Vicky Lyon, SpotXchange’s Managing Director Asia Pac discusses their recent launch and about wanting to become the go-to video ad marketplace in Australia and the APAC region.

Lyon gives an overview on Australia’s current market size and how APAC, being the most connected region in the world, means online video advertising will continue to soar and key growth drivers will be the expansion of 3G networks making mobile TV and mobile video services a reality.

Could you give an overview of SpotXchange and its offering and growth strategy for Australia and the wider APAC region?

SpotXchange is a one-stop shop for advertisers, ad networks, DSPs and trading desks, offering a simple and powerful marketplace of high quality video ad inventory that performs.

And, using SpotXchange's auction-based platform, publishers can maximise the value of their inventory by connecting with advertisers in a real-time bidding environment without sacrificing control.

SpotXchange has been offering its video advertising technology and services to the Australian market from the US since 2009.  We’ve seen increasingly rapid growth in the region, and so felt the need to build up a physical presence so as to provide a support structure to service the needs of local advertisers and publishers.

What is your role and remit for SpotXchange? 

As Managing Director of SpotXchange’s Australian office, my job is to drive adoption of our real-time exchange platform by agencies, ad networks, DSPs and publishers within Australia and the Asia Pacific region.  Our aim is to build a robust network and team that will service the markets’ needs for video inventory.

We want to be the go-to video ad marketplace for advertisers looking to increase the reach and effectiveness of their online video campaigns using superior optimisation technology and targeting capabilities, also allowing them the choice of a buying model that suits their needs. 

For publishers we offer a platform to secure premium video inventory to offer to brand advertisers, whether they choose to use our public exchange for video advertising, or create their own private exchange that includes their select advertisers for maximum control.

Why is SpotXchange choosing now to move into Australia and the APAC region?

According to comScore, an internet marketing research company, 4 out of 5 web users in the Asia Pacific region are viewing online video each month, so online viewing has become an essential part of the digital consumer experience here.

With online video really exploding in uptake this past year in Australia, marketers are starting to sit up and take note of its effectiveness as a brand tool, and video advertising is starting to become an essential part of their online media strategy.  For example, Australia's index value according to Nielsen is 86 to 90 for the US on the index of global video usage by market.   Approximately 77% of Australians consumed online video content on their computers in October 2010 and $8.4 million was spent on video advertising in Q3 of 2010.

SpotXchange is one of the most experienced video ad marketplaces in the business, and because we are seeing huge growth in the region, we believe that we’re uniquely qualified to support the region’s growth.  

How big is the online video inventory pool in Australia and APAC? How does it compare to the US and UK markets?

ComScore VideoMetrix - July 2011

Australia                             

Total Internet Audience = 11,149,000

SpotXchange reaches more than 20% of the total internet population (unique viewers)

Total videos = 1.2 billion              (1,207,282,000)

United States                    Total Internet Audience = 184,873,000

SpotXchange reaches 21% of the total internet population (unique viewers)

Total videos =  43 billion              (42,994,076,000)

United Kingdom              Total Internet Audience = 33,876,000

SpotXchange reaches 21% of the total internet population (unique viewers)

Total videos = 6.2 billion              (6,244,454,000)

What growth potential does the APAC region have compared to say US and UK markets?  What will be the key growth drivers?

There is still huge potential as it has become the most connected region (in terms of subscriber numbers) with more than 200 million fixed broadband subscribers and over 840 million Internet users in 2010 (and potential for further growth).

Key growth drivers here are speed of mobile networks (3G networks offer the speed and performance that is necessary to make mobile TV and mobile video services a reality.   Another growth factor is the fact that all advertisers, no matter the region, are beginning to add more and more digital advertising, including video, to their marketing mix, and the shift from TV to online continues at a decent clip.           

What challenges do you expect SpotXchange to face moving into such a diverse marketplace in terms of geographical size, culture, language and market dynamics?

Each market in APAC is different in terms of its adoption rate, market size and relative growth of online video, not to mention the other factors mentioned like language, culture and regulatory barriers. Accessing these markets correctly and finding the best partners in each area will be instrumental in our Asia Pacific strategy.  

What learnings will SpotXchange bring from the US and UK markets?      

With the US and UK being larger online video markets, there are plenty of lessons to learn.  Real-time bidding for video, for example, is really beginning to take off in the US market in particular, and the Asia Pacific market might be able to adopt the model quicker by paying attention to the barriers to entry and lessons learned.   Companies can educate themselves about what has and hasn’t worked with RTB, and jump right over those hurdles from the start as the RTB auction for video is adopted.   

Another example is audience buying.  More advertisers in the US and UK are buying video advertising inventory using third and first party data.  And publishers can demonstrate the value of their audiences to these advertisers.  As a result, publishers are able to bring more of their inventory into the marketplace.  Consumers continue to have a huge appetite to watch video online, and the number of viewers, amount of video viewed and the time spent viewing is increasing.  Tapping into this growing market with a focus on audience targeting and performance is the smart way to meet your online video ad campaigns.

Does Spotxchange offer real time bidding (RTB) on all video inventory?  What formats does your RTB offering support?        

Yes, all inventory is available within SpotXchange’s marketplace is enabled for real-time bidding.  SpotMarket RTB supports linear, in-stream video ads. 

What is ‘Otto’ and what benefit does it offer your buyers on the exchange?

Otto™ is machine learning auto-optimisation technology for video advertising, an industry first. Building on SpotXchange's advanced audience targeting capabilities, Otto automatically optimizes campaigns to achieve the best performance possible at scale. It is able to improve campaign results immediately, without the delays and limitations of human evaluation, and continues to get smarter over time. 

Otto automatically steers video ad campaigns to the right audience.  Otto recently improved a US-based online travel client’s click-through rate 175% and lowered the cost-per-click on their video ad campaign by 40%.  

Will your strategy be agency or client direct?          

SpotXchange works with both ad agencies and directly with clients.   We also work with publishers to help them monetise their sites and earn the highest CPMs possible. 

What role do you see agencies, publishers, ad networks and advertisers playing in growing online video local inventory pool?        

Much of it comes down to market education.  All online video players need to become better at educating the market about online video best practices.  We have to let the market know what is acceptable, what works, and which lessons were the most valuable to learn.  We also have to focus on truly protecting brands online, and continue to verify and ensure quality for advertisers and publishers alike.  We need to continue to push for standardization in online video to increase adoption rates.  And we have to figure out the most effective ways to reach and engage every audience.  By understanding those two things, publishers should be able to get more commercial video content online and advertisers will be prepared to spend more money if there is a global standard of understanding. 

With the APAC region claiming some of the highest mobile usage globally - what role is mobile playing in SpotXchange’s strategy?

There are 5.3 billion mobile subscribers, which is 77% of the world population.  Growth is led by China and India.  Mobile video, and therefore mobile video advertising, are set to soar over the next few years in Asia Pacific.

SpotXchange is poised to handle the growth in demand for mobile video advertising, no matter the region.   While it’s still early days for mobile video advertising, SpotXchange is seeing increasing demand each month.

Hit predictions for online video in Australia and APAC over the next year?

We believe that one of the next big things for advertiser-publisher relationships is the private exchange for online video.  The Asia Pacific region will start to see a much bigger move toward audience-based buying and programmatic buying via agency trading desks and DSPs.   And we’ll all start to read more about real-time bidding and private exchanges for online video in general. 

At the moment, however, publishers' ad trafficking technologies can't accommodate this new way of buying.  And, some publishers take the view that programmatic buying leads to loss of control and lower CPMs.

Thankfully, publishers have total control in a private exchange.  SpotXchange offers a private exchange solution that enables publishers to segment a portion of their online inventory and make it available for auction to these agency trading desks and DSPs.  In that exchange, publishers can authorise very specific advertisers to compete for this inventory, set their minimum prices and therefore control what it would cost to access this inventory.  That way, publishers provide advertisers with a good blend of premium audience and premium brand.

So the SpotXchange private exchange solution provides publishers with the control they need while maximizing the value of each ad impression.  This helps publishers connect to their preferred advertisers that want to buy in a programmatic way.  SpotXchange is one of the few companies in online video with the infrastructure, experience and real-time bidding capability needed to set up a private exchange.

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