Like many industries, the ad business has been impacted by the coronavirus pandemic as landmark events got cancelled and budgets slashed. But the space has also been quick in finding creative workarounds, such as putting more emphasis on video and digital channels, and on geographies that are on the road to recovery – Japan and Korea, for instance.
Normally around this time of the year, my digital media and adtech group colleagues and I would be chatting away at a bierhalle somewhere in Cologne, going over the events of the day at DMEXCO – the digital media industry’s prime trade show. But as with many events in 2020, we had to go virtual this year and catch up on what the show had to offer via Zoom (still, there may have been beers involved).
Here’s an excerpt from our conversation.
Michal Waszkiewicz: Oren, you’re based in the US – the largest and most innovative digital ad technology market. Is there anything that stands out for you in terms of how the adtech scene has adapted to the COVID-19 reality?
Oren Bernstein: I missed quite a few industry events this year, which is where I usually test the waters and learn about new tech and trends, but from what I can tell, within the media industry – publishers, agencies, advertisers – there appear to be greater technology adoption (especially TV-related) and accelerated use of digital content. When we’re all stuck at home, online is clearly the most critical channel. And Asia’s no different.
I think the most interesting growing (although not new) trend is influencer marketing. More and more people are ‘cutting the cord’ with traditional TV services. Streaming media platforms such as YouTube, Twitch, Facebook and Mixer are becoming increasingly important and, because of this, the importance of influencers is increasing. One big area for innovation here is the use of data to analyze, quantify, manage and optimise influencer marketing. A case in point is our US client CreatorIQ, which delivers an influencer intelligence platform and for whom we’re running a business development program in Japan.
Michal: David, do you see a surge in influencer marketing in Japan and Asia more broadly?
David Royer: Definitely. There are insanely popular YouTube, Instagram and TikTok stars in Asia, with tens of millions of followers, who the west has never heard of. They span gamers, fashion/beauty vloggers, travel vloggers, foodies and everything in between. We’ve been working with a handful of Tokyo-based influencers for a video marketing agency client and this definitely helped show their Japanese customers – some of whom are well-known brands – that we “get” Japan.
If you’re an influencer marketing tech provider, or your creative work depends on influencers, and you’re looking to sell into Asia’s top advertisers and agencies, you have to localize.
Michal: But I would’ve thought that Japan, despite its relatively good control of the coronavirus, has seen some decline in its ad business, no?
David: We’ve actually seen an increase in inventory for both display and video ads because more people have been staying home and consuming more media. Japan remains firmly one of the biggest ad spenders in the world, no doubt about that. But yes - sectors such as travel and make-up, for example, have been affected pretty badly.
Interestingly, this led to a decrease in media prices which opened the door for smaller advertisers to start buying more inventory. We’ve even seen smaller companies buy ad spots on terrestrial TV - something they could never do before. And the more they do that, the more they’ll need clever tech and analytics – meaning adtech companies selling into Japan can add a whole new segment of medium-sized customers to their target lists.
So, in that way, it has been very interesting.
Michal: You mentioned travel as hit hard. Any signs of recovery?
David: Japan makes a lot of money from tourism. The postponement of the Olympics was a huge blow to the entire East Asia region. But in recent months, we have seen an increase in domestic travel advertising, driven by the Japanese government “Go to Travel” campaign – helping it slowly catch up with the level of ad spend in sectors that saw an actual boom due to the pandemic (ecommerce, food delivery, work from home related products, etc).
Likewise, airlines and hotel chains in Korea have been promoting in-country holidays, offering discounts and hoping to capture some of what a typical Korean would spend on overseas travel in a regular year. Not sure if they’ve hit their numbers exactly, but the smart, localized digital campaigns I’ve seen circulating have definitely helped.
This ‘domestication’ further reinforces that any foreign adtech vendor or marketing service provider targeting Japan or Korea needs to have local presence and to localize their offering.
Michal: Right, the Olympics … How do you see this working out in 2021?
David: While we now think it’s likely the Olympics will happen, we’re unsure of the shape they will take. It’s possible they’ll focus solely on the sports competitions with few surrounding events, which could mean some non-direct marketing activities may not happen. But as far as Olympic sponsors go – your McDonald’s and Coca Colas – they are going ahead, and the Olympics are being mentioned as a matter of fact in their ads.
Michal: Oren, when you talk to your adtech/martech clients and prospects about opportunities in Asia, what’s your advice?
Oren: In Japan and Korea, major agencies like Dentsu and Cheil dominate – they have the ear of the biggest brands and can shape the whole market’s technology landscape. As an adtech startup from the US or Europe, it’s always a challenge to get their attention. But over the past few years, and even more so in the last few months, the big agencies have definitely been more open to working with smaller western players. In the last year, we’ve seen a client’s tech being adopted by one of the big agencies to help them measure TV responses. We’ve also seen an agency reconsider in-house development in favor of partnering with a smaller player because it was – unsurprisingly – faster and cheaper.
So, my advice is: Asia’s doable, but you need to be smart about it.
David: To add to that, as part of our Open Innovation business, we’ve been hired by a couple of big Japanese agencies to seek new technologies in Europe because their own reach in that region is lacking. It’s a two-way street now: adtech startups want to work with the Japanese, and the Japanese are actively seeking them out. I dislike the corporate lingo, but we are indeed ‘uniquely placed’ to support companies in this space.
Michal: What about privacy? A lot of my European client conversations this year were about the world going cookie-less and how the adtech industry can continue to deliver insights without highly personalised data. Any views?
Oren: It is a challenge for sure. Asia has always been much stricter on privacy and personal data than the west. That’s why previous-gen adtech staples like programmatic were slow to take off there. But now we’re dealing with actual data monopolies and antitrust issues, and the East Asian markets won’t have it. It’s a complex topic, but suffice it to say companies that figure out how to deliver granular audience insights without relying on third party data would do well to take their offerings to Asia.
David: And on the subject of security, there’s also been a significant rise in different types of fraud in Asia – for instance app installation scams, where advertisers unwittingly pay affiliates for fake downloads. This is costing the industry a lot of money, so technologies that can help counter this threat will be well received by publishers and advertisers alike.
Michal: I agree – privacy protection and ad fraud prevention are front of mind in Asia. From what I saw at DMEXCO this year, some of this tech already exists. I guess the question is now: who will successfully take it there?
To discuss the opportunities for your digital media business in East Asia, you can reach Michal Waszkiewicz at email@example.com