Rob Webster, Crimtan, chief product officer, discusses some of the challenges for Western companies looking to crack the potentially lucrative Asia Pacific RTB market, ahead of next week's ATS Singapore conference.
Stu Spiteri at Krux recently wrote a very good article, where, among many valuable points, he said that “Asia is not different. It is Asia”. While I completely agree with this sentiment, the majority of technology in our space comes from either the US or Europe ,and RTB experience has been gained in these markets so it is worth considering how it could be adapted to work for the Asia Pacific region.
As with most markets, Asia has a few hubs that act as centres of excellence and help service the area as a whole. These hubs are arguably led by Singapore for Western companies trying to get into Asia, but also include Hong Kong, Sydney and Melbourne.
Yet Western companies, for different reasons, are finding it much harder to start up in the huge market hubs of Tokyo and Shanghai. India is also largely untapped by the RTB world in terms of media, despite it housing many development hubs for such companies. This dynamic is hugely important in terms of how to approach the region as each hub brings its own unique opportunities and challenges.
Following on from the point about hubs is one about market maturity. In the ad exchange world, both Singapore and Sydney have matured incredibly quickly in the last 12 months, particularly on the demand side. Firms from around the world are flooding into the market at exactly the same time as local players are soaking up knowledge and skills. This is great news as it means these markets can avoid the baby steps that have been taken in many markets new to the RTB world.
It also leads to opportunities, as this maturity has developed alongside the emergence of mobile and video with RTB becoming more than just PC based as a result. However, it can also lead to problems as expectations on the demand side (which seems to have matured faster) can be ahead of what is available from supply.
Hopefully this inequality between demand and supply will be temporary as the increased demand should lead to turbo charged changes from publishers on supply. Indeed the supply side looks particularly interesting in Asia.
The Google ad exchange is growing quickly in all markets and, after a late start, Rubicon is beginning to make some headway. It will be interesting to see how these companies and others compare to local players as they develop in Asia.
Whether we are talking about the US, Europe or Asia, one interesting comparison between any markets is the relevant dominance of the top publishers. In general the top publishers, particularly in the US and the UK, have much less market dominance than their equivalents in Germany, France and the like.
This creates a very different environment for exchanges with publishers in Germany less willing to fully embrace RTB as it could erode their current market control. This same dynamic exists within Asia too with Australia and Japan having very strong publishers keen to control the market to a much greater degree than in Singapore, Hong Kong and many other territories.
This should not hinder growth, but does have a huge impact on the availability of inventory, market pricing and non-exchange based competition. Google and Facebook have significant power in the US and UK, and to a lesser extent in Australia, but currently wield less power in Singapore, Shanghai, Hong Kong and Tokyo, at least for the time being.
In addition to the market dynamics in the different territories, language, culture and politics can also impact the regions. It is factors such as these that already make the Chinese and Japanese markets (for different reasons) harder for Western companies to enter than Australia or Indonesia. It is important for firms – local or from the West - to ensure they navigate this challenge carefully, set up strong partnerships and hire carefully for each market.
Competitors to the Western hegemony in ad tech are now starting to emerge from China and Japan and will be joined by aspiring companies throughout the region (as we can see by SingTel’s Amobee). As the ad exchange market grows and huge innovation arrives from Asia in other areas of ecommerce we should expect to see more giants coming from this region in ad tech and strategy.
It will be fascinating to see if in a couple of years’ time we see the current charge of western companies to Asia reversed. A sneak peak of what might happen has already been seen in agency land with Dentsu’s move westward.
What is clear above all is how dynamic this space is going to be in the coming years, creating opportunities for many. I look forward to discussing this with as many of you as possible at ATS Singapore on the 7thJuly.
More details about the ATS Singapore event can be seen here.