PubMatic takes aim at supply side of Asia's programmatic challenge

PubMatic, a programmatic ad selling platform, has ambitious plans to expand in Asia-Pacific, and the recent visit of its young CEO, Rajeev Goel, to Singapore signals a starting point. Goel expects to grow the small team of 15 to about 25 by the end of the year, and plans to double that in 2015. He’s also keen to expand the ad platform, which currently operates in Singapore, Japan, Australia and India, to Malaysia, Indonesia, Korea and China.

Goel acknowledges that adoption of programmatic in Asia has been slow, but senses things are going to change dramatically in the next year.

How would you rate the adoption of programmatic in Asia?

I think generally it’s been a bit slow. Asia is a diverse set of markets. Naturally, Australia is the most mature, but penetration is quite low across Southeast Asia, Japan and China. It’s roughly 5 to 10 per cent versus the US, UK and Australia, where it is closer to 35. We think it’ll change substantially. Agencies are globally organised and they’ve seen the benefits of programmatic advertising and they want to take what they’re doing there and bring it here. I spent some time with Vivaki and Xaxis and they are staffed up significantly to cover APAC.

On the publisher side, programmatic advertising creates new revenue growth and profitability. Expectations from publishing companies from other parts of the world are coming here.

What about premium publishers?

I think what most publishers are starting with is a separate digital sales team from the traditional sales team. Even within digital sales, there will be a programmatic sub team. The knowledge transfer infusion has to happen where all digital sellers are programmatic sellers. This will happen when advertisers have programmatic and non-programmatic budgets. So we will probably see that type of wholesale sales integration perhaps two years from now.

What do you think is holding Asia back?

There are a couple of challenges. Geographically, it’s a fragmented space. There are many different countries with different media owners. It’s a broad set of markets to cover. In comparison, the US has 275 million people and it’s one homogenous market. Secondly, some of the markets are more concentrated than others. Japan, for instance, is vertically integrated with Hakuhodo and Dentsu as the key agencies, and as such, they tend to move slowly compared to a fragmented market.

How would you rate awareness among advertisers in the region?

The level of awareness among international advertisers like P&G and Unilever is quite high. As for local advertisers, it’s a little bit of a chicken-and-egg situation with the issue of supply being available and ad budgets. When I talk to trading desks, they tell me that there isn’t enough supply for us to buy and that’s one of the things we’re going to change.

Publishers face a similar issue. Global firms have high awareness and headquarters are pushing the agenda. Local publishers display significantly lower level of sophistication and knowledge.

What are you doing to grow it?

We’re going to do a number of things. We have a targeted interaction approach through which we bring in experts from the global team to meet with publishers. We also host coordinated education sessions with agency trading desks to inform them about how ad budgets are shifting. Finally, we hold an event series called Ad Revenue to help publishers learn how to maximize revenue. We’ve done this in Europe and the US and will be introducing the event in Australia, Tokyo and Singapore. The forum is as much about providing content for publishers as it is to talk about what works and what doesn’t.

Where do you plan to expand?

At present, we’re covering four areas. We’ll be spending time working on a China strategy. We have a number of global publishers who have significant Chinese inventory. So we’ll start by helping them monetise that traffic. We’re also figuring our strategy in Malaysia, Indonesia and Korea. We’ll have our strategy in place by the end of this year to make investments in 2015.

What challenges have you faced in this region?

I think the big challenge is around prioritisation and focus. There is a notion that APAC is one region when it’s actually a dozen. Geographically too, it’s a large and expansive region. Second, is around education, and one has to invest in each of these markets. The third challenge is around infrastructure. Data centers have to be in certain proximity to users, but because of how expansive Asia is, this means investing in several data centers.

What is the big opportunity to migrate brand dollars to programmatic?

Mobile and video. Mobile has shown huge growth in consumption of content. The second is video, but right now there’s a scarcity of premium video ad content in APAC.

How are PubMatic’s Private Marketplaces growing?

It’s growing rapidly. Many suppliers approach programmatic with Private Marketplace first and open-market RTB second. Private Marketplace is the way to go in some of these markets because there’s a relatively high degree of sell-through rate. For instance, Sporting News and ESPN in Australia have very high sell-through rates and we manage a private marketplace for them, facilitating transactions through a trading desk.