The next chapter in advertising: Programmatic by Matthieu Vermeulen, Editor of AdAsia
Booking a hotel or flight online was revolutionary back in the days and has changed the business model of the traditional travel agency. A similar disruption is rippling through the advertising industry and it’s called programmatic.
What is programmatic?
Programmatic advertising – the automated buying and selling of ad space – is one of the most recent additions to digital marketing and advertising and has tremendous growth potential. Programmatic is the equivalent of booking flights or hotels online. In the ‘old’ world this would require the service of a media agency. Using programmatic advertising solutions, brands can run the process, the optimization and the placement by themselves. In the case of programmatic there is a supply and a demand side. By using data the programmatic solution providers claim to be able to serve ads more accurately.
Sujen Selva, Commercial Director, Asia, at SpotXchange, says that programmatic advertising grew by more than 200% in 2014 globally and this growth is set to continue in 2015. As they expect to see more revenue coming out of Asia, SpotXchange opened an office in Singapore in February this year.
And they are not the only ones in this space. A lot of start-ups have popped up in Singapore to cover Asia, adding to the fragmented technology landscape serving the adtech industry. Among them are PubMatic, AdReach and Eyeota. The ‘classic’ media buying agencies in the big advertising groups like WPP, Omnicom and Publicis also received the wake-up call.
Programmatic – problematic
Programmatic is gaining acceptance, specifically on the side of the global advertisers. Yet a lack of education holds back both buyers and sellers. Some fear that their ads will be served with little control over where they appear and who will see them, while actually the opposite is true. In Australia and Asia, the publishers have also not yet been forced towards programmatic as there are not many options, due to the lack of video inventory outside ‘traditional’ media. Programmatic also has its own terms and abbreviations, which can be a little overwhelming to deal with at first. This can be a barrier for both the solution providers as well as brands when starting a dialogue. To facilitate communication, SpotXchange has a list that explains programmatic ‘lingo’. At the same time, the advantages of programmatic, such as transparency, the sheer efficiency and the direct control it provides to advertisers is undeniable.
Selva says that the market in the region is a tale of two tribes. Some countries have not matured yet while others are further up the maturity curve. Singapore and Hong Kong have emerged as the most mature, while nations like the Philippines and China are considered new markets for video programmatic. Nuances exist across markets, like Japan, which is still very traditional. Other markets that are quickly emerging are Indonesia, Malaysia and Thailand.
The growth expectations for all markets are huge. He also says that smaller specialized players in the programmatic market benefit from the fact that the bigger media agencies do not have enough talent resource to deal with the advertisers demand.
On the Spot
SpotXchange itself is a programmatic platform built to help publishers maximize yield from video content, with technology that enables open and private marketplace, and programmatic direct deals. Last year the European entertainment group RTL bought a 65% stake in SpotXchange, providing the company with a sound financial foundation.
When asking Sujen about competition he says that with their focus on programmatic video advertising they have a pretty unique value proposition. Commenting on Facebook and Google, he said while they have obvious strengths in the amount of data they collect, publishers are apprehensive about giving over too much control over the monetisation of their owned-and-operated properties. Facebook’s LiveRail, is SpotXchange’s only true competitor in the region.
One of the challenges programmatic faces is tracking users across mobile devices since the lack of cookies on mobile complicates cross-platform advertising. “Only Facebook and Google can do this robustly at the moment”, he says. The industry is working to develop an alternative to cookie-based tracking, such as determinalistic and probabilistic targeting, to enable more precise targeting on mobile devices.
SpotXchange’s global expansion is now further substantiated with the opening of the Singapore office.
AdAsia wishes SpotXchange a bright future and solid growth in Asia.
Programmatic is an area that we will closely follow, so stay tuned for more updates. We’ll be back with feature articles about other players in this domain soon.