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2016: The year mobile ad tech takes a giant leap forward

In the world of online advertising the year 2012 was perceived as the ‘year of mobile’ which has also been one of the ongoing discussions in the industry for several years. Mobile advertising existed before this, but in this period something substantial changed, which drew the attention of big players starting to realise that mobile was not just a matter of shrunken processes and different ad units, but a true market. Mobile was real. This trend was easily evidenced as marketers started allocating spends and budget to mobile to drive their campaigns.

Fast forwarding to the present …mobile is clearly real and has evolved much faster than online, gaining strong momentum in the last few years. At present mobile is known to be the preferred platform to target the digitally connected generation. Monetising on this trend the industry is seen switching from Norming to Performing and refining along the way with scope for growth. It’s the point in time where mobile ad tech completely disconnects itself from its display origins and stands as an independent force.

Supporting this drive is an eMarketer report which highlights the significance of digital advertising spending in Asia-Pacific, estimating it spends to reach a total of USD 252 billion by 2018. Further echoing dominance for mobile, as APAC is forecasted to have 1.48 billion smartphone users by 2019, due to a surge in smartphone adoption coming from emerging markets like China and India. Marketers will also be seen revising their strategies to target these mobile audiences as was reflected in our recent programmatic trends report that identified Asia Pacific region as the highest growth for mobile ads inventory and spending in the first half of 2015.

Cookie becomes obsolete
As mobile users spend more time on apps and mobile web, it is clear that cookies have become obsolete and there’s really no replacement for it.

In its place are a basket of IDs, signals, and inferences that are being cobbled together to somehow approximate privacy-safe user identification. However, this is effective only in some cases, especially when you get a user to log-in. There is promise for innovation here as tracking users across devices and context within exchanges is something that industry leaders are placing heavy focus on.

Similarly, user’s preference for using multiple devices to make a purchase further complicates the process of attribution. Bringing attention to a need for intelligent attribution model or the efficiency of attribution as a budget-planning metric to ensure effectiveness in targeting.

Mobile breaks free, no longer an extension of online
Marketers are increasingly looking for innovative and flexible mobile-specific formats, such as native ads and video in order to garner attention of their target audience and enhance their dollar spends. Despite being at an early stage with native ads and video, purpose-built portrait video units are becoming an obvious next step.

As apps or advertising SDKs become more customisable and start to take hold, these two formats will start to evolve into completely different and interactive units that could enhance advertising experiences. Dynamic video content; interactive units that actually work; SDKs that understand the propensity toward one type of behaviour vs. another, and advertising experiences that follow suit; and storyboarding or incentivised storyboarding across multiple screens.

According to industry experts spending on native ads in Asia Pacific is also expected to double to USD 16.9 billion by 2018. With China leading the market and grow from USD 2.6 billion to USD 5.12 billion, followed by Japan at USD 2.22 billion to USD 4.36 billion and Australia from USD 0.78 billion to USD 1.53 billion. Indonesia will also see a rapid increase from USD 0.55 billion this year to USD 1.53 billion by 2018.

Just like how smartphones changed the way we consumed the Internet, this evolution will result in the mobile becoming independent and moving beyond desktops into a market and ecosystem that will quickly dwarf its predecessor.

Programmatic will lead
Real-time bidding (RTB) is real and a force that matures and becomes a reality for mobile around the world, moving to television, outdoor and print. According toeMarketer, the global RTB spend in digital advertising is estimated to reach USD 8.5 million in 2017. This trend is starting to influence the marketers in APAC as it has the biggest market potential for programmatic to gain more revenue.

In another report, eMarketer also shares majority of APAC’s marketers to either already using programmatic advertising or have plans to use it for generating better revenues for their ad campaigns, build brand awareness drive traffic to their website and primary being customer acquisition.

As part of this process, programmatic buying models, especially in mobile, will truly come of age. As programmatic deals and transactions across agencies continue to influence buying, traders, media planners, exchanges, and publishers will soon become centralised. Budgets will be broken out by audience rather than by medium, and all will be driven through established programmatic pipes significantly evolve the process of programmatic buying, especially in mobile.

Publishers gain power
A substantial shift will happen where publishers will be able to have access of the aggregate makeup and behaviour of their users as the fundamental data systems that connect users and advertisers mature. The preponderance of data available historically to the demand side will start to shift, and also become available to the supply side.

Through these “insights” and real-time access to user data on their apps or mobile sites, publishers will be able to customise the experience of ad-driven monetisation. As ads increasingly become content, both will become an intelligent stream, delivering more personalised experiences that are finally relevant to their end user.

Publishers will have the ability to promote inventory and/or audience packages to platforms where they can be discovered and customised programmatically. This will encourage deal creation from both publishers and advertisers, hence lowering the technology barrier that previously only allowed large publishers to have direct access to relevant demand directly.

All in all, 2016 will be the year where mobile truly gains independence and moves on to graduate into the advertising mainstream. With the alarming pace at which it is evolving, it would not be surprising to say that mobile will completely change the way digital advertising works. Perhaps, by 2017, we may not even be talking about “mobile” anymore but resolution and context.

Garrett McGrath

Garrett McGrath is Smaato's Vice President of Product Strategy, leading the product development of Smaato’s Global Mobile Monetization Platform. Garrett has been directly involved with the evolution of advertising technology, and more recently Real-Time Bidding, for over 15 years. He has been instrumental in the online or mobile advertising success of companies ranging from lean start-up, to ad tech specialty, to Fortune 10. At Smaato Garrett leads the Product Strategy group, helping to ensure that Smaato stays ahead of the ever expanding and constantly changing global mobile advertising market.