Is APAC ready for Social Advertising? Singtel buys Amobee….Mass consolidation in APAC

In the old world we had two fragmented online areas of spend for advertisers; enter Google’s dominance in search and then Yahoo’s dominance in display advertising. That was then around 15 years ago and has the world changed?

Google is still the powerhouse in search and its taken the world of advertising by storm; from a platforms perspective ( DoubleClick) to the  managed service and publisher specific ( Admeld) to the media perspective ( AdX).

This was at the cost of Yahoo’s demise but now there seems to be a greater disruptive shift in the marketplace. 

SOCIAL MEDIA……

Facebook became a game changer; where it passed the contribution of content on to its users; then brought in social engagement through its targeted advertising and collection of friends. 

Anyone will tell you the most persuasion in life comes from those around you; your friends are the ones that influence and encourage you to try out new ideas/products and concepts because they have tried it and it has now been tested. The human tendency is to go with what you know or what your friend/family knows. Word of mouth is a power tool when it comes to advertising and what other way to do it but share a platform to allow those very users to persuade others.

Digital display marketplace is now not only display advertising but its segmented into various sub-sections like rich media advertising, social advertising, mobile advertising etc.  Couple this with users being fragmented across different devices from handsets, laptops, mobiles and tablet and its not hard to see that the ecosystem is a chaos map for advertisers.

Then content was king…..now engagement is King. Therefore whoever has content is not necessarily going to survive this disruption.

Can any advertiser choose to ignore its audience? especially those audiences that are already engaged?

Let me give you a great case study from the UK……

Marks and Spencers a huge retailer in the UK was for all intents and purposes a leader in its vertical. It derived huge profits and British shoppers as well as visitors flocked to Marks for their products due to quality and style.

Marks decided it was not necessary to spend money on advertising and cut its budget whilst at the same time smaller new retailers emerged; enter New Look. Marks decided not to listen to its audience who were seeking quality but also cheaper pricing for clothing that was more trendy. Marks buyers were stuck in the 1980s and they decided to not listen to their shoppers but stick to the same styles and products they had been doing years ago.

Marks lost market share and lost respect from its shoppers and the younger generation preferred to shop at New Look and TopShop. Marks never managed to change that perception around and instead has spent more of its budget on expanding their food lines.

The moral of the story is if you are ahead of the game – defend your position to the end. No brand or advertiser can afford to disregard the marketplace, the shoppers or the disruptive technologies that are coming soon.

So why is it that still in APAC we don’t see much social advertising? Is it because the players are not in market; well that is not true as we’ve seen many companies have set up offices here including Buddy Media which is not a player in social advertising until recently; through its acquisition of Brighter Option which makes perfect sense and becomes a major force in social CRM management and advertising. 

APAC is going through mass changes all at one time compared to the US or Europe where evolution has taken time to get to the next stage; here in Asia we’re just seeing Invite Media come to market in Australia, Singtel purchasing Amobee so its easy to see that APAC is consumed with a large ecosystem shift all at once and its left many advertisers and publishers confused on how to amalgamate their digital strategy with so much disruption in the market.

Facebook have a office in Singapore which has leveraged growth in the understanding of social advertising and coupled with social advertising now on the arise; we are seeing media planners start to get to the level of frustration they once had with choosing who to partner with for inventory – now the who becomes the what?

What strategy should I take; 20% media spend on social, 30% on display, 40% on mobile and the rest on search? We’ve evolved from the who partners to choose to now the what types of media to choose?

Whilst our trading desks are helping us to combine audiences under one UI and frequency cap; we now have a situation where sub-sets of audiences are growing? 

Singtel’s purchase of Amobee is interesting and certainly the right tactic for a large telco to look beyond its own telco yield which is rapidly diminishing. Think SMS revenues dying as a result of power apps such as whatsapp…..which allows you with a data connection or wifi to send short messages with pictures or voice notes to anyone who also has whatsapp on their phone. As mobile costs shift from 3G connection to wifi and voice becomes VOIP….where is the revenue stream for tomorrow?

With Singtel having equity stake in 5/6 other telcos in region- its not difficult to see where their strategy lies and its survival. This is just the start of consolidation in APAC; expect more especially with the largest growth and audience coming from APAC……

Social audiences in this region are amassing with Orkut in India losing out to Facebook and with India now being the second largest country with facebook users its not hard to see that Indonesia will flip over fully to Facebook. Why is Indonesia so meaninful to Facebook? Indonesia is approx 250M people which is 2/3 of the size of the US….and one of the fastest rising stars in region.

Looks like Social Advertising is the  way for all of these companies to ensure they keep listening, reaching and engaging with their users…….. that will power the use of verified ad dollars and facilitate the growth of data driven ad buying……usher in the world of audience buying…….

 

 

 

 

 

 

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Co-opetition with Microsoft, Yahoo, AOL through AppNexus

It seems to the be question of the month for me from lots of players in the ecosystem in APAC….
What do you think of the Ad-trading unification of Microsoft, Yahoo and AOL inventory and why has Right Media decided to move to direct advertisers?
Just like the French News Publishers join forces to compete against the automated ecosystem of RTB it seems that larger publishers in North America are uniting and pooling inventory to a 3rd party agnostic platform; AppNexus. Has the horse bolted and the barn door shut after the fact? It really depends on where they are uniting – it is just on unsold inventory that has been manually carved out as these specific ad units on these specific pages that are unsold or is it a true case of unsold inventory? Will AppNexus leverage their data or will those three publishers still keep that at arms length? How does AOL and Yahoo value the AppNexus model since its partially funded by Microsoft but works completely independently of that.
AppNexus recently announced their Apps marketplace which actually seems impressive and specifically caters for those who are interested in deeply embedded technology provision.
In a nutshell; the trio-unification is most likely to survive the eco-system shift. I don’t just mean the shift to automated buying but also the drivers behind it. Essentially we have fragmentation to blame. Fragmentation of users, fragmentation of hardware, fragmentation of inventory and fragmentation of technology. That’s a mess in a world where advertising; at least online advertising is growing in popularity with advertisers specifically as it ties back to ROI in a more streamlined direct way. Can we say the same for offline radio, newspapers, tv?
Publishers are constrained by their own thoughts; resources and certainly the eco-system shift has left them perplexed. The days of milk and honey are slowing becoming dry days and the eCPMs of previous years are declining because we have more publishers who are highly specialised; more advertisers who are pressing for better ROI and more technology expediting the need for automation. The influence of agency lunches to bring in demand are out-dated and even APAC is starting to feel this.
What does a publisher do when it knows its core audience is not loyal and shops around for the latest news, weather or e-commerce deals? On one hand its losing the value from lower eCPMs of its inventory and  on the other hand its losing its users to more specific developed content across other publishers? How does a Yahoo survive when users are distracted to other sites whose value is lower than Yahoo eCPMs? Why would an advertiser pay for that premium price if they can buy them realistically cheaper elsewhere but still tied back price to the value of the impression? (RMX optimisation)
So its easy to understand why the big three are getting together. Its also a response to the potential threat of Google dominating the display market as it strives to build out its DoubleClick AdExchange and its Invite Media DSP. Its a very real threat; Google has executed very well and has bundled in youtube inventory into AdX and is also adding very interesting features to bolster the growth of the DC AdX. The real point is that it may just be too late.; the horse has bolted.
Rightmedia has had a challenging ride and one that is a close one to my heart because of where it once played the leading role in ad-exchanges; indeed it was the pioneer. It has now become the submissive one to the Google Ad Exchange and also AppNexus which make no mistake is a technology player that has an extremely large network of inventory; just recently CPX Interactive moved over from RMX to AppNexus.  In essence RMX had to move to direct seat-holders for various reasons; one being that most networks were now using their own technology or others to become their own DSP; it could also be that inventory has started being pulled out of RMX and RMX has direct advertisers it needs to strategically protect so it has to take off those large arbitraging ad-networks. RMX has to identify what it has evolved into because it is becoming more clearer that it cannot be seen as a ad exchange alone; it may very well become a DSP.
The real question is – are direct advertisers ready to handle this new way of buying? Most DSPs are actively using their technology, their managed service or a combination of both to help direct advertisers so will a direct advertiser seat achieve any difference? I think it will be a lot of hassle for advertisers to seek their own seats; then these same advertisers will hand over access to the managed services team at the DSPs – what will change is those arbitrage ad networks are looking less likely to arb under this model; there will be complete transparency between the DSP and the advertiser but will anything else change?
So in the short term its going to cost RMX money and hopefully in the long term it makes sense but given the propensity to want to understand the automated buying process from direct advertisers or agencies; I’m not certain that much will change. This will only give the upper hand to the likes of AppNexus and DoubleClick AdX to scale up and build a better reach. Both are extremely excellent at what they do; the edge for now sits with Google in amassing towards a full ecosystem in the display world.
Its certainly a big risk on the part of RMX but sometimes the highest risk strategy offers the best rewards.
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Microsoft, AOL and Yahoo – a publisher oligopoly?

Allthings D recently broke the news that many of us knew was likely – when one split force decides to gather to create a stronger force against a strong competitor. It sounds like physics really.

I recently read this:

http://tech.fortune.cnn.com/2011/09/15/aol-yahoo-microsoft-online-ads/

and actually the whole efficient ad marketplace has been slowly moving in this way with groups of publishers in certain markets like France gathering together to create a virtual closed marketplace. Its been active for some time it’s just now that the larger publishers have decided to band together to control the ecosystem of efficient automated ad buying and its (in the publisher eyes) inefficient pricing mechanics.

AppNexus is the most likely choice of DSP/ad exchange aggregator as it is the most agnostic in the marketplace even if heavily invested by Microsoft.

The concept of unsold inventory massed together into a closed marketplace and to have each other sell the other’s inventory is in theory efficient for a publishing business that can only see it revenues dip if its large user base are not worthy data points so this banding together suggests a deep ingrain fear of the understanding of each publisher’s inventory worth. It’s not surprising as often these large publishers have so much data they can’t efficiently manage the true insight data.

I differ in opinion that this is a desperate move – it’s a strategic move but one which comes far too late. The marketplace is now bought into the concept of efficient ad trading and the buying not of named publisher inventory but instead of audiences. So; the slick trading desks and the savvy DSPs are not really going to see this move as sensible at all.

If anything the move looks counter-productive given that all three have investments in this type of technology or dataplay. All three companies have challenges when it comes to buying technology and then integrating it into their own eco-system. It also means their own salesforce will have to become much savvier in how they sell their inventory and again; it comes down to how much of their inventory they want to sell versus the need to hold back inventory in order not to plunge eCPM levels.

After all no one publisher from the three wants the laws of diminishing returns; it most cases these three publishers will still want to manage a minimum bid price for their inventory which means it’s not a true dynamic closed marketplace.

I think the horse bolted before the barn door was shut…..  I have a soft spot for Yahoo; I worked there through Rightmedia  and I had my first email account with them at 18 but in Asia – this does not count for much as Gmail penetration in India is killing off its largest long-term indian rival; Facebook penetration and take up in Indonesia and Vietnam is indicative that the new generation will have a new relationship with these publishers and sadly the long and well established publishers are slowly losing market share.

All these changes in ad buying are great for the user as the value of their eyeballs are now more directly measured against their ROI against the ads they are seeing and relevancy kicks in to encourage better clicks, conversions and overall a better user experience for all. Engagement is the new King.

I am still in belief that the online ad market will grow in value especially in Asia and so every large publisher should see ad revenue grow not decline; the publisher just has to ensure that they make use of the data that each user brings in order to monetise efficiently against each user and that’s where the smaller niche publishers should see a very different playground to the one they see now.

 

 

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Does Google really want to get into the Hardware Mobile Business?

Google last week announced its acquisition buy of Motorola Mobility for approx. USD 12.5Bn and the public reaction was Google is competing with Apple for hardware. For most of us in the industry it was more a case of Google looking to Motorola assets namely its patents which it tried to buy from Nortel recently against Apple et al and lost. ( Some say its to offset any litigation from Apple against the android platform).

Google’s main business is search and its arena of activity was namely through the pc or laptop.  Hardware has in fact changed the way we interact with the web and now its on the move through various devices; ipad, the iphone or other smartphones.

The challenge with such hardware is fragmentation of hardware and operating systems. This means that having uniform applications are no longer applicable much like they were with the pc (unless of course you are a mac user).

Mobile Internet usage has surged in Asia namely because of Japan initially but now as the emerging asian countries start endorsing the web, the infrastructure and indeed the monetisation it could bring; the interaction of the web and the growth of new online countries means the growth is in Asia.  Some Asians will not be able to afford the pc or laptop and will settle for connectivity to the web through their mobile.

Google is merely preserving its dominance in search and its existence by ensuring that the new age of internet users have Google at the forefront of their mind when logging onto the web.  Google has also built many functions that will try to navigate the user back to Google through maps, Google daily deals etc.

Google does not need or in my opinion want to get into the hardware mobile business but this was a strategic move to press ahead with Motorola patents that assist in the user journey and also given the price differential between Apple iphones and android based phones – why would it not be smart for Google to have control of the price elasticity of the smart phone market and sell Motorola android based phones at a distinct price variance to Apple? and thereby control a greater share of the market.

I think this strategy would make perfect sense in Asia especially since price sensitivity would be fairly high in this region as markets here are just emerging and economies are moving to the new dawn of prosperity.

Let’s say if Google brought down the price of smartphones to 50 USD against Apple’s 200 USD then its safe to assume that at a price elasticity of 4x the multiple of the Google smartphone – that it would cause an effect in the marketplace. Of course I have only looked at price here – the largest component of buying an iphone is desire. Desire is ingrained in our being and not something that can be manipulated by price – but it can if the masses cannot afford it and look for the a version that is affordable.

With Google giving back a better revshare model back to its app creators and Google itself developing such useful apps like Google Earth, GMaps its likely that the differentiators may only in the future exist through the hardware not through the app market.

The smart phone users are getting smart…. we’re not necessarily convinced that a convergent phone is actually a better phone – unfortunately the call quality, the battery life are affecting the core feature of the hardware….it being a phone. I know my largest battle with the iphone is not the aesthetics or the apps but actually the amount of time I have left on charge to make a call. Also the fact that you cannot buy another backup battery which is something I usually have with me is challenging with an iphone. Sure you have various iphone devices that you can attach that make the iphone look as long as a UK telephone box, but they are not the same as having a spare battery.

One of the interesting things about Motorola and Google buy was that Motorola does not have a large presence in Asia; in fact Motorola is more dominant in USA and some countries in Europe. So the excitement of this deal I believe will be felt in Asia – Google with Motorola should make an interesting play in Asia with the other larger smart phone hardware providers here being HTC and Samsung.

So if new internet users are coming from emerging markets; mostly Asia than its fair to say that Google will want to ensure its status in search remains in prime position; and if these users are interacting with the web through their smart phones then its makes full sense this is not just about litigation or patents alone.

It’s a smart move and  this is why Google dominates because it has the vision to do so. It also makes perfect sense when Microsoft is working through Nokia that Google would look to buy a mobile hardware company. After all, sad to see it so but the web world looks set for dominance by three players;  Microsoft, Google and Apple.

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Programmatic Buying fancy term for fancy business… How is Asia faring up to this?

Buzz words come and go and no more so than in the media industry. Working for RightMedia years ago was one of the most challenging roles and companies to work for, a newbie in the advertising world meant I had to get to grips with the basics before even ever understanding the ad-exchange business.  What kept me sane was applying knowledge from my oil and gas days and understanding the concept of futures, forwards, options and the spot market.

RightMedia was a spot market for advertising; a clever piece of revolutionary technology that allowed anyone from any country to buy and sell inventory in an automated fashion, through one common platform. It was the tipping point…..

Programmatic buying is a glam word for exchange buying the real change has been in the ability to process information much more quicker. This is where cloud computing came to the rally and where companies like AppNexus built its technology and processing on.  Efficiencies within media buying and selling has largely come about through cloud computing the data processing element which is fuelling the growth of RTB.  RTB is complex, a mine-field of decision tree mapping and can’t at this moment in time utilise 100% of inventory through RTB – the amount of processing of every piece of intricate black box attribute is impossible for 100% of inventory in real-time.

It will be when all ad exchanges are RTB enabled and each DSP is capable of that processing power so programmatic buying in theory is the utopia but when inventory is not being traded 100% through DSP’s then programmatic buying has inefficiencies. It’s not an absolute but it’s so close.

I’m working with some large publishers and ad networks that are moving into this arena in Asia and one of the problems I encountered in the early days of RightMedia was how do you explain simplicity when the audience thinks that the platform is a magic pill and complex? The simple answer is you have to go back to the drawing board and explain the intricacies within media buying and that as great as programmatic buying is; it’s still needs managed hands. In other words it’s not 100% automated; the best DSP’s out there actually have huge managed service teams; because as amazing as mathematical probability is in deducing a predictive outcome on whether someone is likely to click or convert – the one big difference is statistical significance; that can take hours, days or weeks depending on budget and other factors.

The human can see in some cases faster than the automation of programmatic buying because the algorithmic decisoning that is working in the background has to go through qualified levels of variables before it assesses whether it should buy or not buy an impression. Imagine doing that for every single impression.

Asia is leap frogging from traditional media buying towards programmatic ad buying by the emergence of DSPs in the marketplace. You have Julian’s Brandscreen setting up office in Singapore outside of its AU HQ, Adgile growing from HK and USA and now ADZ which has just recently appointed Eduardo Saverin from Facebook fame to join its board and lead one of its investing rounds.

I’d also expect some large publishers to start selling media through these asian DSPs – just imagine the Indonesian market is over 250M people almost 70% of the US population, that is just one market. Asia is going to be huge.  However, not all markets are equal in Asia and the Australian market is disruptive and publishers are not embracing programmatic buying.  With good reasons….. they will see revenue plunge initially. Fairfax is indicating that it will not make any of its inventory through these platforms. Publishers if in agreement could in theory alienate such platforms if they continue to resist and are large enough to oligpolically force change. Its unlikely in the long-term as the push is coming from advertisers. If advertisers continue to bulldoze through programmatic buying then publishers have no residual power left to command a revolt. When you mix this in line with our economic instability you can glare that advertisers will win in the long run.

It also is evident that the growth of asian silicon alley is booming also; quite a few VC’s are swirling around and the Asian Governments like Singapore are handing out some very lucrative tax advantages in investing in home-grown businesses. This is further fuelling the growth of digital technology.

Its certainly exciting to be in Asia right now….

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Disruptive technologies…..programmatic buying……audience shifting and data distribution…. NFC and now……..

3d printing……

I’ve been researching this for some time and have been discussing this with a colleague in the UK who is one of the most nanotechnologist nuts of them all and the best way to explain 3d printing is to show you…. this is a great video on ZCorp and the future is really going to be interesting and potentially challenging for copycat China – you will see what I mean when you watch the video….

Why this is a disruptive force is because the cost of this printer will in time shift and be an affordable must have for personal use….. the digital age is changing not only media but the manufacturing industry….

I had to share this with all. I’ve been told from folks in China that this is already being made a reality so let’s see how disruptive this force becomes in the next 5 years.

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Will NFC become huge soon?

What is NFC? A football club in Northampton? :-) NFC stands for near field communications and really we all should not only know about it but we’re using it in a host of applications through cards.

NFC, or near-field communications, is a way for two devices to communicate small amounts of data when they’re placed about three-four inches apart – almost virtual payment where neither party needs use any other form of payment.

The London tube has been using it for years, and also HK and Singapore underground. It’s mostly seen as the next evolution stage of wireless payments transfers. The future gateway is a vision where your mobile phone will become the only thing you need to carry as it will become your tool to seamlessly pay for goods/services like transport; foods and restaurant bills.

Imagine this coupled with your budget app which can then add onto your bank account and predict your real liquidity at any time of day. Wow!

It’s all going through the motions and the recent below article on Sequent raising funding for NFC payments has got NFC back into the spotlight:

http://techcrunch.com/2011/05/10/sequent-software-raises-funding-aims-to-simplify-nfc-mobile-payments

Google is adding its presence to the NFC forum and weighing in on its future especially with its new android operating system.

The US big 3 telecoms partners are also producing the ISIS platform to become a new way to pay through retail, f&b and travel.

For those in the know it’s a x2 RFID tag where it communicates both ways. The first time I remember reading about RFID was for farming preservation. These are the types of tags placed on livestock on a farm.  Don’t ask me why I was bored at the doctor’s office reading a magazine on subsistence farming!

It seems that NFC has many challenges but given that Apple, Google et al are racing to be the first – it will be coming soon near you.

Many hype about this but think of the possibilities – you get foursquare delivering you integrated marketing offers – you go in to take advantage and you don’t even need your wallet. I may call it daylight robbery or entrapment where temptation hits you for your favourite handbag is on sale whilst you walk past a shop…. hhm…

However NFC has limitations including speed and London is especially aware of this:

http://www.theregister.co.uk/2010/12/23/oyster_london_nfc/

We tend to live in a world where we want on demand services at the speed of light….so NFC has some way to go to ensure delivery of that.

Maybe Jack Dorsey’s Square company should not fear just yet – NFC has a lot to live up to.

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