Despite the headwinds of global economic uncertainty and the deprecation of third-party identifiers, programmatic investment and revenue within the Japan and Asia-Pacific (JAPAC) region are surging, with over 70 per cent of firms increasing their programmatic activity from 2021, with a tenth of respondents increasing their programmatic activity by more than 75 per cent.
This is according to a new research report, The State of Programmatic in JAPAC – 2022, published today by OpenX and ExchangeWire.
Building on trends from 2020 and 2021, digital advertising professionals representing brands, agencies and publishers in Australia, India, Indonesia, and Japan were surveyed. Alongside programmatic activity, the report examines market reaction to identifier deprecation, the evolution of header bidding usage, and attitudes to direct approaches from DSPs.
Supplementing the statistical findings, the report also includes analysis from thought leaders at Microsoft, Times Internet, and Xaxis.
Audrey Michelin (pictured), director of account management, ANZ, OpenX said: “The report demonstrates programmatic’s robust growth in the region and in Australia, with 70 per cent of respondents seeing an increase in spend and revenue. This is thanks to Australia’s maturity and continued confidence in programmatic. COVID-19 drove a need for streamlined efficiency and greater flexibility across the industry, shifting spend towards programmatic, with the trend continuing post-pandemic.
“Despite being a mature market, many Australian marketers have yet to prepare their first-party data-driven strategies and find appropriate tools and partnerships to activate them. Currently only 15 per cent have access to first-party data, the lowest across the surveyed markets. The industry needs to work together to test and identify the best solutions, sooner rather than later, working alongside trusted adtech partners.”
Commenting on the importance of first-party data solutions and the support from publisher partners, John Harvey Faurholt, director – advertising and retail media partnerships — JAPAC, China, Microsoft Advertising said: “While general access of first-party data has improved across the region, we still need to deliver a solution that can provide enough scale to warrant deeper investment from agency and brand partners.
“This starts with expanding our supply, enabling an ease-of-use and access, and more effective bundling with our broader offerings and solutions. First-party data buys are just one piece of an overall media plan, so illustrating the full picture for our buy-side partners and collaborating through this transition, will ensure broader adoption and success.”
Highlights from the report include:
- Publishers have matured in their strategic selection of header bidding partners, while the use of prebid has seen a sharp decline. Compared to 2021, more respondents are using fewer partners – 61 per cent using up to 9 partners (up by 5 per cent) and 24 per cent using 10 or more partners (down by 9 per cent). The use of prebid solutions is down to 12 per cent compared to 33 per cent a year ago. This is most prominent in India, where no respondents reported using prebid in 2022 as compared to 50 per cent using it last year.
- Concerns about fraud and quality, and more active optimization of supply chain. Fraud and quality concerns remain high (89 per cent) in JAPAC. Similar to 2021, the Indian market displayed the highest concern with 99 per cent showing some concern, following by Australia (94 per cent) and Indonesia (86 per cent). Concerns are increasing in Japan, with 42 per cent very concerned (up by 10 per cent).
In response, a majority of buyers (80 per cent) have run a supply path optimization (SPO) review in the past 18 months, with 34 per cent indicating that it was the first they have ever done. India is the most active market with 86 per cent having run an SPO review in the past 18 months. Japan is seeing a steady annual growth in SPO reviews from 34 per cent in 2021 to 50 per cent in 2022. - Concerns over identifier deprecation and mitigation solutions. 73 per cent expressed some concern, up from 67 per cent in 2021. At 91 per cent, India remains the most concerned market. This is followed by Indonesia (72 per cent), Australia (65 per cent) and Japan (63 per cent).
Mitigation strategies vary strongly across JAPAC. In Indonesia, 88 per cent of publishers are heavily relying on obtaining more first-party data assets, compared to just 17 per cent in Japan.
Other markets favour a range of third-party solutions:
India prioritizes demand-side platforms (DSP) (50 per cent) and third-party ID solutions (48 per cent).
Japan prefers a cross-supply chain approach, with a mix of DSP (45 per cent) and exchange/ supply-side platforms (SSP) (42 per cent).
Australia shows a balanced approach in exploring all surveyed options except first-party data use, though there is a slight preference for sell-side solutions, with exchange/SSPs favoured by 34 per cent.
- Increasing preference to work directly with DSPs without an exchange or intermediary. About two-third of JAPAC participants are open to working directly with DSPs, without an intermediary or exchange. On the sell side, publishers in Indonesia (45 per cent) and Japan (40 per cent) prefer to work with intermediaries. Almost one-third (32 per cent) of publishers in the region prefer to work with intermediaries rather than on a direct basis.Meanwhile, buyers in India (82 per cent) and Indonesia (77 per cent) are actively considering a direct approach, followed by Australia (60 per cent) and Japan (48 per cent).
- Buyers are now funneling a higher proportion of their media spend through programmatic than publishers are generating revenues via programmatic. 72 per cent of buyers reported an increase in spend compared to 56 per cent of publishers who saw an increase in revenue. This marks a reversal from last year.
- More brands and agencies now have access to first-party data. 85 per cent of buyers now have access to first-party data, up 5 per cent from 2021. Despite being relatively mature programmatic markets in JAPAC, Australia (15 per cent) and Japan (31 per cent) have the lowest proportions of respondents with access to first-party data, and the highest proportion (both 32 per cent) of those who believe there are no appropriate solutions for activating their first-party data assets on the open web.
You can access the full report here.
