There are signs that the data-driven ad market in APAC is gathering momentum. With a number of US vendors now entering the market, and local APAC solutions getting new funding and traction throughout the region, APAC is likely to have a big growth spurt in 2013. Pubmatic, another significant player in the space, announced its move into the region with the launch of its newest data centre in Singapore, which will provide the platform to service growing business in the South East Asia and Australia. ExchangeWire caught up with Paul Shepherd, Country Manager, Australia to discuss the recent expansion.

How have you seen the Australian market develop over the last 12 months?

From a display point of view, the Australian market has been quite robust. The IAB reported that growth in FY11/12 was 15%, and to all accounts the market is continuing to grow at a similar number. I think the winners of the last 12 months have been Google, Facebook and the Category specialists like carsales.com.au and realestate.com.

Data and audience conversations continue to dominate the agenda from the advertiser point of view, and publishers who have been able to deliver against these objectives have also experienced great growth and a lot of these impressions have been delivered by programmatic buying. Mobile has seen strong growth in 2012 with a 36% quarter-on-quarter growth and there is a big opportunity for mobile in the APAC region.

The programmatic industry has seen exponential growth. Standard Media Index (SMI), an independent source of advertising expenditure data, in June 2011 reported DSP spend to be $500,000 AUD and in June 2012, this number was over $3,000,000 AUD.

PubMatic are seeing increasing shares of media budgets allocated to agency trading desks, where I have been told the advertisers are seeing a fivefold improvement in campaign metrics. As a result, ad networks that have performed well over the last three years are finding it challenging but are still doing well, especially when they can demonstrate that they are adding extra value to the advertiser.

On the publisher side, we are seeing great returns from a yield point of view and this is being driven by RTB. The question I think a lot of publishers are asking themselves is, "Can I use automation, and the tools that automation promise, to drive higher yields by holistically looking at each impression on its own merit and matching the right advertiser to those impressions?"

In short, yes they can. Technology like PubMatic’s Strategic Selling Platform, enable publishers in the APAC region to evaluate direct-sold campaigns, as well as the available opportunity at that moment in the non-guaranteed open market, helping them to evaluate the demand that brings the most revenue to their bottom line. Publishers can literally optimise each impression for the highest value, through Private MarketPlaces or through their direct-sold teams.

With the make-up of the market in Australia being heavily focused on a small selection of dominant publishers, how does that affect the strategy around programmatic monetisation versus markets such as the UK where it is clearly more of a buyer's market?

For some publishers, Australia is like the UK. It can be a buyer's market, especially if you don’t have scale in a key vertical, a strategy around packaging your inventory, or you are not developing new integration and sponsorship ideas to win the hearts and minds of your advertisers.

Over the last five years some of the larger publishers have underpinned their revenues by developing internal performance teams to service the ever growing needs from the audience and direct response advertisers, and to also counter the ad network model.

As ATDs have come online, I think some of these same publishers are still working on what their next step should be. “Do I package inventory in a wider agency trading agreement (e.g. do PMPs or do I develop the power of the data I have as a publisher and build an even stronger internal business e.g. Audience Extension)?”

Personally, I think they will adopt a hybrid of the two. Because of this internal questioning, Google AdX has been able to meet supply and drive great returns away from the premium publishers to the longtail. Over the last six months, mid-tier premium publishers have been testing the waters and seeing great results and are now formalising their programmatic strategies to seek a competitive advantage in 2013.

Now we are seeing the buy-side ask themselves, “Is my customer’s campaign being enhanced when I serve against premium sites versus the longtail from Google?” I think we know the answer is yes, so moving into 2013 this will give these larger publishers the opportunity to come online and also will give some power back to the midsize premium publisher, which is very important for the overall ecosystem.

What developments are being seen across Southeast Asia? How are publishers in these markets reacting differently? What similar themes are emerging?

PubMatic would say Southeast Asia is where Australia was at the start of 2012 - looking and planning the next steps. Personally, I think H2 2013 will be the time where programmatic trading takes off in Southeast Asia. The advantage Southeast Asia has is they can learn from other mature markets and be more advanced with their strategies; and this is where PubMatic is excited about taking a leadership role.

Over the last six months you can see key vendors starting to ramp up their operations, PubMatic have just invested in a data centre in Singapore to handle the expected demand, Turn have just opened up in Hong Kong, Julian Tol CEO of Brandscreen has relocated to Singapore to drive business in the region and trading desks like Cadreon, Accuen and Xaxis are all building up their Singapore teams.

I believe programmatic buyer adoption, once it ramps up, will grow faster than any other market we have seen. We know Southeast Asian advertisers want to reach the right audience, and it is proven that programmatic trading can deliver this. Publishers in this region need to bear this in mind to understand the value of their inventory, especially once they package this inventory with publisher owned and third-party data.

Is the focus on RTB in Southeast Asia? Or is there more focus on programmatic premium monetisation?

I think, like other markets, it will start with RTB-based indirect sales and move very quickly to the sale of premium inventory through RTB. Publishers are currently wary of implementing RTB systems when selling premium inventory out of fear of devaluation through lack of price control. However, there are many ways publishers will be able to retain control and empower themselves with little effort.

We anticipate Private Marketplaces (PMPs) will be a key consideration, and we’re seeing some early adoption as we move into the market. PMP is an ideal environment for publishers in Southeast Asia to safely negotiate premium access directly with agencies, providing more transparency, operational effectiveness and more control over price and their brand.

Technology is empowering publishers around the world to price and sell their inventory with more insight, and in turn the buy side is seeing better returns on this inventory. The future for publishers is to let technology look at each impression with tailored rules set by each publisher, and in real time make the right call on what advertisers should be served. This automation takes our conversations away from remnant to overall monetisation of a publisher’s digital assets.

How does PubMatic navigate the diversities of each Southeast Asian market? How do you scale business cost effectively across the region in light of this?

PubMatic is a business that looks at each market on its merits. On entering markets we do our research, we hire local people who know and understand the market or partner where it makes sense. We are committed to helping publishers realise the full potential of their digital assets. We don’t simply splash, hire and retreat out of markets if it’s not going our way after six months.

As yields in these markets are lower than more traditional markets, we look at more advanced ways publishers can increase yield and to your question earlier around premium monetisation, this becomes our lead story not the afterthought.