PubMatic's Rob Jonas discusses how APAC publishers can learn from the "mistakes" of Incumbent markets, and put the right strategies in place.

How are regional publishers building strategies around programmatic, and where is APAC at the moment in terms of development?

The APAC market has similar characteristics to the EMEA market, as it comprises a series of individual markets at different stages of evolution.

With the exception of Japan, today, overall RTB market sizes are modest, but the Asia Pacific region is expected to reach $5.2bn in spend by 2015, according to Brandscreen. In fact, Australia is PubMatic’s third largest territory by revenue since opening local offices in June of 2012. Irrelevant of maturity, more advanced publishers across the whole region are looking to technology providers to help them capture revenue from programmatic buying, whether it is simple yield optimisation or more sophisticated secondary premium market development through the use of audience data, pricing and packaging.

Recent announcements in the APAC region from agency trading desks such as Accuen, Xaxis and Cadreon highlight their focus on the region for programmatic and this is further fuelling plans and execution for local publishers. There’s been huge growth year-on-year, with advertising budgets reaching 250% through DSPs. All this will further focus the attention of publishers, as SSPs will increasingly come to new markets to secure the pent-up demand, ready to launch from global advertisers on local publishers.

In terms of strategic execution, regional publishers are looking to North America and Europe for best practice, whilst cautiously evaluating whether the international solutions providers have built products and services relevant for their markets.

Mobile provides a huge opportunity for the APAC region, with the total ecommerce spend world-wide rising 39.5%, according to IDC. The region’s many mobile-first markets are at an advantage compared to some European markets in adopting mobile programmatic.

From your vantage point, which markets are most evolved in the APAC region?

Having an increasingly global footprint allows us the opportunity to see first-hand what is happening across multiple markets, all of which are at various stages of evolution, with programmatic buying and selling. The Australian market is a relatively mature market, with an increasing emphasis on data management as a means to increase value from inventory in a typically inventory constrained market.

Southeast Asia and India are really emerging now as strong growth programmatic markets, with the larger premium publishers and media owners working with solution providers to solve specific monetisation or audience specific opportunities. Singapore is showing interest in the automation of direct sales, with an increasing adoption of Private Marketplaces (PMP). We’ve seen three times the number of DSPs integrated with PubMatic, growing from the initial InviteMedia, MediaMath and Turn, to partnering with NetMining, SocioMantic, Adnologies, MdotM and The Trade Desk.

However, Japan is the largest and most mature market, with an RTB market of $350m in 2013, according to IDC. During 2011, the Japanese market spend was slow in the making, yet last year we saw absolute spend overtake France and Germany, with a prediction to overtake the United Kingdom in 2014, as IDC revealed in their RTB report in 2012. This market is, however, very unique with horizontally-integrated DSPs and SSPs aligned with the major agency groups. In addition, the SSP solutions in Japan are more akin to super ad networks; they miss many of the sophisticated brand control features and audiences solutions typical in SSP platforms, such as PubMatic’s. We therefore expect the Japanese market to go through a second wave of growth as companies such as PubMatic launch in 2014.

Finally, we have China; which has the potential to be the largest market in the region and has developed with relatively small outside influence to date. IDC estimates that in China, RTB spending will reach $195m by 2014.

In short, Japan seems to be the largest and most mature market, but the products in this market are not as evolved as in, for example, Australia, where there has been a greater influence from global organisations, such as PubMatic.

At the recent ATS Singapore there was a sense that a lot of publishers are not ready for the jump to programmatic. Is this the case? How do publishers bridge the knowledge and tech gap?

Publishers require solutions tailored to their markets and they need technology providers to understand their business needs. The challenge in this case lies with the technology companies, not with the publisher. Platforms built for the North American or European markets may not be relevant to APAC-based publishers, without a deeper understanding of the publishers' business. Irrelevant of market however, publishers' challenges remain the same: how do I maximise the yield from my advertising assets; how do I increase operational efficiency in my sales and ad ops teams in an increasingly fragmented buying landscape; how do I capture a representative share of programmatic buying, and; how do I operate my advertising business in a global marketplace that operates on multiple platforms? Programmatic solutions such as PubMatic's can solve all of these problems, once publishers are open and transparent about the challenges they are trying to address.

How big is the opportunity around mobile, given the usage of mobile in the SE Asian region? Is mobile still at the nascent stage in the region?

Markets across Southeast Asia are still undeveloped within the world of technology and computer science. Yet, mobile phones have landed, and these ‘mobile first’ areas will drive APAC’s mobile expansion. The high consumption of social and gaming media on mobile devices in Southeast Asia creates environments that are not viewed as 'brand-safe' or addressable by brands and agencies, but the combination of audience targeting and real-time bidding unlocks the potential of this inventory pool and makes it palatable to a wider range of advertisers. Mobile capital expenditure in the Asia Pacific region was predicted to hit AU $53.3 billion by the end of 2012, with carriers in the region fast approaching those in North America and Europe, according to a report by ABI Research.

So, mobile is far from nascent, but programmatic mobile is still at as early a stage as it is in other markets around the world. The opportunity, however, is large; and programmatic may end up saving an otherwise lacklustre experience for advertisers on mobile devices. At PubMatic, we have been working closely with all the participants in the rapidly expanding mobile RTB marketplace and unlocked additional value through the use of data and technology. For example, working with Jumptap, we were able to increase eCPM on this inventory by 504% month-over-month, through appending additional data and targeting parameters. For publishers with increasing volumes of inventory on mobile platforms and historically low yields, this creates a viable business model for their continued growth.

How does a vendor like PubMatic adjust its strategy in a region that might have five to six distinctive markets? How does it work with such disparate groups of publishers, particularly in markets like Australia and Japan?

We treat these markets in the same way that we have adjusted our strategy in our other regions, by recognising the unique characteristics and building out our business to support them. We keep that human interaction in place to ensure we can mould our offering to suit the publisher. Key to this is local hiring and support, ensuring that we have in-time-zone teams to build and maintain relationships with our customers. Expanding globally as a company means we need to be able to customise our tools to all markets, and be confident in doing so. For example, in Australia we’ve reshaped our Unified Optimisation Engine product to work alongside performance-driven businesses for publishers. We educate ourselves on the market we’re landing in and shape our products to suit.

Also key to localisation is the presence of local data centres. We opened an APAC data centre in Singapore in November 2012 in order to maintain the same industry-leading response time for our publishers and demand partners. Our product itself is very modular and allows smaller publishers, in less mature markets, to use less complex components to manage yield or capture RTB spend, versus larger and more sophisticated publishers who are looking for the richness that our Unified Insights and Unified Optimisation products deliver. Finally, there is a good balance between global and local. Many of our publisher and demand partner relationships are global in nature, providing us with a business in new markets almost immediately on launch. This allows us to develop a foothold that is quickly augmented with local partnerships to provide a compelling offering to both sides of our business.

Do you think APAC is going to jump over RTB trading and straight into programmatic guaranteed? Have local publishers learned from the mistakes of European and US publishers in terms of how their first forays into programmatic should progress?

This is being driven by the agencies and their trading desks in a way that we have not experienced in the digital advertising market before. Advertisers recognise the value of real-time and audience-based buying and are driving their agencies to deploy their budgets through the agency trading desks. With brands and agencies very active, this is further driving programmatic guaranteed spend through private marketplaces and other mechanisms.

RTB trading and yield optimisation will have their place, but many APAC markets have only three to four ad networks and three to four RTB buyers, resulting in lower liquidity and a bigger role for programmatic guaranteed. The 'mistakes' of European and US publishers were to rush into using RTB to monetise their unsold inventory, as opposed to using RTB to create a secondary premium marketplace and increase value; and many technology vendors are guilty of creating these mistakes. The global market is very well connected now and these lessons are well understood and APAC publishers appear to be taking a more considered and holistic approach.

Given the complexities of the space, it feels local publishers will have to have a lot of service/education trying to figure out the new programmatic world. Does this mean that vendors in the region will have to be more service led?

There is a misconception that programmatic buying means the end of human intervention, or the 'rise of the machines'. At PubMatic we have found that it is critical to add a layer of services to all customer engagements to ensure that technology is deployed specific to a customer's needs. In many markets, some service providers have provided the pipes-and-plumbing and hoped that the publisher will deploy this to deliver the intended results. This is not always the case and can be a danger to the whole industry. If publishers in a specific market are not able to realise the potential of programmatic, it will be perceived as a failure. We can't see a point in the future where humans are not involved in the buying and selling of advertising inventory, but the profile of those will change from traders and order-takers, to analysts and engineers. As this change in skill sets takes effect, the potential for programmatic trading will accelerate, as will the returns.