There is no argument that the potential of programmatic video in Asia Pacific is huge. According to a report by Media Partners Asia, digital ad spend in the region will grow from US$13 billion in 2016 to US$35 billion by 2021.
Despite the region consisting some of the largest programmatic markets—China and Japan—programmatic penetration stands at just 17 percent of overall digital ad spend according to a study by Magna Global Intelligence. The number is expected to double to 35 percent by 2019 but will remain below the global average of 55 percent.
The truth is that Asia-Pacific is a unique market space. Consumer preference for digital content consumption varies across the region and it has been one of the major challenges for the growth of programmatic video.
Let’s take a closer look at four factors that are impacting programmatic development in Asia-Pacific:
1. Consumption habits
Consumer consumption of video content will have a major impact on programmatic growth. Many territories in Asia are often mobile-first, and consumers are more likely to connect to the digital world through their smartphones, instead of PCs. This trend is unique to the region and dictates how consumers interact with online videos.
In our recent Q1 Global Video Index report, we saw that for advertising video-on-demand (AVOD) content, 66 percent of consumers were viewing short-form content on their mobile devices. These videos, which are typically less than five minutes long, are indicative of the short attention spans people have when viewing videos on mobile.
This means creative ad approaches such as personalised ads served to viewers are necessary to grab the attention of these mobile-savvy consumers. Such new approaches demand the data targeting that programmatic technology offers.
2. Digital access
Another factor is the vastly different support infrastructure found across the APAC region. Mature markets such as Singapore, have well developed broadband networks to propel consumers away from traditional TV experiences into the digital video space.
WeAreSocial reported that internet penetration in the city-state stands at an impressive 82 percent. In contrast, only 36 percent of Indonesia’s population is connected to the web.
The infrastructure across different markets is largely beyond our control but it does ultimately translate to different rates of growth across Asia Pacific. This means that we have to understand what are the different factors fuelling the growth.
In this region’s emerging markets, increased connectivity and access to digital content will be a large driver for advancements in programmatic video ad spends. The conversation that we need to have with brands is how to drive such content before talking about monetizing it.
On the other hand, for programmatic to grow in the more developed markets, marketers will have to look beyond growth in connectivity and lead the push themselves. With the market potential already established in these countries, the conversation would then evolve to which monetization model works best for their region and how programmatic can drive not only better content but also more revenue for the brand.
3. Understanding of programmatic
Driving the adoption of programmatic in Asia is a considerable task to undertake. Marketers are more aware of the importance of digital advertising, but many of them are still sticking to formats they are accustomed to. In the case of digital this means banners, pop-ups, and even videos blasted across platforms through direct ad sales.
As the understanding of programmatic grows, there will be a paradigm shift from “views and impressions served” to more indicative metrics, such as conversion rates. Consequentially, we can expect the industry to move towards delivering higher-quality video ad experiences for consumers―enabled by programmatic methods.
4. TV and video ad market convergence
Convergence of the TV and online video market is another factor that will drive programmatic video expansion over the next few years. This convergence will be particularly true in the most advanced markets in the region.
The need to effectively track and measure audiences moving to digital platforms has ignited the demand for data-driven approaches. Addressable TV ad delivery with its more precise data targeting capabilities will also continue to trigger programmatic video advances and integration in the region.
Highlighting the greater integration between markets, Nielsen recently announced its new metrics, capable of tracking viewers across multiple platforms and thus allowing them to include digital views in ratings. The new measurements will allow for greater cross-platform targeting of video content.
Ad buyers are demanding the same guaranteed volume in digital that they receive in the linear world, and sellers want the control and flexibility to maximize their revenue opportunities across channels. All of this foretells greater integration between linear TV and digital video transactions, with more programmatic gains to come.
Many other factors will influence the future growth of programmatic video in the Asia Pacific and beyond. One thing is certain—programmatic video is the future.
Companies with vested interests in this space should keep their eyes on regulations, technological advances, and consumption trends to stay ahead of the curve.
Think about new ways to improve the viewer ad experience and optimize programmatic and data-driven advertising through fresh creative approaches. And, expect to see all markets continue to move towards the more holistic transactional capabilities that programmatic technology supplies and demands.
Vicki Lyon is director of AdTech, Asia Pacific and Japan, at Ooyala