Q&A with Mikko Kotila, Statsit CEO on display ad tech trends.
RTB, programmatic buying, and trading desks are likely some of the lingo you'll hear in display ad tech. The industry is currently estimated to be worth $2 billion globally.
However, even display ad tech players would admit that the current landscape is complex and confusing.
More so in the diverse Asia Pacific region, with most of the action unfolding in Australia, China, Japan, and Singapore.
ClickZ speaks to Mikko Kotila, CEO and founder at Statsit, a display media trading house, to explain how he would describe programmatic buying to marketers and why Asia, which had a relatively late start to RTB compared to the U.S. might actually work to the region's advantage.
Excerpts of the interview below:
ClickZ: How would you explain the ad tech ecosystem to a brand marketer without being too confusing or oversimplifying the landscape?
Mikko Kotila: When somebody asks me what we do, I tell them that we create soap selling efficiencies.
From the advertiser's standpoint the important things are a larger reach, better targeting, lower cost of media, fewer commissions, and more measurability.
It's hard to do programmatic in a way that doesn't lead to better ROI. Fundamentally speaking ad tech is about bringing order and efficiency in to a poorly functioning market place.
CZ: Do you think display ad tech is similar to Wall Street?
MK: There are some similarities, most importantly the idea of electronic trading. We both have exchanges that facilitate matching of buyers and sellers together in real-time transactions.
Our asset is very different though. It's perishable - i.e., if an impression is not sold when the target is loading the page, then the asset can no longer be sold. Also we lack price parity.
We can learn a lot from Wall Street though - mostly on how not to do things.
For the money market algo-traders the past decade has been a brutal race-to-the-bottom. I'm afraid we will follow the same way.
First, it will be about massive infrastructure investment and data hoarding. Next, we'll find a way on how to take the margins as close to zero as possible.
Then we'll all look at each other and say "we could have avoided all this by learning from Wall Street." Unfortunately, at that stage it's very hard to change evil ways.
CZ: The industry often refers to Terence Kawaja's Display Lumascape when explaining the ad tech ecosystem. The IAB (Internet Advertising Bureau) recently created its own chart to simplify the chain. What do you think of the IAB Arena in portraying this space to marketers?
MK: After going from bubble to bubble for almost 20 years, I've learned that every player wants to be the thought leader of their own bubble. Lumascaping is one of the ways that condition manifests itself.
The programmatic space is tremendously confusing right now. Take DSP for example. We think that it's a buy-side player, like a fund would be on Wall Street. But it's a lot more like a broker if you look at it. Fundamentally speaking, a DSP is a sell-side middleman.
There is a lot of conflict of interest in the air and buyers (and sellers) should pay attention to this when making larger media investment decisions.
CZ: How is the display ad tech ecosystem in Asia Pacific different from America?
MK: Americans are definitely ahead of Asia Pacific. Though I think that might end up hurting them later on. The fact that we had a relatively late start in to electronic trading in the region is now allowing us to critically look at some of the early choices of the global industry and say "nah, I think we're going to skip that step altogether."
The big thing that keeps coming up is the absence of third-party data here in APAC. Which might not be all that relevant in the near future with blanket cookie blocking as the default setting in browsers. Without going deeper in to the recent announcement by Mozilla on protecting user privacy, I think this is generally good progress.
For APAC this just means we have the opportunity of being ahead of the curve in solving the larger problem of data usage and targeting once and for all. At the moment we're not married with any given direction.
CZ: What are some best practices Asia can learn from the U.S. or vice versa?
MK: We're very lean here in Asia, at least most of us. I think that's something everybody can learn from. I hope that it's not just because we don't have the money to be bloated but because we understand that lean solutions lead to efficient markets. That's what this should all be about at the moment. Creating efficient markets.
The U.S. has been successful in moving more of the spend from traditional trades to electronic trades. Part of that is explained by the early start and the huge investment. That being said, I think part of it has to do with economic incentives. If the suit or the media planner gets a bigger bonus from electronic trades, then they are more likely to encourage more electronic trading.
Asia seems to be about tradition and convention, while the U.S. is more about cutting-edge and change.
CZ: How do you see display ad tech evolving in Asia Pacific?
MK: 2013 is the land-grab. 2014 is the race to the bottom. 2015 is Google.
CZ: How is Statsit playing a role in display ad tech in APAC?
MK: First and foremost, we play our role as the educator. Right now every presentation we do is basically a workshop. Our primary goal at this stage is to increase awareness. Partly about the basics of the ecosystem, but also about some of the less talked about topics that plague our industry - rampant fraud, brand safety issues, conflicts of interest, lack of transparency, and the amount of poor quality inventory.
We're doing what we can to create the necessary awareness within buyers and sellers, encourage regulation, and try to be as outspoken and sincere as possible. Because of this unique position we have in the industry, some have started to call us "The Media Cops."
Island by Statsit is a trading house with strong focus on propriety technology development. We are the only company in Asia with propriety verification and targeting solutions built in Asia for Asia. We also run our own trading desk and manage media investment for some of the leading advertisers in our region. Everything we build is complementary to whatever is already there, which means you can benefit from our solutions even if you were already working with an agency trading desk or a DSP.
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Adaline Lau, ClickZ Asia editor, oversees day-to-day editorial operations covering digital marketing from search to social media, mobile to analytics in the region. Before ClickZ, she was senior reporter at Marketing Magazine and has worked as a journalist for The Singapore Marketer and Asia Pacific Broadcasting. Connect with her @adalinelau or Google+.
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