What Southeast Asian Marketers can Learn from North America to Maximize In-App Programmatic

Note: Originally published in Campaign Asia on October 8, 2019.

When it comes to reaching and engaging consumers on mobile, programmatic has firmly emerged as the preferred channel for digital marketers. Zenith reports 65% of all digital advertising spends globally are expected to be on programmatic by end of this year led by mature markets such as the USA and Canada. InMobi’s 2019 Mobile Programmatic Advertising report shows a synonymous trend for global in-app spends with North America alone accounting for 59%. However, what is encouraging is that half of the top markets across the globe are from Asia Pacific.

How is Southeast Asia uniquely poised for in-app programmatic?

Southeast Asia has seen a steep increase in the adoption of apps with close to two times the global downloads in the last year. An average smartphone user in SEA spends close to 4 hours a day on apps, 33% higher than the mature markets such as the USA and Canada and significantly higher than time spent on other media including TV and print. The SEA consumer is not just mobile native, but an in-app native - making SEA the perfect hotbed for in-app programmatic.

Excluding China, Southeast Asia is leading the charge in Asia Pacific - 5 out of 7 key markets are among the top 20 global in-app programmatic spenders. In looking at Q2 2019, in-app programmatic spending rose by one-third in the region compared to Q2 2018.

Key challenges with in-app programmatic adoption

Despite the shift from consumers and brands, in-app programmatic adoption faces three big challenges in the region.

• Lack of understanding: While 8 out of 10 advertisers in SEA say they invest in programmatic, 90% still possess basic knowledge of it . Everyone in advertising these days ‘knows’ programmatic but not many really understand the technology well. Is it about automation? Is it about low-cost execution? Is it about audiences? Is it only for performance or can it be used for branding as well?
• Lack of trust in in-app programmatic: In our latest state of mobile programmatic survey, traffic quality (40%) and brand safety (38%) concerns ranked among the top 3 barriers to programmatic adoption in SEA. Brands are wary of the authenticity, credibility and nature of the inventory.
• Perceived lack of premium inventory: Advertisers have long regarded programmatic to be meant for long-tail, remnant inventory. The continued perception has discouraged marketing investments from other channels to programmatic.

Accelerating in-app programmatic adoption: learning from the West

To accelerate the growth of in-app programmatic, Southeast Asia can seek inspiration from a few key trends in North America to drive efficiency, effectiveness and engagement.

1. Leveraging high-impact, in-app formats

A majority of demand in North America is now coming from high-impact, in-app ad formats. In Q1 2019, for the first time, less than half of all in-app spending went towards banners. Video is becoming more impactful and powerful with 2x greater CTRs than native ads and over 10x greater than banners on average in the U.S. It helps, of course, that the vast majority of mobile video ads are now 20 seconds or shorter in duration. Southeast Asian brands can drive immersive, customized engagement through rich media creatives, video ads, interactive end cards and ads mimicking virtual reality.

2. Adopting global safety standards

There are now various measures in place to ensure advertisers are only spending money on brand safe and fraud-free campaigns. As of today, the vast majority of in-app inventory in the U.S. is app-ads.txt enabled, and screened for traffic quality, viewability rates and brand safety by trusted, third-party platforms. Adoption of global safety standards such as app-ads.txt, sellers.json and continued investment from third-party measurement platforms to make these viewability and brand safety technologies accessible in the region, will boost transparency and trust in the in-app ecosystem.

3. Driving awareness and market education

But perhaps the biggest systemic change is just the overall comfort level with in-app programmatic media buying in North America. As programmatic becomes established, media buyers and advertisers are comfortable leveraging it for more and more of their campaigns. This is largely why open exchange buying in the U.S. was up 58% in Q2 2019 compared to Q2 2018. Replicating this in Southeast Asia would need a concerted effort from all the players in the ecosystem - brands, media agencies, technology platforms, publishers and industry bodies - to educate and demystify the complexity of this channel.

I expect all this to occur in short order in Southeast Asia. The appeal of in-app programmatic advertising is peaking with the promise of maximizing the 3Es - Efficiency, Effectiveness and Engagement, through mobile. If done right, in-app programmatic will become more integral, effective and popular among brands and marketers in the coming months.