What's holding back online video in Southeast Asia?

A wave of research has been published over the last few months that points to a growth in the adoption of online video in Southeast Asia. There have been widespread conversations in the industry around online video advertising and its potential benefits and this corresponds with the increase in the demand and trading of online video on publishing platforms.

This trend has been confirmed in a recent Forrester Consulting study commissioned by SpotXchange where 26 percent of online video ads, representing between 21-40 percent of the Southeast Asian marketplace, are being traded programmatically. While this highlights the growth in programmatic buying in Southeast Asia, a number of challenges are potentially holding back the industry’s future growth. Outlined below are a number of issues publishers and advertisers are currently facing in Southeast Asia.

Brand safety and viewability

Fraudulent trading behaviour, including click fraud and online video advertisements being served in “unsafe” places such as illegal downloading or pornographic websites, is a significant concern amongst marketers. This issue has gained substantial attention in the programmatic trading industry, where advertisers have found their ads being displayed in sites they do not wish to be associated with. Beyond the potential of being exposed to an artificial increase in clicks, this could seriously damage a brands reputation. Industry initiatives such as the Internet Advertising Bureau Southeast Asia Video Council and the Open VideoView Initiative, of which SpotXchange is a founding member, have identified viewability as a key standard for measuring the effectiveness of video advertising. The industry is currently working towards a commonly agreed upon standard for measuring how ads are being viewed and this will ultimately improve transparency and further drive demand.

Pricing

There needs to be a marked change in the way publishers and advertisers perceive the cost of video inventory. Many advertisers have a perception that the higher an ad unit is priced, the more likely it is to come from a premium publisher. However, this is not proven as there are a number of factors that affect the price of online video inventory – including the initiation type and the player size of an online video ad. As a price guide, the cost of a mid-tier online video ad unit is currently between US$4-10 and the cost for a premium online video ad unit ranges between US$15-20.  The demand for premium inventory far outstrips supply so the rate in which budgets are flowing to secure this inventory and the volume of streams are not increasing at the same rate.

Banner versus in-stream

Publishers are at different stages of adopting ad technology to support online video advertising in Asia. This requires modifications to be made to support banner and in-stream formats. For example, videos that play in banner advertising are generally auto-initiated. However, advertisers have cited real user engagement coming from in-stream formats where the ad unit appears before or after the content is displayed. This contributes towards a significant price differentiation between banner and in-stream formats with a higher CPM for in-stream advertising. In-stream formats attract an average cost of between $5-7 per unit versus banners that cost between $1-2 per unit, or less. In-banner and in-stream are completely different forms of media and the pricing should reflect this. However, marketers believe they should be able to buy in-stream at the same rate, which is similar to using an age old adage of comparing apples with oranges. A post-campaign analysis has also revealed that the completion rate for the viewing of an in-stream video tends to be much higher when compared to a banner unit.

Education and talent resourcing

A prominent discussion topic has been around the lack of skills and talent in Southeast Asia to advance programmatic trading and real-time bidding for online video. Many agencies, brands and ad-tech companies feel that the explosion of programmatic buying and selling has come so fast that they have outpaced their ability to acquire enough staff with the skill sets to cope with the flow of budgets into programmatic video trading.  Multinational brands such as P&G, Reckitt and Lenovo have setup in-house trading desks to complement their media agency’s buying initiatives. While some multinationals are very familiar with the use of advertising technology, there still remains a significant lack of education and talent in Asia. Media agencies may have caught up with programmatic trading and online RTB but they may not be working with CMO clients who are aware of its advantages. This may lead to CMOs dictating the budgeting, buying and measurement of video advertising in the same way they would manage TV advertising spends. Instead of measuring the success of their campaigns by the ability to effectively target and reach their audiences using programmatic and online RTB, these advertisers measure success through a click-through rate (CTR). To increase education and talent, the industry needs to lobby universities to include programmatic trading and online RTB as part of their marketing curriculum and look at ramping up education within agencies to help their staff acquire the right ad tech skills.

Internet Infrastructure

The adoption of online video is critically dependent on the Internet and mobile data infrastructure of a country. According to ITU, in countries like Singapore and Malaysia, the consumption of online video has been particularly strong across computing and mobile devices and this is supported by Internet penetration rates of 73 and 67 percent respectively. However, countries such as Indonesia, Thailand, Philippines and India are still lagging behind when it comes to the reach and viewership for online video. This can be attributed to the significantly lower Internet penetration rates in these countries, with the Philippines’ and Thailand’s Internet penetration levels at 37 and 27 percent respectively, Indonesia at close to 16 percent and India at just over 15 percent of its total population. The readiness of a country’s Internet and mobile data infrastructure will support advertisers in considering whether their audience is ready for online video advertising.

The challenge of getting publishers and advertisers across Asia to increase their use of programmatic trading and online RTB requires the entire industry to work together. By raising the education and talent standards in the market, we will start to see a cascading effect where advertising technology will demonstrate its leadership in helping advertisers get more out of their video spend while reaching a better targeted demographic audience.