APAC’s Misplaced Expectations for Programmatic

Something bizarre is happening in the programmatic world.

The Asia Pacific (APAC) region has a larger population of Internet users (1.4 billion active Internet users in 2015 according to a We Are Social and IAB Singapore report) than any other region. Yet, it remains behind Europe and North America in terms of maturity in the programmatic industry.

China alone has the most Internet users, close to 650 million and the largest e-commerce market in the world (worth US$426 billion in 2014 according to eMarketer), but it is the United States that single-handedly beats the rest of the world in programmatic ad spend.

Although current growth is strong in both programmatic inventory and ad spend in APAC, future growth is likely to come from a select few leading markets – the first one being China – while the rest of the region is likely to be slower to adopt ad tech.

Get Real with Real-Time Bidding (RTB)

Given that APAC has the biggest market potential for programmatic, it is a pity that APAC advertisers are not maximising this potential to gain more revenue.

The most common form of programmatic ad buying is RTB and APAC needs to correct its existing delusions of this technology.

1. Programmatic Drives Sales, Not Miracles

The Problem: Often, new-to-programmatic advertisers in APAC are impressed by the possibilities of how RTB can improve their sales. They are excited by the results of case studies in pitch decks and expect the same from their own campaigns. The problem is that the results shown at pitches, while true, are merely examples of someone else’s campaigns, driven by someone else’s unique first-party data.

The Change Needed: Programmatic can do wonders to a media plan, but it’s not magic! Advertisers in APAC need to recognise that not all data are created equal; and in the programmatic world, where data sits at the heart of each campaign, performance will not be equal either. It is unrealistic for start-up advertisers to expect their sales to reach the levels of larger advertisers after just one campaign, simply because they do not share the same level of scale in the data they have.

It is a mistake to compare the performance of their own campaigns to that of advertisers of a different size or even industry.

A realistic but still challenging target advertisers can set for programmatic partners is to match the same KPIs of their best performing existing campaigns of a similar nature. Once those targets are hit, then advertiser and vendor can collaborate to best leverage technology and data to further improve performance and meet other advertiser goals, like up-/cross-selling products, or increasing margins.

2. Treat Ad Tech as Partners, Not Vendors

The Problem: There is a unique trend in APAC whereby advertisers often set moving targets for campaign performance: an initial target KPI is given, the vendor meets the KPI, the advertiser adjusts KPI and expects vendor to meet the new KPI. This is unrealistic and does not promote a collaborative, sustainable long-term partnership. It’s a race to the bottom for both sides.

The Change Needed: An attitude towards open, sustainable programmatic budgets and strategies, and ad tech relationships to support them. Performance marketing campaigns have clear KPIs and goals such as cost-per-order (CPO) or customer acquisition cost (CAC), and of course advertisers are hungry for campaigns that hit these targets.

To achieve sustainable campaign performance, a transparent and collaborative relationship with ad tech partners is needed. This starts by committing to the initial KPIs and budget agreed upon at the beginning of campaigns.

Advertisers need to rethink ad tech as a cost-of-sale, instead of perceiving it as a line item on their marketing plan that can be continuously lowered. This approach gives vendors a clear indication of when campaigns are underperforming and the motivation to beat these metrics. Given a reasonable time frame and a fair budget, partners who can’t meet these targets have no right to be on the media plan.

3. Give Programmatic Time to Prove Itself

The Problem: Apprehensive advertisers unfamiliar with RTB sometimes pause campaigns after a few weeks when results don’t seem apparent. This is common in less advanced markets in Southeast Asia and in markets where advertisers still heavily rely on traditional ad buying methods, like China.

The Change Needed: It’s all about the education of RTB. The problem exists because some advertisers do not understand how real-time auctions work and their implications for media buying.

The technology and algorithms take a few weeks to learn user behaviours for a particular advertiser, which means a certain level of data aggregation is a pre-requisite: like people, machines learn through experience, predicting probabilities based on patterns that emerge in data.

Depending on data volume, the first weeks of a campaign can massively misrepresent the results possible in the long run. The ideal duration for a campaign test period is 90 days, which gives sufficient time for campaigns to prove results without losing too many resources and time if they do not perform.

It is also important that the test period is supported by the right metrics to measure performance, which could vary based on campaign objectives.

For example, post-click cost-per-action (CPA) measures performance marketing campaigns, and target cost-per-mile (CPM), cost-per-clicks (CPC) or click-through rates (CTR) for other campaigns. Programmatic is a highly transparent process by nature, as costs and results are shown in real time.

And if APAC advertisers can return the same openness and approach RTB the right way, they will start to see that ad tech drives sales for them steadily and surely.

*Image via Shutterstock

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