SINGAPORE - In her more than eight years of working in the digital industry, with stints at Twitter, Yahoo, Google and now as the Asia MD of AppNexus, Sonal Patel has witnessed “the rather leisurely way” programmatic has grown in the region.
This is partly due to the infancy of the Internet, a lack of disposable income to buy internet-ready devices, culture and the high participation of intermediaries (ad networks) who, “for survival reasons, have delayed the growth of programmatic.”
But things are set to change as the region reaches a tipping point, with advertisers more driven by ROI and effectively seeking efficient spend—leading to an increase in interest in new technologies.
“Advertisers are becoming more concerned about ROI, and agencies are working across differing solutions and measurement technologies like viewability to ensure ROI is effective, measurable and leads to a desired result,” said Patel.
According to a recent study conducted by AppNexus, more than a third of advertising professionals in APAC admitted they knew very little, or nothing, about how programmatic works.
“Interestingly, the lack of knowledge about programmatic ran concurrently with a relatively high adoption of it, at 77 percent, suggesting that there is a ‘do first, understand later’ attitude,” said Patel.
Education still accounts for the bulk of the conversation in a region that’s seeing mobile come to the fore for programmatic adoption. The company’s research shows that for the majority of the advertising ecosystem in APAC using programmatic, mobile accounted for 90 percent of its use, compared with just 71 percent globally.
“Of course, across APAC some markets are more advanced in terms of adoption than others, and it is likely we will see Singapore as a hub for SEA and India and Japan lead in terms of desired participation,” said Patel.
For those who haven’t adopted programmatic, AppNexus sees a perceived issue of trust. One of the biggest issues, cited by 40 percent of respondents, was the lack of transparency on where ads end up being displayed. Almost half of local professionals fear their advertisements will appear on undesirable sites.
In addition only a quarter of advertiser respondents in APAC said that they are totally confident in knowing how effective their digital campaigns perform.
Mobile apps and uneven infrastructure
Patel shared that in terms of knowledge, the team is seeing large app developers move toward programmatic, as it offers a better ‘real-time’ advertising proposition for them, especially since mobile gaming is growing at a tremendous rate due to socialised gaming.
The speed of an unknown game rising to the top of the app stores has made it imperative for mobile app developers to want to spend more on social advertising. And when social advertising starts to become more expensive, they look to other ways to advertise in real-time in order to make the most traction with their audiences.
“Knowledge has naturally grown as a direct result across the market but it is still short of adoption versus the western markets,” she added.
In terms of infrastructure, Patel said certain markets limit opportunity. For example, China is still a distinct challenge due to lack of direct ad-servers in the market.
“Since programmatic has to be ‘real-time’ the latency aspect of ad-serving outside of China is making it difficult to penetrate in China,” she added. “Other markets have similar barriers due to latency, especially for video and various formats.”
One of the challenges, Patel shared, is that since quite a few publishers in region do not use IAB ad-standards, there has to be a level of education to encourage standardisation of advertising in order to be able to have large advertisers want to buy standard ad-sizes.
“Advertisers are unlikely to develop bespoke advertising creative for such publishers, unless of course native advertising is something publishers are driving for,” she said. “Native advertising is in the infancy stage of education in APAC.”
Header bidding to the rescue?
In February, the company launched PriceCheck, a new solution that extends header bidding from desktop to mobile apps.
It is a still-nascent technology for the region, with Naru Radhakrishnan, Millward Brown's chief client officer for Southeast Asia, calling header bidding a “natural evolution” that benefits publishers, as it is known to improve yield in a prior interview with Campaign Asia-Pacific.
Radhakrishnan noted that it would be interesting to see how header bidding plays out in Asia, which is largely driven by video and social.
Patel reports that the company has had publishers reach out regarding PriceCheck, as well as the on-ground team evangelising the solution to the market. The concept is relatively new in region, and publishers understand the value but still need some education on how it works in practice.
“This is not surprising, given the market has had to leapfrog many iterations of ad-tech products and features,” she said. “Once publishers understand the logic and the yield-management effect, they recognise the potential positive impact on their businesses. Often publishers have no idea why they need a solution like PriceCheck until they see how much money they have left on the table over the considerable years they have been in business.”
Patel said that conversations in Asia have changed significantly over the last 12 months due to changes in local players consolidating, publisher consortiums growing, data partners setting up in the region and large agencies connecting across differing tech solutions.
“We are seeing publishers starting to question what their own strategic longevity goals are and whether they need to address the growth of large social media networks and what that means for their business,” she said. “Content does not pay for itself, and advertising is necessary to prime that viral pump, but if users are not engaging fully on publisher websites, but going to social media, this creates pressure on publishers to think creatively and protect their data."
Patel said that publishers are interested in header bidding to protect yields. They are looking at data as their true ‘inventory’, not users only, and are considering audience extension and layering data beyond their own.
“We’ve seen interest from some local publishers that are looking at the international adtech landscape and realising they need to be ready for change,” she added.
Header bidding and mobile header bidding have been very popular with clients in India, Patel said, adding that AppNexus has also had some clients in Singapore enquire about its growth in yield.
“We have signed up quite a few clients in market, but India stands out as the market with the most demand for header bidding,” she added.
The elephant in the room with header bidding’s adoption is the fact that the technology is also seen as an inherent response to a domain dominated by Google and its DoubleClick for Publishers (DFP) platform. And AppNexus, with its proactive support for header bidding within its solutions portfolio, is naturally the most vocal in its defense of it.
“Fundamentally, header bidding is a way to stop one company, Google, from limiting publishers to its own, proprietary demand,” said Patel.
Proponents argue that header bidding allows publishers who use DFP to access all of their demand sources directly in a fair and transparent auction, to get the best price for their inventory.
“It’s been very disruptive to Google’s advertising business, as it threatens DoubleClick’s manufactured monopoly,” she said. “What it’s done is allow digital publishers to earn more money for their content, and other ad tech companies to bid directly for advertising inventory.”
Patel pointed out that while the technology has been around for quite some time, an increasing amount of publishers have adopted programmatic technology over the past few years, making the shortcomings of Google’s ad server clearer to the market.
“It’s only been more recently that the industry has realised that header bidding is good for everyone—except Google,” she said.
In a move widely seen as a pushback, Google announced in April that it is testing exchange bidding in dynamic allocation (EBDA), and is making First Look available to all of its clients.
Patel described the move as a “sure indication” that Google is losing its monopoly, calling it a “clear effort to stall publisher adoption of header bidding”. But neither product addresses the problem that header bidding is designed to solve, she added.
Patel argued that at first glance, First Look seems a lot like header bidding. But instead, it establishes a preferred auction with a price floor. While a useful innovation in some regards, First Look does not resolve the structural limitations of DFP.
“Publishers are still unable to access multiple demand channels directly, and they are still locked into the black box that is AdX,” Patel added. “In effect, First Look leaves you right back where you started.”
She also claimed that Google’s EBDA program raises more questions than it answers.
“First, can we be sure that EBDA allows publishers to work directly with their chosen demand partners, and that those partners can bring the full heft of their demand? Second, does EBDA enable us to be fully transparent and honest with publishers?” Patel argued. “Google hasn’t answered.”