‘Programmatic will be massive in APAC, but there are key areas that need focus’
Tom Simpson, Mediaquark, CEO, shares insights on some of the common mistakes made by international companies looking to successfully crack the diverse APAC region.
Singapore-based Simpson stresses the need for localisation (plus increased levels of education) in the APAC region ahead of the second annual ATS Singapore event on 7 July, 2014, where attendants from IPONWEB, Adap.tv and MediaMath (plus many others) share their perspectives on fusing global expertise with local market nuances.
The development of programmatic media buying from a $190m cottage industry to a $1.1bn global powerhouse over the last 2 years is primarily down to increased spend in US and European markets. Now, as in many other business verticals, APAC is catching the eye as an engine for future growth.
With a unique set of strategic challenges, APAC is a region that adds complexity to an obvious dynamism. Witness the pain experienced by so many Western tech companies in the initial ‘race to China’. While Facebook is still touting for business, Google got its fingers badly burned and retreated, as did many others.
So, what are the key challenges associated with digital in APAC? And how is programmatic helping to disrupt it?
Here are the key factors.
APAC is not a country
This is the first thing to get right. APAC is not a homogenous region, but a series of fragmented yet loosely inter-related markets.
The big advertising hubs such as Singapore and Hong Kong, see a large number of incoming global businesses, and at their best have a highly data driven and forward looking approach to digital marketing. In contrast, the rest of the region sees less education and investment, and presents a very different digital opportunity.
While Singapore and Hong Kong make a great base for operations, each country across APAC has a distinct culture and way of doing business, and it pays to get close to this. All markets globally are relationship driven, and local presence is generally just good manners, whether in Asia or elsewhere. Local markets represent huge untapped opportunities.
Education, education, education
Digital understanding across APAC is generally low. Programmatic is just taking off, with many global DSPs only officially opening offices this year. In China of course, local DSPs rule.
The distance between the super-smart RTB players and the rest is huge. In many markets, China included, the majority of digital display is still delivered as non-standard creative, on a cost-per-duration basis, aimed at the biggest local market site, and with little tracking or ad serving.
Industry education is the biggest opportunity for any business looking to drive digital or programmatic spend in APAC.
Lack of data
Many businesses do fantastic work with data in silos, but this hasn’t historically translated to the industry at large. This is changing fast and DMPs are now in high demand.
Third-party data and audience targeting can be hard to come by in APAC, due to privacy concerns and lack of understanding. Again, this is changing as technology and data providers respond to increased demand.
Getting data right presents a big opportunity for the next few years, and programmatic buying promises to help drive data marketing maturity.
File under ‘technical difficulties’
There are a range of technology issues that keep APAC markets interesting. Porting global tools to APAC can mean English only interfaces, and technology that cannot process local character sets.
Many markets have also not fully resolved content rights issues. This has meant a huge under-serviced demand for premium online video, and an undersupply of online video ad inventory in one of the largest global online video viewing markets.
As APAC becomes a more interesting revenue stream for global businesses, expect to see these issues quickly resolved.
Emerging ecommerce
Ecommerce is growing fast, and APAC is now the largest global market. Retail and travel verticals are seeing ever more business transacted online, and this will produce significant positive pressure to drive performance marketing and programmatic.
Consumer uptake of ecommerce is slowed in many markets by the low penetration of consumer banking facilities. Looking to solve online payment difficulties is a popular endeavour for regional startups right now. A watching brief.
Digital scale
Digital marketing itself hasn’t scaled in APAC yet, let alone programmatic, for many of the reasons outlined above. Spends are still small, with TV the dominant advertising media.
CPMs are low in exchanges and on the ground as a result of limited demand and competition, although we are seeing a growth in competitiveness across markets according to recent reports.
The talent gap
Even at limited levels of digital spend, there is a major shortage of genuine digital talent. Businesses looking to operate successfully in APAC have to either import people, or crack the education conundrum.
The future is programmatic
So what does this all mean for programmatic media?
Most importantly, there’s an opportunity for more disruption than we’ve seen elsewhere globally.
It’s interesting to see the clash of a very old world with a very new world, and programmatic media in APAC will be much more than simply an IO killer – it will bring creative standardisation, measurement discipline, data and digital scale. It will also be a key factor in the growth of ecommerce.
Programmatic will be massive in APAC, there is no doubt about it.
However there are two key areas that need focus to help drive this growth.
1. Educate
A focus on education is necessary from the entire industry, and this presents one of the most interesting opportunities of all.
As an industry, we love to keep things complicated. This can be useful in some cases, but in this case the opposite approach is needed.
We need to simplify programmatic.
There is nothing inherently complex about CRM with the reach of TV, and we must ensure that message gets across. This is a challenge that is globally relevant.
Which brings us to the second key factor.
2. Localise
Most programmatic spend in APAC is delivered from regional hubs into local markets.
For programmatic buying to scale, investment in people, education and technology at local market level will be crucial.
