where they can check if their ads are online – rather than programmatic trading. In certain countries like China, strong resistance was seen due to the dominance of a few concentrated media channels and regulation hurdles. Currently, Korea is the largest developing Asian market in term of programmatic ad spending, totaling US$237 million in 2014. Malaysia and Singapore closely follow with a forecasted RTB penetration of 30% by 2018, surpassing China.
For advertisers, the opportunities presented by programmatic ad are plenty. Targeted advertising could help to drive down cost, especially with display ads from premium publishers. The most benefit would come from increased campaign ROI and a better control and management of campaign. Andrew Tu, APAC Managing Director of The Trade Desk, explains: “Buying digital is not about driving down CPC or paying for the lowest CPM. Rather, it’s about the ability to track the CPM performance and more meaningful performance metrics.” Additionally, advertisers will benefit from an enhanced understanding of their target audience and can move beyond a “quarterly marketing budget” cycle to launch real-time initiatives based on real-time opportunities, simultaneously increasing the relevance of their content and context.
For publishers, programmatic opens a new realm of digital channel which prioritizes cost saving and value maximization. Publishers could explore and build capabilities in fast rising digital formats such as video and mobile ad. There are plenty of investment returns from first-mover advantage and publishers could differentiate themselves from competitors.
At Phar Focus, we help marketers and advertisers across the region to tap into the programmatic potential without being burdened by the industry’s technical jargons and sophisticated mechanism, to focus on what they do best – that is, strategic marketing. Our specialist team will provide consultation services on both media mix and campaign management, working closely to deliver the new height of digital benchmarks and generate integral insights which can help our clients and partners to stay ahead of the crowd. Keep an eye on our next post on Focus+ and how our platform can create a difference in your strategy.
You can stay up to date on our latest blog posts by following us on LinkedIn.