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Sociomantic’s Rohit Kumar on why programmatic must show value to grow

After an action-packed 2014 that included the acquisition by dunnhumby, continued innovations in mobile marketing and the foray into many new markets, Sociomantic has continued its momentum in the Asia Pacific region in 2015. The programmatic advertising specialist entered the region in May 2013 with an office in Mumbai, followed shortly by regional headquarters setup in Singapore in June. Last year the company expanded into Indonesia, Vietnam and Taiwan, all markets in which marketers expect a dedicated local approach. Now, the company has launched its latest office in Shanghai, China.

The APAC appeal
Sociomantic’s launch in the region, nearly two years ago, came at a time when advertising technology had just begun to attract attention. “The industry knowledge of programmatic was still nascent even in the core sectors of ecommerce and travel. People knew programmatic and its promise but there weren’t any serious players locally,” recalled Rohit Kumar, who was given an expanded mandate in mid-2014, and named Sociomantic’s Managing Director APAC.

The APAC region is exciting for Sociomantic in part because of its sheer size. Home to the world’s top two largest populations — China and India — APAC as a whole has more internet users than any other region in the world. To be specific, APAC as a whole has 1.4 billion active internet users as of March 2015. China alone has 642 million internet users, the most of any country in the world and its mobile advertising market, valued at USD 13.9 billion in 2015, surpassed the United Kingdom and Japan in the past two years to become second largest in the world, after the US. These numbers are game-changing and present the programmatic advertising industry, including players like Sociomantic, vast opportunities.

Of challenges & opportunities
APAC can be intimidating for foreign businesses for a few reasons. Market size is one of them; another can be the diversity of markets that make up the region. Besides demographics, language, and culture, the different markets also vary in mobile and Internet penetration, consumer shopping behaviours, and maturity of ecommerce.

In India, ecommerce is booming, as local online marketplaces such as Snapdeal and Flipkart receive rounds of funding by the billions. In spite of this, ecommerce is but a tiny fraction of total commerce in India. By comparison, Singapore has a more advanced and mature ecommerce scene in which nine out of 10 Singaporeans own a smartphone and every fourth ecommerce dollar is spent on a mobile device. These are a few of the reasons why Sociomantic, like many other digital businesses, chose Singapore as its regional business hub. That being said, Sociomantic also understood the importance of quickly establishing foothold in fast-growing markets beyond the regional headquarters, and hence chose Indonesia and Vietnam as the first markets of focus.

“Indonesia has a strong growth in its ecommerce sector, even though the internet penetration still has significant growth potential. Vietnam, on the other hand, has a burgeoning middle class as well as a rise of fashion and daily deal sites. These factors made both countries ideal markets for Sociomantic’s initial growth,” Mr Kumar pointed out in a conversation with DMA.

Indonesia boasts of a mobile penetration rate that is currently well over 100 per cent and an expected total online spend of USD 4.49 billion by 2016. Despite the above figures, online spend in Indonesia, like India, still only makes up 1 per cent of total retail spend in the market and has much room to grow to say the least.

Next in the plans was to take on China. Mr Kumar explained, “We have been serving the market in Greater China for our SEA clients, so we know how our campaigns work with Chinese inventory. We also believe that Chinese market has now arrived at a stage that is ready for our high-tech ‘German engineered’ solutions. The fact that our parent company dunnhumby has a presence in the market only helps in setting up operations there.”

The programmatic potential
In this digital age, there should be no excuse for marketers to shy away from using programmatic display as part of their sales and marketing strategies. Programmatic display should be considered a strategic means for achieving marketing objectives instead of being viewed as simply another marketing channel. As advertisers become more comfortable and familiar with the mechanics of programmatic, sooner rather than later, incorporating programmatic solutions as a way of consumer engagement will become a norm.

Rohit Kumar on five actions that the programmatic industry should take to address to grow its share of the advertising pie
#1. Demystify a complicated structure
For want of a better word, the confusion that comes in this space from the vendor side is a pet peeve. The industry likes to bucket companies into categories, and there is a constant conversation on how Sociomantic differentiates itself from agency trading desks, DSPs, retargeters and many other display advertising players. On top of that, there are new three-letter-acronyms surfacing every day, and we have to keep in mind that marketers will not spend money on something they don’t understand. It is in our interest to work towards simplicity rather than confusion. Right now, we are achieving this through market education via one-on-one formats and industry platforms like DMA and local conferences in the various markets we operate in.

#2. Don’t just profess performance and value—prove them!
Channel growth cannot just be demanded. Programmatic needs to first justify its place in media plans and show business results. Programmatic spend in the region is lower than it could be but instead of focusing on why this is the case, we should start thinking about what programmatic can do that less dynamic media buying methods cannot. If we start addressing that question, then the dollars will shift. Right now, there exists an expectation culture. In my opinion, there isn’t enough conversation that surrounds the solutions to problems.

For some industries, it was easy to demonstrate value quickly based on conversions and performance, but there is still some convincing to do with the larger categories. That being said, it is difficult if not impossible to generalise across the region. In some of the markets, publishers are slow to adopt programmatic selling which results in a lack of supply rather than demand. In that context, a brand would be justified to question the move to programmatic, because why should they take the leap if inventory hasn’t?

#3. Promote the right kinds of attribution
Too much of the industry is dependent on the last click attribution (LCA) model, and the reason is the vast majority of the market uses Google Analytics, which is a free tool and reports using LCA. Every marketer knows the downside of the model because it gives no credit to what led to the last click. We have a very strong view on this and have written a whitepaper on the multiple models that can be used instead. One example is the U-shaped attribution model that could give higher weight to the first click (to represent the difficulty of acquiring the first click), then a lower weight to middle clicks and again a high weight to the last click. There are many models out there, and getting the industry to understand their options is a big challenge. At the same time, it is also a huge opportunity for advertisers.

#4. Educate on the value of using of first-party data
Claiming lack of data is a nice ‘get out of jail’ card for people who are afraid of getting their feet wet with programmatic. The biggest advantage of this business is the ability to harness the first-party data that advertisers have. It is the precise reason that makes ROI-based campaigns possible. The advantage of first-party data lies in the fact that it differs greatly from client to client, which gives each one a unique advantage. Third-party data is an aggregated insight and can be used in reach or branding campaigns.

Still, we have not seen a campaign that performed better because of using third party data. It is nice to have to achieve reach, but it is far from being necessary to succeed with programmatic. Moreover, third-party data can be prohibitively expensive to start working with at this time in APAC. That’s why we recommend for our clients to start with the valuable data they already have—most importantly CRM data—to tap into the value of programmatic.

#5. Commit not only to a mobile future, but also a mobile present
APAC is a mobile-first region, and luckily for our clients, our dynamic banner technology has been mobile-friendly since 2012. The general feedback right now is that browsing on mobile is happening, but buying on mobile still has a lot of headroom to grow. Many of our clients want to run mobile campaigns as an information-gathering mechanism. We are seeing many new clients kick off their programmatic experience with mobile campaigns and then growing their expertise out from there to desktop and to social. More than that, we are witnessing the possibility of moving from a mobile-first to a mobile-only region with announcements like Myntra India shutting down its desktop site to only operate a mobile app, and Alibaba in China encouraging merchants to list on mobile only. All of these make the future of mobile in APAC and the rest of the world very exciting and full of potential.

Noor Fathima Warsia

A veteran journalist in the Indian marketing, media and advertising fraternity, Noor Fathima Warsia took on the role of Group Editor -– APAC for Digital Market Asia in May 2013. Noor has focussed on tracking trends and developments in the Indian media industry.