Why should we care about the Asian-Pacific digital advertising market?
According to the latest Strategy Analytics report, this year the Asia-Pacific region (APAC) is likely to overtake North America as the biggest digital advertising market worldwide. Predictions range between an 18%-20% increase in digital ad spending, which would bring its total spend for 2016 up into the region of $70-$80 billion.
This is a staggering figure and one we should not overlook. Perhaps unsurprisingly, China is firmly in the front seat of this regional drive in digital ad spending. This year, 44% of total digital ad spending worldwide will come from the U.S and China alone. But China is not an oddity, with the likes of Japan, Thailand, India and Indonesia, the region boasts half of the world’s top six countries in digital ad spending.
What is unique & desirable about Asia-Pacific digital market?
Mobile-first – The majority of people in APAC interact and engage with the digital world through their smartphones. In China, uniquely, users often even favour apps over mobile web. Understandably, many APAC countries have become critical markets for mobile app and gaming companies. Leading in-app advertising company, Vungle, saw ad revenues soar up 400% in China from 2015.
Efficient broadband – Mature markets such as Singapore have well developed broadband networks, providing a large internet-connected audience. WeAreSocial reported that an impressive 82% of the city-state was connected to the web. The availability and size of audience in many countries in APAC is attractive, and there is plenty of room to grow. Currently, spending per person in APAC is around $15, compared with $165 in the US and $95 in Western Europe.
Untapped technology – The Pokémon Go phenomenon has highlighted the power and potential of location-aware apps and geo-targeting. This week, breaking away from its traditionally risk-averse mould, Japan has become the first country to include in-app brand sponsored locations with McDonald’s Japan.
What are some of the challenges of the Asia-Pacific market?
- Unique market – Just because it works in the West, doesn’t mean it will work in APAC. Whilst foreign companies can bring a lot of value to the region and act as a bridge between China and the rest of the world, it is essential to tailor tactics to the region. Vungle’s unprecedented success in China is largely due to their commitment to understanding the local market. By hiring Chinese-speaking employees and sending them into the field, they have localized everything from sales, engineering to account management.
- Latency - The Chinese firewall not only screens and blocks websites, but also slows down almost every international ad call. Moving forward, companies would benefit from investing in localizing their servers.
- Anti-Fraud & Ad-Blocking– Anti-piracy efforts and standards of viewability abroad are yet to catch up with the U.S. and Western Europe. In addition, many APAC consumers in countries such as China are mobile-savvy and well-aware of the latest ad blocking technology. According to a study by PageFair, 36% of smartphone users in APAC countries have ad blocking technology installed.
To recap, the potential of programmatic video in Asia-Pacific is huge. Foreign companies should not be discouraged by the regional challenges; APAC offers a unique market space that is only just starting to take off.