Programmatic buying: What Asia can learn from the West

The adoption of programmatic ad buying platforms has moved swiftly to disrupt the advertising market in the last 12 months. Ad space that was once bought manually is now traded automatically. Publishers have been given the tools to utilise the wealth of data available to them and sell their inventory at scale, delivering efficiencies and increased yield.

A recent report from Magna Global titled 'The International State of Programmatic'  highlights the global trends in programmatic adoption across 24 different markets. What it has found is that, while Western markets, with the US in particular, are the most mature markets for programmatic, emerging Asian markets are showing rapid growth in programmatic adoption.

In fact, it is forecast to be the fastest growing market for programmatic in 2014 (73 per cent of all ad spend) with a total spend of over $500 million. Within the Asia-Pacific region, Korea represents the largest share of total programmatic spend among developing Asian markets with a total of $237 million.

It’s probable that programmatic trading will have the same effect on the Asian market as it is having on the Western world. But the process of adopting programmatic, which is being driven mainly by the US and UK, hasn’t been a totally smooth one. As is often the case, teething problems have occurred. As the rest of the world embraces this new technology, new adopters can learn from Western markets and benefit from their growing experience.

Transparency

For advertisers, their biggest fear when it comes to programmatic trading has been transparency around additional fees and costs for CPMs. Without seeing how fees are broken out from CPMs, advertisers have measured the success of the campaign using only limited information about the actual costs of the ad. The key learning here is that advertisers should expect that a proportion of CPM cost goes towards various technology layers, not just the publisher. Meanwhile media agencies should give their clients a detailed breakdown of the technology layers being employed and be able to defend why they have been used or paid.

Control

It was a slightly different story for publishers. Their biggest fear has been around lack of control during the real-time bidding (RTB) process, as the system is automated using pre-established data. The misconception here is that programmatic is only about RTB, but that isn’t the case. Supply side platforms (SSP) offer a wide range of options to control who can and cannot buy media and for what price, so there are things that publishers can do to control what brands and products appear on their sites. There are also private marketplaces that allow premium inventory and/or special executions to be offered to buyers of choice, at a price controlled by the publisher.

More isn’t always better

One issue encountered by publishers in Western markets is around the premise that more doesn't always equal better. By this we mean that publishers have been known to tag their inventory to be offered by multiple SSPs at any one time and this doesn't increase the price offered. Ultimately, all SSPs are connected to the same exchanges and demand-side platform partners, so the same algorithms that evaluate the impression offered through one SSP will evaluate it the same as when offered to them in parallel through a second SSP. Worse still, the value offered to both may be lower, due to a perceived reduction in scarcity.

The future of programmatic is exciting. It’s an evolution that will shape the industry for years to come. Although still in the early stages of adoption, Western markets are learning a lot about the process and how to tackle the issues arising. If the Asian market is going to embrace this new way of trading ad inventory, why not use this as an opportunity to see if there are any key learnings that can be taken away? In this way, it may not just catch up, but overtake, and be held up as an industry leader. 

Irfon Watkins is CEO of Coull