To emerge from the shadow of their US counterpart, ad tech players in Australia, and Asia-Pacific, need to come together and resolve fragmentations in the industry, urges Mediaocean CEO, Bill Wise, in this byliner.

The focus of the international business community is ever-changing; but it's a safe bet that soon it will fall firmly in the direction of Australia and the wider Asia-Pacific region. Emerging from its fourth mergers and acquisitions cycle in 20 years, the Australian market is garnering interest – and ad tech is no exception.

Mergers, such as WPP and STW, as well as Tremor's acquisition of TVN, recently hit the headlines and shifted the spotlight onto the potential of Asia-Pacific growth. As a result, forward-thinking businesses are starting to recognise the value of increasing their presence in this region and becoming a one-stop global solution for advertisers.

These market players, though, must constantly innovate to remain competitive in the fast-moving ad tech space. Achieving differentiation means continually finding new ways of helping advertisers and brands deliver their messages to highly targeted audiences, across multiple devices, and in any location.

So, why is global consolidation shaking up Australia's ad tech industry, and what makes its companies so attractive?

Bill Wise

Consolidation to emerge from US shadow

For local market players, the prospects of achieving in-country growth are limited. The greatest funding amount received by an Australian company so far, at USD$250m (£176m) for email marketing specialist, Campaign Monitor, had come from US investors.

Indeed, as tech authority and author, Paul X. McCarthy, recently commented, the online technology world has been "very US-centric", with the US "dominating [even] more than it did with legacy industries". According to McCarthy, Australia's tech is no less vibrant, but has hitherto remained in the shadow of the US.

However, opportunities in Asia-Pacific are increasing and, by 2019, the region is expected to overtake North America's ad spend by USD$1.35bn (£950m) to become the world's biggest ad market.

Although Australia's ad spend is rising at a steady rate of 33% year-on-year, its overall ad spend seems low compared to budgets across Asia-Pacific. It is, therefore, unsurprising that smaller companies are looking to merge with larger, complementary service providers to boost resources and revenue.

The Australian advertising industry is innovative and, amid fierce competition, local providers have developed a unique ability to identify and plug overlooked gaps in the market. For example, startups such as Unlockd, which are now part of Boost Mobile, identified and harnessed an opportunity to increase ad views by offering consumers cheaper phone bills. Here, at Mediaocean, we also recently acquired BCC AdSystems, which provides global workflow software that enables advertisers to plan, buy, and manage media.

Australia further serves as an international launchpad that helps businesses gain entry into new markets and to better serve their global clients. Yet, recent partnerships have highlighted several challenges confronting ad tech players in Australia and the wider region.

Key challenges facing region's ad tech players

In the fast-moving digital environment, advertisers are faced with myriad evolving considerations and, in Australia, accountability tops the list.

IAB Australia research, though, shows that despite concerns about brand safety and ad fraud, 50% of agencies are not using the relevant tech at their disposal to address these issues.

This is part of a wider problem across Asia-Pacific, where media-buying groups, and ad tech providers, are working separately in small, regional groups, rather than joining forces to create solutions with globally applicable capabilities. Consequently, larger companies dominate the market, while smaller companies are restricted by cost pressures and limited budgets.

IAB Australia has already begun to make headway in tackling challenges with its Ad Tech Advisory Council; which works to find solutions and set guidelines with the aim to improve efficiency and consistency in the industry.

However, to give ad tech players the opportunity to grow, greater collaboration between media buying groups and software providers is vital.

By coming together and investing in new systems that fulfil global digital advertising requirements, ad tech players in Australia, and Asia-Pacific, can attract the clients needed to enhance resources, achieve growth, and gain funds to invest in further development. There is no doubt that innovative companies in these economies are sparking the imaginations of businesses around the world, making mergers and acquisitions in the space an irresistible opportunity. Yet, to achieve their full potential, market players must first overcome challenges and work to unify the fragmented marketplace.

If media groups and tech providers can collaborate to improve the effectiveness and impact of ad campaigns, they will turn Australia and Asia-Pacific into an advertising powerhouse capable of taking over the globe.