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APAC Advertisers Stuck in Ad Network Model

While agencies may have moved on, some advertisers in Asia-Pacific have yet to transition from the ad network model and hold out-dated views about programmatic.

Matt Harty, Asia-Pacific senior vice president of The Trade Desk, explains in this Q&A with ExchangeWire that these advertisers believe programmatic deals with remnant inventory and avoid tapping this platform for their media buys. He adds that such misconceptions sometimes are linked to demands for antiquated models such as CPC.

Some ad tech vendors, too, look at things with tunnel vision, Harty observes, and elaborates on other challenges the region will likely face this year.

ExchangeWire: Dragged down by China, Asia-Pacific’s economic outlook is looking somewhat dismal. How do you think this will impact the region’s ad tech market?

Matt Harty: To date, China has been a closed market to most ad tech players. If anything, some conservative thinking about China could benefit global ad tech players. If a marketer’s appetite for risk-avoidance increases, we may see more demand for third-party monitoring and quality control products. This may open up new opportunities for non-China players.

If these pressures grow in 2016 and help bring China more in line with global standards, then a slowdown in China could be a boon for the global players.

And what should market players be focusing on amid this landscape?

If the market tightens in 2016, marketers will likely look towards efficiency and digital, historically, has been the winner when marketers want to increase media efficiency. So, I am bullish about digital and would continue to focus on areas around efficiency. The questions marketers may ask will centre on how they can achieve maximum on-target efficiency as well as how they can ensure their budget is spent on ads that are actually seen by their target audience. Addressing these questions will cover the gambit of ad tech vendors, including those that deal in viewability, fraud prevention, and third-party data provision.

Matt Harty

Matt Harty

If there is increased demand for these efficiency tools, then the importance of programmatic in digital will also increase.

Highlight your top three predictions for the Asia-Pacific ad tech industry this year, and what needs to happen for these three predictions to materialise.

First, direct (or what has traditionally been ‘Insertion Order’) business between publishers and ad buyers increasingly will be done by PMPs (private marketplaces). These allow for the utility of buying and selling to increase, as well as conditional buys.

For example, let’s say I want to target women in my campaigns. I can make a buy from a publisher that publishes female-focused content. That in itself does not exclude men, but a conditional buy based on a female third-party data segment can exclude men. With this strategy, I can achieve both on-target and environment aims for my buy. A marketer’s desire for certainty in terms targeting and growing requirements for efficiency will drive this change in buying.

Second, demand for third-party data will grow in 2016. It will open up in Southeast Asian markets, while some other Asia-Pacific markets may take a while longer to follow suit. Many publishers last year spent time in deep introspection and I believe a result of this inward reflection on their business models will lead them to monetise more than just their webpages.

More big Southeast Asian publishers will experiment with audience products in 2016 and programmatic will benefit greatly from these advances.

Third, cross-device will prove an enabler to Advanced TV. We may not see widespread Advanced TV availability in 2016, but we will see some movement. The first real TV irons are in the fire and the gateway to this will be marketers getting real experience with cross-device.

We live in an omnichannel world today. As marketers gain confidence and experience in planning holistically, the desire to add ‘real TV’, and not just largely user-generated online video, will grow voraciously.

These three predictions are highly intertwined. The Advanced TV market can be a series of PMPs, while PMP growth can be driven by the availability of third-party data. Efficiencies from cross-device can free up more budgets to buy data. There are a lot of moving parts.

Discuss the top two challenges the industry will face this year, and how these can be addressed.

Programmatic growth can be huge in 2016, but will there be people to manage the transitions that many marketers are trying to achieve? Can programmatic become a victim of its own success? I think we have already pulled many talented people from search into programmatic, and that pool is drying up. Many firms are looking at fresh grads and younger hires to build out the ranks, increase the pool of talent, and keep costs from spiralling. Hopefully the people coming out of school will think what we are doing is as cool as we think it is.

Walled gardens also can threaten the openness and the path to real omnichannel buying. Programmatic is about open marketplaces, big and small, being connected by a common standard. It is through this common standard that seamless buying can happen, true evaluation of the value or media can be made, and value between the buyer and seller can be achieved. Acceptance of walled gardens and behaviour that does not add to the openness of the market is dangerous. The only way to fight back is to limit buying behaviour to the lowest level possible with such vendors.

A year ago, you highlighted the lack of programmatic talent and expertise in Asia. Do you still feel the same today?

Yes, I still feel the same, but I also feel we have improved in 2015 and are starting to see a way through the problem. The first step was to ensure that core teams were established. A lot of progress was made in 2015. At The Trade Desk, we can now add dimensions to our core team and I imagine other firms are thinking similarly. We are still looking for senior hires, but we are looking for a lot more entry-level hires. More of our established people have moved into ‘player/coach’ roles alongside our new recruits. This way we grow the talent pool, plan for the future needs of our clients, and keep the costs realistic in a fast-growing space.

What are advertisers in Asia-Pacific still not getting right about programmatic?

There is still a group of advertisers that have not moved on from the ad network model. Their agencies may have already moved on, but convincing these clients remains a challenge. They perceive programmatic as remnant inventory and feel they should either avoid buying or make very low bids. These views and beliefs are clearly out-dated, but some clients need more time than others to catch up with changes.

This problem sometimes manifests as an advertiser demanding out-dated buying models like CPC. Over-emphasis on the importance of clicks and under-emphasise on more tangible models, like CPA, will remain for now, alhough thankfully, with fewer clients each year.

Also, some clients still resist implementing tags they need on their sites to ensure the success of their campaigns. Again, this will increasingly be limited to less savvy clients moving forward.

On the vendor side, I believe many companies still are thinking too narrowly and that are limited by channel or geography. I, personally, believe in a future where all advertising can be bought programmatically through one platform that is independent of any sell-side conflicts, and that can buy across all channels and all markets. I like to think that is the future we are pursuing ourselves at The Trade Desk.

What’s still lacking in the programmatic market today?

Education is still crucial. Transparency is another area for growth, as is standardisation in measurement. Transparency is the standout area for improvement and this needs to begin within the industry itself, not only between agency and client. For the market to have transparency, we need to have clearly separated buy and sell vendors. This removes the obvious conflicts, but also leads to the kind of real price discovery that will give both buyer and seller what they need from the transaction.

This also involves improving general practices and a new breed of modernised creative management tools that have PMPs and RTB can revolutionise advertising, offering holistic buying, and standardised measurement.

How does the trading desk model need to evolve to address these challenges?

In 2015, the agency trading desks made great strides in normalising and popularising the concept of programmatic and did an admirable job building knowledgeable teams. We look next to the opportunity to see them move upstream to educate their clientele, which can lead some clients to take a far more hands-on role with programmatic than usual in their media buying.

What’s your growth strategy for Asia-Pacific in 2016?

As The Trade Desk only works with agencies, our growth strategy is heavily intertwined with the rollout strategies of our agency clients. That said, the directions we are moving in seem to be towards adding depth and capability.

We are moving responsibilities to a larger number of people inside the business and increasing our functional depth within client service and trading, in particular. This idea carries into more depth of markets, too, and we will add more offices to follow our clients requirements for support. However, it’s not enough to open offices and add staff. We strive to add language and cultural capabilities as well as align our businesses, commercially and geographically, to be closer to our clients’ needs.

In 2016, we are going to double-down on our core values of agency focus, transparency, and omnichannel capability.