The recently released Quarterly Mobile Index (Q2) 2017 report from Pubmatic had some mixed news for publishers in Asia-Pacific region:
- Leading YoY growth in monetized mobile web, header bidding impression volume grew the most in APAC.
- Lowest mobile web (display) eCPMs of all regions despite 48% uplift YoY.
- Massive drop in the share of monetized mobile app impressions (down to 6% from 12% the year before).
- Only 3% of all (global) mobile video impressions came from APAC.
Now, all of that may be true. But it’s one platform, and there’s a whole lot more to the state of ad tech in a region as diverse as APAC that’s worth a look.
1. Ad Spend in APAC is Through the Roof
Zenith’s Advertising Expenditure Forecasts states that between 2016 and 2019, advertising expenditure in Asia Pacific will grow by USD 30B.
Put that in context: APAC will be contributing nearly 50% more ad dollars than…
- North America, which will grow by USD 20B.
- Western Europe, which will grow by USD 11B,
- Central & Eastern Europe, which will account for USD 4B, and
- Latin America, which will grow by USD 3B.
Now, despite taking in the largest share of ad spend, Zenith predicts that the APAC ad market will still be smaller than that in North America, although the gap between the two is narrowing rapidly. In fact, by 2019, for the first time ever, APAC will account for more than a third of the global total ad spend (34.3%).
How much of that ad spend is for digital? According to Ad Spending in SouthEast Asia report (IAB Singapore and eMarketer, Feb 2017), across eight APAC markets:
Digital ad spending in individual countries varies considerably, with more advanced economies adopting digital at a quicker pace. Nonetheless, all six countries will see double-digit gains in digital ad spending in 2017. Increased demand for mobile, video and social media advertising will drive this growth.
The keyword here is Mobile. It occurs a lot in this post.
2. Programmatic is Prospering, Despite Challenges
There’s a lot of diversity; each individual APAC market has its own set of trends and challenges. Shubha Krishnan, director of business development at Innity, gave an inside look at some of the individual markets in an interview with eMarketer:
- Thailand and Indonesia
These are larger markets with a higher level of programmatic maturity, especially for mobile. Krishnan says, “There is enough inventory from local publishers for sellers and buyers to develop their own ecosystem. These markets also have greater potential volume of impressions, and they automatically lend themselves to PMPs just because they have the necessary scale.” However, the same markets also see higher instances of ad blocking thanks to poorly mobile-optimized websites.
Strong publishers in each of the three different languages (Malay, Chinese, and English) make the market more fragmented, says Krishnan. “It doesn’t have the scale for driving much ad spending. Generally, there are a lot more PMPs being tested out, but it’s in very early stages.”
Smaller market with few key publishers who favour direct relationships. Krishnan says, “The region is high in terms of ad spend, but handicapped in terms of scale.”
Plays by its own rules. Great competition among buyers for inventory from local publishers.
Despite disparities, there are some trends and challenges that are common across the region. Hiring the right talent and educating the clients on programmatic, as per multiple agency and tech company executives, are few of them.
According to Krishnan, the biggest ad-spenders in the region are global FMCG brands. “The strongest advertisers are mostly global, and they get inventory mostly from gaming and other non-local publishers,” she says.
APAC, as a whole, is seeing programmatic prosper when it comes to:
> Programmatic Direct Adoption
APAC led the charge in adopting programmatic direct deals (also known as automated guaranteed and more).
According to AdX data (from Jan 2015 to Dec 2016), the number of impressions delivered through Programmatic Direct deals in APAC grew more than 65% YoY in 2016, putting the region ahead of the Americas, where the number was a little over 50%.
APAC saw 29X more Programmatic Direct video impressions than 2015, more than 45% of which were on mobile.
According to a Think with Google blog post:
The top five countries in the world with the fastest-growing Programmatic Direct adoption rates are in APAC, namely, Indonesia, South Korea, Malaysia, Taiwan, and India.
Indonesia had the highest Programmatic Direct growth rate among APAC countries in 2016 at over 6X, followed by both South Korea and Hong Kong, each at over 3X. And Japan ran the most Programmatic Direct impressions in 2016, followed by China and Australia.
> Visible Shift from Desktop to Mobile Video
Programmatic video is the hottest inventory all over the world right now. In APAC, the focus is on mobile, and both AOL and Pubmatic will back that up with numbers from their sell-side platforms.
What’s interesting is the visible migration from desktop to mobile video in APAC. Adobe Digital Insights’ (ADI) Asia-Pacific report found that for equal growth in the number of desktop and mobile video impressions (7%), the difference in YoY CPMs is startling. Desktop video CPMs plummeted 13%, while mobile video prices saw a 36% uplift.
3. Mobile Adblock is the Biggest Threat
In order to truly understand the impact of mobile ad-blocking in APAC, it’s necessary to first understand the sheer number of mobile and mobile-only users in the region.
According to Global Web Index’ Trends 2017 report, India tops the charts in online population growth, leaving behind Europe and America on the latter account. And that’s just one (considerably large) APAC market. Five out of top ten fastest growing online populations are in APAC.
Now size up the mobile-only audience in the region. According to the same GWI report, in countries like Malaysia and Thailand, 1 in 3 internet users are mobile-only. Here’s how that population compares with the rest of the world:
When you put those numbers next to APAC’s exorbitant data charges (and the general state of economy across the region), you’d see that APAC consumers have an additional incentive to install adblock: To reduce the data drain from advertising on the internet.
UC Browser was number one mobile browser in early 2016 in China and India. As of now, most of the top countries (with highest mobile adblock penetration) are in APAC:
More worrying is the potential of this trend moving to western countries if the consumers are forced to battle intrusive ad experiences on mobile. Data has consistently shown that consumers in fast-growth markets like APAC spend the longest amount of time on mobile and set the global trends in adopting new mobile services or behaviors.
4. Similar Consumer Behavior
Compared to the US, APAC consumers have:
- Slightly lower video ad completion rates: 4% and 9% fewer video ads were completed on mobile and desktop, respectively.
- Similar discontent with marketers over ad relevance: Funnily enough, advertisers in both regions believe they are doing well (as compared to two years ago) in terms of delivering relevant ads. Consumers in both regions disagree.
- Similar preference for personalized ad experiences: 65% of 18-34-year-olds prefer ads based on their interests. A third of the same demographic (in both regions) believe it’s not done well enough. But then again,
- Similar concerns over privacy: Less than half of the consumers are comfortable exchanging personal data to enable personalization, although the concern is more pronounced in the US than APAC.
- Slightly higher loyalty for favorite sites: 8 out of 10 APAC customers return to their favorite sites. 7 out of 10 US customers do.
- Slightly higher drop-off among non-customers: 75% of APAC visitors do not return to an abandoned cart. 70% of US visitors do.
APAC marketers are of a slightly different mindset too. The top concern among marketers in APAC is measuring the return on ad spend (ROAS), unlike in the US, where brand-safety and viewability conversations are under spotlight across ad tech industry.
The very same survey also shows the worst kept secret in ad tech industry: the fact that brand marketers are more into measurement than their agency, tech, or sell-side partners.
That’s not to say marketers here are not concerned about brand-safety. According to Krishnan:
If you’re not talking about ad verification then you’ll probably lose your job, on the buy side at least. Irrespective of the seller or the environment—programmatic, ad network or traditional insertion order—some amount of verification, be it in terms of brand safety, fraud or viewability, is going to happen. That’s an eventuality that nobody is going to be able to get away from.
APAC, as a region (with the exception of Thailand and Vietnam), does no better or worse on viewability front than the global standard for desktop display (according to IAB Singapore’s viewability report). But when it comes to brand-safety, there are different risks, again stemming from regional diversity. As per Krishnan:
With brand safety, some players are not [knowledgeable] in non-English languages. So they’re unable to do alerting or blocking for content in Chinese or Thai. Those hurdles still remain. On the mobile web, some third-party trackers have very limited capability to keep up with feedback across the ad serving environment. There are things they’re unable to track. So there are a lot of execution pain points that need to be overcome.