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% of firms increasing their programmatic activity from 2021, with a tenth of respondents increasing their programmatic activity by more than 75%. This is according to a recent research report, The State of Programmatic in JAPAC – 2022, published 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.
“Southeast Asia and India are among the fastest growing digital economies in the world. With the proliferation of new mediums, programmatic is proving to be a critical channel for marketers,” said Priya Bhatia, Vice President – Business Development, Southeast Asia, OpenX.
“We foresee strong growth in programmatic over the next few years as marketers look to maximize their ad spend and trust and confidence in the technology grows.”
Highlights from the report
- 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% using up to 9 partners (up by 5%) and 24% using 10 or more partners (down by 9%).
The use of prebid solutions is down to 12% compared to 33% a year ago. This is most prominent in India, where no respondents reported using prebid in 2022 as compared to 50% using it last year.
- Concerns about fraud and quality, and more active optimization of supply chain. Fraud and quality concerns remain high (89%) in JAPAC. Similar to 2021, the Indian market displayed the highest concern with 99% showing some concern, following by Australia (94%) and Indonesia (86%). Concerns are increasing in Japan, with 42% very concerned (up by 10%). In response, a majority of buyers (80%) have run a supply path optimization (SPO) review in the past 18 months, with 34% indicating that it was the first they have ever done. India is the most active market with 86% having run an SPO review in the past 18 months. Japan is seeing a steady annual growth in SPO reviews from 34% in 2021 to 50% in 2022.
- Concerns over identifier deprecation and mitigation solutions. 73% expressed some concern, up from 67% in 2021. At 91%, India remains the most concerned market. This is followed by Indonesia (72%), Australia (65%) and Japan (63%).
“Fears around the impact of identifier deprecation are growing, revealing that more needs to be done to alleviate worries. Fortunately, a vast majority now have access to first-party data. As brands and agencies figure out how they can use first-party data to target customers in digital advertising, adtech partners will play a key role activating those strategies,” Bhatia added.
“The pandemic has seen digital transformation accelerate at an unprecedented pace. With the shifts and changes being implemented we are seeing a greater focus on data-driven marketing and performance. This spiked demand for programmatic inventory,” commented Deepika Nikhilender, senior vice president, Asia Pacific, Xaxis, “Tech set-up costs for mid-size and smaller publishers, especially in SEA, may be the reason why many publishers are still slow in pivoting to programmatic.”
Mitigation strategies vary strongly across JAPAC. In Indonesia, 88% of publishers are heavily relying on obtaining more first-party data assets, compared to just 17% in Japan.
Other markets favour a range of third-party solutions:
- India prioritizes demand-side platforms (DSP) (50%) and third-party ID solutions (48%)
- Japan prefers a cross-supply chain approach, with a mix of DSP (45%) and exchange/ supply-side platforms (SSP) (42%)
- 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%
- Increasing preference to work directly with DSPs without an exchange or intermediary. About two-third of JAPAC participants are open to work directly with demand-side platforms, without an intermediary or exchange.
On the sell side, according to the report, publishers in Indonesia (45%) and Japan (40%) prefer to work with intermediaries. Whereas buyers in India (82%) and Indonesia (77%) are actively considering a direct approach, followed by Australia (60%) and Japan (48%).
““Fears around the impact of identifier deprecation are growing, revealing that more needs to be done to alleviate worries. Fortunately, a vast majority now have access to first-party data.”
Almost one-third (32%) of publishers in the region prefer to work with intermediaries rather than on a direct basis.
- Buyers are now funneling a higher proportion of their media spend through programmatic than publishers are generating revenues via programmatic. 72% of buyers reported an increase in spend compared to 56% 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% of buyers now have access to first-party data, up 5% from 2021. Despite being relatively mature programmatic markets in JAPAC, Australia (15%) and Japan (31%) have the lowest proportions of respondents with access to first-party data, and the highest proportion (both 32%) of those who believe there are no appropriate solutions for activating their first-party data assets on the open web.
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.
You can access the full report here.