If you are out there surfing the net (who isn’t?) chances are you’ve at some point interacted with advertising tech firm AppNexus –whether you know it or not.
AppNexus is one of the growing numbers of companies that endeavors to make it easier for brands to target consumers more accurately by optimizing data-driven, real-time sale and purchase of digital advertising.
As a rival to the leviathans Facebook and Google, AppNexus has established itself as a major player in the game. Late last year the firm made headline news when it chose to blacklist the far-right website Breitbart News on the grounds that the publication was promoting hate speech.
Beyond the politics, the move was additionally notable for the fact that it widely revealed the influence and reach of AppNexus as a strong player in the online ad game.
Branding in Asia recently spoke with Sonal Patel, Managing Director and Vice President for AppNexus Asia-Pacific. In an extensive conversation, Patel talks about programmatic in Asia, addressing negative perceptions in the ad world and helping independent publishers reclaim a stake in the “walled garden” duopoly of Facebook and Google.
AppNexus reported signing over 260 new publisher deals globally in 2016. What percentage of that was in Asia, and how would you describe the reception to your offering here thus far?
Signing 260 new publisher deals globally in 2016 was an incredible achievement for us, and specifically, in APAC we signed some exciting deals with the likes of Zee News, Times Internet and Cheetah Mobile.
It isn’t possible to report the number of publishers by market, because our ecosystem has advertisers and publishers who transact globally. For example, we have publishers in China that have international inventory outside of their domestic market, Indian advertisers looking for non-Indian resident users and so forth.
Sadly a small percentage of negativity has impacted our region to a greater degree than the actual damage it has likely created, at least in my opinion.
We measure the liquidity of impressions from users around the world. Often, publishers that have huge inventories in certain Asian markets are non-Asian publishers. But we have also aggressively signed up publishers in our region and we have a number of advertisers looking for local inventory. As a result, we have seen a marked increase in adoption of programmatic from both global and local publishers and advertisers.
In Asia, header bidding has really helped increase programmatic adoption across the region. It is one of the most contentious topics in today’s ad tech ecosystem. Though the technology has been around for a few years, it is now gaining rapid momentum within the industry as the answer to publisher appeals for a fairer ad exchange marketplace and a viable counter to Google DoubleClick’s monopoly. It has created an opportunity in the market for publishers to gain greater control in the battle to win ad spend in the ecosystem.
Asia is a widely diverse marketplace, in what countries are you placing greater focus and what makes those more fertile for AppNexus?
Indeed it is and the divide between culture and language is so apparent in this region. We are concentrating on markets where we have seen a surge of demand; this is fluid depending on campaigns and currency fluctuations.
The markets that are an immediate focus include India, Indonesia, China and Singapore/Malaysia, as we have seen programmatic increase rapidly in these markets. These markets fit well with our demand and there are some (what I call) ‘parachute markets’ that we will dip in and out of but won’t be our main focus.
Who is your biggest competitor in the region? And how are the local players faring against outside competition?
The running joke in the industry is you work with everyone, especially in programmatic. Given we work on the demand and supply side across the programmatic landscape, we often work with those others would consider our competitor.
In general, the biggest competitor would be Google as it is the closest across the board to our platform. The main difference between us and a platform like Google is that we promote an open internet over a closed one.
That means promoting open ecosystems. As the leading technology partner to the companies of the open internet, AppNexus endeavors to help independent publishers reclaim their fair share of advertising dollars from the closed, “walled garden” duopoly that is Facebook and Google. It also refers to our open technology: our open APIs are a core differentiator.
It is one of the most contentious topics in today’s ad tech ecosystem. Though the technology has been around for a few years, it is now gaining rapid momentum within the industry as the answer to publisher appeals for a fairer ad exchange marketplace and a viable counter to Google DoubleClick’s monopoly.
We’re noticing that local market publishers are more cautious of working with new partners and are becoming savvier in terms of asking questions on the differentiation of platforms. We aren’t seeing many local competitors outside of Google, aside from in India.
It’s a large performance market and one that is naturally mobile first. As a result, we have some ingrained clients who have local servicing that has caused slower progression with our technology. However, larger publishers in India are known to us and we have signed a large supply of these publishers.
What‘s your approach in markets such as South Korea where portals like Naver enjoy almost complete domination across mobile and desktop platforms?
South Korea is a market near and dear to my heart. I have spent time in the market and have worked there through some of my previous companies. We are active in the area through partners, but the market is still very video driven and TV has a high percentage of media spend still trading through it.
We have seen a very small move to programmatic as a result, so the market is not as open to programmatic as say, China or India.
Naver’s domination coupled with a tougher programmatic headwind makes it doubly difficult. In these situations, we still actively keep an eye open; working with our partners to monitor the temperature of the market.
You’ve written that living in APAC has meant ad-fraud, bots, fake clicks and transparency have always been in the market news. Can you talk about that and where things are headed?
AppNexus exists to create a virtuous cycle between marketers, publishers, and consumers, addressing many of the problems that have traditionally hampered digital advertising.
The markets that are an immediate focus include India, Indonesia, China and Singapore-Malaysia, as we have seen programmatic increase rapidly in these markets.
These markets in question are ones which are price sensitive to data. The challenge becomes larger if users don’t or won’t understand that advertising is a way to offset the costs of content creation and development. Then we could see publishers have no choice but to look at subscription as a way to monetise their content creation.
While it’s highly unlikely in our market, we have started to see this play out in Europe so you never really know. If this happens then we may see a surge in app usage as ad blockers don’t necessarily play well in this environment.
Most publishers have still not pushed users onto their apps and allow both pathways to their content. This is certainly one to watch for as the markets in APAC are more mobile first than US or Europe.
Ultimately, if more apps are used, it’s harder to see ad fraud play out in the marketplace. We’re already witnessing agencies and advertisers shifting spend or at least talking about this across viewable inventory.
The old days of buying publishers based on scale of users becomes distorted if users are going to multiple websites or Facebook to consume media.
This is where the MRC has created guidelines on minimum thresholds for measuring viewable impressions across desktop, mobile web and mobile in-app environments that require a certain percentage of the ad to be watched in order to be considered ‘viewed’ by the user.
Because of this, I’m predicting a decline in ad fraud, fake clicks and lack of transparency in the market. AppNexus is championing transparency in the adtech sphere, just last year we launched two key marketplace tools – Advanced Deal Metrics and Bid Error Report – to help maximize the power of advertiser spend and increase publisher revenue.
One of the other reasons for this decline is due to consolidation or combustion of ad-tech vendors, which will leave only a number of players who will transact in the market. Those players will have either bespoke tech, bespoke scale and/or bespoke inventory. We are due for a shakeout soon.
Late last year AppNexus stopped placing ads on Breitbart for hate speech. Asia is no stranger to heated political and cultural content. What are some issues you’ve come across in terms of monitoring content and serving ads in some markets?
That’s a great question. It’s important to mention that AppNexus’ decision to blacklist Breitbart is not based on its editorial position or for spreading misinformation. AppNexus banned Breitbart for its violation of AppNexus’ existing hate speech policy.
We do our best to stay abreast of these issues but they change often and fluidity of market dynamics makes it difficult to always be proactive. As its core mission, AppNexus exists to build a better internet by powering the advertising that powers the open internet.
Brian O’Kelley, our CEO, has invoked passion as he describes the need for us to be aware when we work in such a rapidly changing environment like technology. AppNexus was one of the first to denounce hate speech and although we do not directly work with partners, we felt it was important to cease work with such organizations.
At AppNexus, we try to serve ads that will not offend sensibilities in local markets. With Asia having so many languages, cultural, political and religious differences, we aim to work closely with buyers (advertisers, agencies and some ad networks) and set them up for success by offering guidance, where possible, for campaigns where some of these differences should be known.
We also work in tandem with publishers to adhere to their unique brand safety publisher guidelines. One area where we’re maximizing our efforts is by showcasing local language ads as much as possible. Sometimes advertisers forget that native language ads are a necessity in certain markets and it should not be a given that users can read English!
It was recently noted by Michael Rubenstein that Google and Facebook command over half of incremental digital advertising dollars. Is there light at the end of the tunnel in terms of independent publishers finding parity?
We’ve seen the industry grow rapidly but the power of the industry in terms of revenue does sit with only a few players, and publishers are realizing that they do not necessarily own the users but only the engagement of the user at the time they actively consume content from them. In other words: data becomes a commodity, not a user.
I think parity is difficult when you are up against large scalable competitors who don’t own all of the publishers’ inventory. On the flip side, they do know how to leverage data and efficiently make it scalable. This leaves publishers between a rock and hard place where they need to work with these companies, while also remaining wary of a larger threat to their business in the long term.
Where publishers can differentiate themselves, however, is through owning first party data. If they can use their data smartly they can offer richer data sets that allow them to command higher eCPMs. So the questions you really want to ask publishers are – are you organisationally structured to think beyond short-term revenue plans, and are you structured to make sweeping changes across sales channel conflicted departments?
Publishers need to change to ensure there is less friction and a better understanding of where users fit into their revenue model. The old days of buying publishers based on the scale of users become distorted if users are going to multiple websites or Facebook to consume media.