High Stakes, Disruption, and Innovation: Programmatic in Australia

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AppNexus announced its Australian expansion in March of 2014. We were drawn to Australia because of our strategic partnerships with several of Australia’s largest media and marketing leaders, a fascination with the pace at which the market seemed to be evolving, and the heft of a handful or two of influential participants. Having spent more than a year talking with Australia’s ad tech power players, it’s clear to me that as a top-10 global advertising market where approximately 20% of display spend is programmatic (eMarketer, PWC), Australia has embraced advertising technology—and is still leaning forward.

From my vantage point, 2014 represented what I’d call “A Big Deep Breath” for the Australian programmatic advertising market. The volume of direct-response dollars that migrated to programmatic for the last several years has started to plateau, which caused two important responses from major buyers and sellers:

  • The first, from the buyer, was the growth response: agency trade desks, responsible for the bulk of the dollars spent in programmatic, began to develop multi-pronged strategies for capturing the next wave of growth in programmatic. These strategies involved raising the profile of programmatic in annual trading agreements, focusing on audience access alongside—and sometimes apart from—media, and finding new ways to execute “traditional” buys through programmatic technologies.
  • The second, from the part of the seller, was acute awareness that a) programmatic will not replace direct sales at almost any level, and b) their media and audience assets are going to be a critical ingredient for the future of programmatic growth in Australia. These realisations bolstered confidence, and caused major publishers to experiment with new ways of trading that enabled them to retain both control and value of their media and audience assets.

In 2015, I expect the Australian advertising industry to exhale that “Big Deep Programmatic Breath”, and the trends and experimentation that characterised 2014 will crystalize into clear growth strategies for buyers and sellers. Watch the power dynamic unfold as publishers work to increase competition for their audience and data while, simultaneously, major agency holding companies work to translate their buying heft into competitive advantage for the agencies and their clients. I don’t think both forces can operate in total harmony, but I do think that we’ll see some newly strengthened and carefully cultivated partnerships. Additionally, buyer and seller strategies will almost certainly translate into a consolidation of the systems and technologies they each use to execute their mission. I’m particularly keen to see which companies invest in up-skilling their people to capture the advantages created through advertising technology, in contrast to the companies that outsource the very intellectual capital that they’ll ultimately need to differentiate their businesses. As a company with a core value of empowering our customers, I’m quite biased towards the former. Companies playing the “long game” with their talent here will win.

In particular, watch for five key dynamics in Australia in 2015:

  1. Major buying groups innovate to defend their turf from media companies, technology vendors and competing buyers. Agency trade desks play a pivotal role in this effort, though new muscles need to be formed and strengthened. Visionary leadership is rewarded.
  2. Major publishers have a standardised programmatic offering for their data, and most notably, they become comfortable decoupling their data from their media with the right controls and terms. This causes CPM increases across programmatic channels.
  3. Companies with troves of proprietary consumer purchase and identity data—think airlines, grocery chains, banks, telcos—will get very serious about turning those assets into marketable media & advertising products. Those that execute successfully will become a disruptive force in the marketplace, forcing current leaders to adapt and accelerate their own plans.
  4. Cross-platform buying and selling becomes a point of differentiation for both buyers and sellers. Mobile, still anaemic in terms of revenue, becomes an important ingredient in that offering, but still struggles for appropriate attribution.
  5. Major global media companies further wall off access to their supply, demand, and audience assets. Closed vs. open advertising marketplaces become more starkly defined, forcing important strategic choices for participants.

It’s a fun time to be in this industry, and the high stakes, strategic thinking, and true visionaries in Australia make it truly rewarding.  I couldn’t be more excited about the year to come.

Cheers!

You can meet Dave at Ashton Media’s “Programmatic Summit 2015” in Sydney on March 5th where he will deliver an opening presentation.

#15for2015

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