Text: Michiteru Hirose, country manager, Japan, PubMatic
According to AppAnnie’s recent ‘The State of Mobile 2019’ survey, Japan is one of the fastest growing mobile app markets in the world. The average consumer has more than 100 apps on their smartphones, and growth in consumer mobile spend has significantly outpaced GDP growth between 2016 and 2018. As the mobile app market grows both globally and in Japan, so too does in-app ad spend. The same AppAnnie report predicts that 60% more apps will monetise through advertising in 2019.
What does this all mean for programmatic advertising in Japan?
In an effort to answer this question, PubMatic recently partnered with Digital InFact to survey media buyers in Japan. The findings shed some light on the perception of in-app advertising and the programmatic ecosystem in general.
Key findings from the research include:
1. In-app spend accounts for an average of 28% of digital ad budgets in Japan.
2. Excluding walled garden apps such as Facebook and Line, the most popular app verticals among media buyers are News (71%), Health/Lifestyle (50%) and Gaming (41%).*
3. The primary purpose of in-app advertising differs according to buyer type, with branding being the primary objective for brand advertisers vs. app installation for agencies.
4. Media buyers in Japan tend to focus on performance metrics for in-app campaigns, with CPA (56%), CPC (34%) and CPI (32%) being the most popular.
5. While 50% of media buyers say that they buy in-app ads on Facebook, Twitter, LINE and Google APP Campaigns, only 16% use a DSP to buy in-app ads programmatically.
6. Concerns over inventory quality are main factor in preventing media buyers from buying in-app inventory programmatically**, with 51% citing brand safety concerns and 48% citing ad fraud.
The key takeaway from the research was that despite high levels of investment in in-app advertising in Japan, media buyers are still wary of transacting programmatically due to inventory quality concerns.
Approximately half of the media buyers surveyed cited brand safety (51% of respondents) and ad fraud (48% of respondents) as one of the key reasons they would avoid buying in-app ads programmatically.
Additionally, the study revealed the need for continued education around the benefits of programmatic buying in Japan. When asked why they do not buy in-app ads programmatically, 31% of media buyers stated that they do not understand the benefits of programmatic advertising.
As mobile advertising budgets shift from web to apps both globally and in Japan, we can expect to see in-app advertising increasingly being used for branding as well as performance.
However, in order to see the format realise its true potential, the industry needs to work hard to increase the credibility of in-app programmatic advertising—with publishers adopting IAB initiatives such as app.ads.txt and the Open Measurement SDK, buyers working with certified vendors to mitigate risk, and technology vendors supporting both sides.
This industry-wide effort will help establish a secure programmatic ecosystem that inspires confidence in buyers and brings an influx of brand advertising to programmatic.
Our survey also highlighted the need for continued education about the benefits of programmatic advertising in general in Japan. The programmatic ecosystem here is still nascent compared to some other large ad markets—and education will be a key piece of the puzzle in seeing it gain traction.
PubMatic has long been committed to driving the adoption of programmatic through education, and as such we will be rolling out training for both buyers and publishers in Japan.
In doing so we hope to see more advertisers embracing and benefiting from the enormous potential of programmatic in-app advertising.
To find out more, see the full report here.
* Advertising agency respondents were asked to limit responses to one key client.
** Programmatic in-app ads were defined as those purchased via DSPs, these do not include ads purchased via ad networks or social media apps.