SINGAPORE — Despite a hugely challenging 12 months in terms of both the ongoing coronavirus pandemic and the deprecation of third-party identifiers, programmatic investment and spend is growing at a rapid rate across the Japan and Asia-Pacific (JAPAC) region, with nearly two thirds of firms increasing their programmatic activity from last year. This is according to a new research report, The State of Programmatic in JAPAC – 2021, unveiled by OpenX and ExchangeWire.
The report highlights that 30% of agencies, publishers, and brands recorded higher programmatic revenue or spend compared to pre-Covid figures. 31% of publishers are generating over 40% of their revenue via programmatic. On the buy side, 21% are allocating over 40% of their spend to the channel.
The report follows last year’s assessment of the region — The State of Programmatic in JAPAC – 2020 —and examines once again Australia, India, Indonesia, and Japan given their diverse economic climates and differing approaches to programmatic trading. Alongside each market’s response to Covid, various factors affecting programmatic trading are examined, including access to first-party data, the use of header bidding and the status of supply path optimisation (SPO). The report also highlights concerns around the deprecation of Apple’s Identifier for Advertisers (IDFA) and Google’s initial announcement that it would block third-party cookies on its Chrome platform next year. The search giant has recently pushed back its plans until late 2023.
Supplementing the quantitative findings, the report includes analysis from industry thought leaders at Publicis, Microsoft, Unilever, and Xaxis, providing further insight into emerging trends.
According to Andrew Tu, Managing Director, APAC, OpenX: “The programmatic industry in JAPAC is displaying a remarkably strong recovery. We see newly-forged programmatic expertise across both buy and sell sides driven by rapid digital transformation. Agencies, publishers, and brands are demonstrating greater confidence in managing their own programmatic activities. As a result, the ecosystem is directing more revenues and spend through the medium compared to other marketing streams.”
“Despite some fears around the impact of IDFA deprecation and the eventual removal of cookies in Chrome, a majority of brands are maintaining or increasing spend on the independent web and not towards the walled gardens. Instead, they are working together with their tech partners to navigate the nascent privacy-first environment,” Andrew added.
“The results of this survey suggest that programmatic in general is reaching a new level of maturity in APAC. While there is still discrepancy around the region, general knowledge and understanding has certainly advanced in all markets as illustrated by the growth of SPO, concerns around ad fraud and increase in prioritisation of first-party data in most markets,” commented Jonathan Mackenzie, Managing Director, Publicis Media Precision APAC, “The irony is that just as markets get to grips with the programmatic ecosystem of today, changes like IDFA deprecation are re-defining the programmatic ecosystem of tomorrow. This makes for a very interesting 12 months ahead.”
Highlights from the report include:
- Publishers have matured in their strategic selection of header bidding partners, while the use of Prebid has increased by over 10% market-wide. Compared to 2020, publishers are using relatively fewer providers than in 2020, and prioritising ease of setup for when existing providers are not meeting expectations.
This is prevalent in the Indian market, where 32% are now using 1-4 partners, compared to just 7% last year, and 13% are using 15 or more partners, which has more than halved from the 29% recorded in 2020.
- Concerns within the region over the deprecation of IDFA and the third-party cookie. Two-thirds (67%) are concerned about the effect of IDFA and cookie deprecation, with 29% very concerned about these changes.
India displayed the most concern, with 87% disclosing some level of concern, followed by Indonesia (71%) and Australia (62%). In Japan, only 49% are concerned, while half (50%) are not perturbed about the upcoming changes.
- Brands and agencies are not funnelling spend to the walled gardens, and instead favour independent ad tech. Only 16% of buyers are increasing walled garden ad spend in response to IDFA and third-party cookie deprecation, whereas 27% are investing in exchange, SSP, and DSP partnerships.
In India, only a handful (2.5%) are funneling spend away from independent ad tech towards the walled gardens.
- Buyers are acting over concerns of transparency, and are more confident in amending their programmatic pipelines. Two-thirds (67%) of marketers and agencies have run an SPO review in the previous 18 months, with 32% indicating that it was the first one they have ever done.
Concerns around transparency are high in the Indian market, with 100% of respondents showing some concern. This is followed by Australia (93%) and Indonesia (88%). By contrast, only 20% in Japan are very concerned and actively looking for solutions, while 29% are not concerned at all by fraud- and quality-related issues.
- India is more heavily invested in programmatic than its peers. Only 2% are not using the channel, compared to 33% in Japan, 9% in Australia, and 6% in Indonesia. Moreover, 12% of respondents within India are generating over 75% of their spend in programmatic, double that of both Australia and Indonesia.
