Programmatic has moved from the margins to the mainstream. Will it stay there?

The South China Morning Post (SCMP) has some surprising views on incremental revenue. Ian Hocking, VP of digital, at SCMP, says he frequently listens to pitches from potential partners promising to add a little extra to the bottom line. This is pretty standard in ad tech. But Hocking thinks we should be aiming higher in order to rise to the joint challenge of a potential Covid recession, and the need for new privacy-focused policies.

“Incremental revenue suggests you only are taking this tiny little bit more: just this incidental thing,” he says. “But I want to talk about something that’s really going to substantially drive (revenue). Those are the partnerships I want to concentrate on.”

Hocking divulges his point-of-view in a webinar hosted by App Annie. Titled Ad Monetization Landscape: The Programmatic Journey, the discussion centred on how publishers and their ad tech partners can flourish in a trust-centred post-Covid world. His key takeaway for publishers was this: choose your programmatic SSP partners carefully. His argument also extended to the number of strategic relationships.

On one illuminating slide, he showed the quantity of partners working with an unnamed UK publisher – well over 500. He contrasted this with SCMP’s cohort – well under 50. He explained that more isn’t always better. “In my experience, I don't find that adding tons of partners necessarily increases the number of bids on every ad impression that we serve,” he says. “In fact, I find that it stays really constant once you've got four or five.”

The strategy seems to be working. SCMP has achieved a 325 per cent year-on-year increase in its programmatic revenue.

Hocking’s presentation was a fascinating insight into the strategy of a major global publisher. And it was a reminder that programmatic – synonymous with RTP during the early days – is now well-established on private marketplaces and direct channels.

Programmatic has changed the way the industry thinks about efficiency. It used to be about lowering costs. Now, it's all about eliminating waste – by ensuring buyers always pay the right price for the right inventory.

And this drive for efficiency is irresistible. Every vertical is becoming wise to it – which is why programmatic is now permeating other channels such as audio-connected TV, digital out of home and, of course, mobile.

For all the good news, we shouldn't ignore the big challenges facing publishers. The advertising ecosystem is home to a lot of stakeholders – advertisers, platform owners, users, shareholders. They sometimes have conflicting interests.

But there is one concern that currently unites all of them: consumer trust. It has been two years since GDPR came into effect across the EU, and the movement toward data protection and consumer privacy is now sweeping across the globe – from India to Canada, California and Brazil.

The platform owners have taken note of this development and are acting on it. Apple, Google, Mozilla, Microsoft and others are systematically dismantling the third-party tracking tech that underpins most of what we do in digital advertising.

We can't wish this away. Instead, we need to find new ways to do retargeting, lookalike modelling, frequency capping, audience segmentation and more.

According to Colin Lam, strategic partner and development director at Index Exchange, this re-thinking needs to happen now. He says publishers must look at how they activate first-party audiences, and have the right pipes in place to be able to do so. Meanwhile, exchanges and DSPs have to work on ingesting non cookie-based solutions, and buyers and advertisers must revise how they activate their CRM data or firs-party audience sets.

Ultimately, he thinks these changes will centre on people-based marketing. "This is the solution moving forward," he says. "We're now seeing positive signs of movement within the APAC space. It's extremely important to be having these conversations right now because the cookie does have an expiration date."

Of course, trust is not just a concern for end users. It's a big issue for buyers/advertisers too. They want to know exactly who the sellers are, and where they are placing the ads. They want to ensure brand safety and prevent fraud.

A number of industry initiatives are helping. In the App Annie webinar, Evelyn Tay, business development director mobile at OpenX, referred to some of the most effective initiatives. Amongst those she cited included Ads.txt (a text file that lets buyers to check the validity of sellers), sellers.json (lets buyers identify the final seller of a bid request) and Trustworthy Accountability Group (a global initiative to fight ad-tech crime).

She also advised app publishers to consider Apps-ads.txt: “It helps prevent the unauthorised reselling of inventory,” she said. “There are a lot of bad guys that can fake or clone an app, which can hurt the publisher’s income or image. We strongly encourage they look at Apps.ads txt.”

Lam agreed and reported that the APAC market has responded well to these initiatives. "We're going in the right direction. I think ads.txt is at about 91 per cent adoption. But ideally, we would be looking at 100 per cent. This shouldn't be a company differentiator. It should be a shared value across the ecosystem."

Index has taken its own action. It created ‘audit logs’, which act as receipts that record every transaction that takes place, including bidding and transaction events.

Lam said: "Buyers and advertisers can be sure they are getting what they paid for...that nothing murky is happening beneath the surface with regard to fees and so on."

Of course, it's not just trust and transparency that have recalibrated the way we think about digital ad space. The Covid pandemic is laying waste to many industry verticals – travel, hospitality, airlines – and many of them are big online spenders.

According to TeQ Kim, regional director for Xandr APAC, there is less budget available for branding campaigns as a result. On the flipside, other verticals such as e-commerce, government and healthcare are increasing the spend.

Another new trend is rising demand for niche audiences. He gives one surprising example. "Marketers are targeting groups like 'young working moms with young children who like watching dramas'. I've never seen targeting options like that before. Marketers are looking for very strong ROI. I think this could be a great opportunity. This is also why I believe programmatic will be less impacted than some of the other methods of digital advertising."