APAC Programmatic to Go For Co-Ops & More Bidding Options

In this industry byliner, RTB House's Asia-Pacific managing director Jakub Ratajczak outlines three key trends that will see publishers band together and more bidding options emerge.

Programmatic was originally developed as a practical tool for selling leftover inventory, but it has evolved to become the primary driver in online ad spend for the biggest brands.

According to Magna, digital ad spend across Asia-Pacific increased 5.6% last year to reach USD$156bn (£112.6bn). And according to Zenith Programmatic Marketing Forecasts, the share of advertising bought programmatically for display advertising expenditure will increase to 67% worldwide in 2019. This represents a rise in value towards USD$84.9bn (£61.28bn). Asia-Pacific leads global ad spend growth and will grow up to 33.4% of the global figure by 2019.

Programmatic allows brands to have conversations with the right audience in the right context depending on the data they have about the customers. There are three trends playing out that shed light on why this is happening and how APAC marketers can leverage these highly targeted ads.

First, artificial intelligence (AI) is going mainstream. The competitive gap between companies that develop and foster AI in their digital platforms and those that have not will become more apparent. This will certainly appear in programmatic media buying. DSPs must bear this in mind, as 'traditional' machine learning soon becomes outclassed by smarter variants like deep learning. Self-learning algorithms gain information about optimal ad placements for DSPs. As they are inherently cost optimisers, programmatic ads also help save wasted ad spend.

Jakub Ratajczak, APAC MD, RTB House

AI has become the de facto standard in making sense of big data for many industries; and this could not be more relevant for e-commerce. Coca-Cola, for example, has revealed that they want to use AI bots to create music for ads, write scripts, post a spot on social media, and buy media. Amazon also trusts self-learning algorithms, using its patented algorithm-based 'anticipatory shipping' system to more precisely define customer purchase patterns and predict brand, price points, and products that will be bought. Based on that, it ships products to distribution centres before an order is even placed, revolutionising the e-commerce industry.

The development of self-learning algorithms can intelligently buy ads in a bidding system, processing billions of layers of data to make an optimal decision within seconds.

Publishers co-opting as ad partners

In 2018, we'll also be seeing important changes between publishers and advertising suppliers. Native ad blocking has been enabled in the Chrome browser since February and Google, as a member of Coalition for Better Ads, will begin to block annoying and intrusive ads. Blocking criteria will be strict.

Such initiatives will ensure higher quality ad placements for the advertiser, but the display industry will need to adapt. Ad companies will have to be selective and careful while presenting offers, as even a small failure to comply will result in the ad being blocked. Companies complying with the guidelines of Coalition for Better Ads – as pretty much of all of the biggest players in the market do – should not be concerned, but they should discuss the subject with publishers to avoid any misunderstandings.

We're also seeing initiatives in Asia-Pacific such as DELTA Publisher Alliance, which launched with three of Japan's leading publishers (Soccor King, J-CAST News, and AUTO SPORT) that offer a combined monthly reach of over 16 million unique users and 114 million page views.

Through new co-operatives, publishers will make their entire mobile, app, and desktop inventory available to advertisers, enabling participating publishers in the alliance to access demand from thousands of the world's leading advertisers.

Another important improvement is ads.txt, also known as 'Authorised Digital Sellers'. It is a project that aims to increase transparency in the programmatic advertising ecosystem. It is already used by top websites around the world and soon can be a standard tool everywhere.

It allows publishers to declare the companies authorised to sell their digital inventory. This trend of disclosure and transparency is important to digital consumers, so they can be sure they are seeing advertisements from secure and reliable sources. Advertising companies will certainly want to get on board as an official partner, or be left behind in the competitive ad space.

New bidding options arise

Back in 2016 and 2017, header bidding was all the rage. It rose in popularity due to its friendly solution for both advertisers and publishers alike, improving the monetisation of the ad surface and providing access to better inventory. However, its one key flaw was its slow page-load times.

This paved the way to server-side bidding (SSB). The pressure to increase the democratisation of access to ad space, and the efficiency of monetising the ad space by publishers, has resulted in a faster load solution. Establishing server-to-server solution speeds up page-load by hosting ads on a publisher's servers, instead of user browsers.

SSB, though, is demanding and requires a highly developed digital infrastructure, so it is not easy to maintain. Currently, only the biggest and most specialised publishers can apply it. SSPs like Amazon, Google, or App Nexus are already investing in the new technology.

Furthermore, SSB is developed to co-exist with header bidding, which we expect to remain the core programmatic technology.

So, where do we go from here? Programmatic e-commerce will continue to be a highly adaptable, always-developing technology, but we are in the midst of really important global digital trends that can reshape how we think about media ad buying.

Publishers, advertisers, and users alike will experience the impact of new programmatic technologies, new regulations, and new solutions this year.