Recently, I have been fortunate to spend time with senior leaders from eight of southeast Asia’s largest CTV and OTT companies to get their views on the industry, business opportunities, and challenges.
Like the region itself, it was a diverse group ranging from respected national broadcasters to those with a more focused content offering and scaled multinational OTT providers. However, a few key trends and opportunities clearly emerged.
Scarcity of Inventory
CTV/OTT is the most highly valued and in-demand inventory for buyers across the region – and there is simply not enough supply. This was according to the largest CTV buyer in the region, and was also validated by each publisher. Market maturity is one contributor, and all attendees had plans to significantly grow their user bases, but ad formats are also a key factor. Pre-roll, mid-roll, and post-roll are the dominant advertising formats, which limits the number of ads that can run for each piece of content, and limits the flexibility for pricing and packaging of inventory. Ad pods were discussed at length as a practical solution. Ad podding allows publishers to insert a group of ads into each ad break and gives them the controls to decide on how many ads to run, the duration of each ad, and to ensure competitor exclusions are in place. Its introduction can immediately double or triple a publisher’s inventory, while also allowing for some creative packaging solutions such as a premium for the first position in each pod.
While there is a general scarcity of inventory it is often even more scarce when we look at what is available to programmatic demand. The reason most often cited is that direct sales (non-programmatic) still represent the majority of ad revenue among this group of publishers, and it is always prioritized above programmatic demand in the ad server. The drivers for this are a desire to ensure agency trading agreements are fulfilled and legacy internal sales hierarchies. This approach makes sense at first glance, but I think it needs to be challenged if a publisher wants to fully maximize the value of their inventory. We have seen programmatic buyers running programmatic guaranteed (PG) or private marketplace (PMP) deals who are willing to pay the same or a higher CPM than the CPMs secured via direct sales. So why should the PG/PMP deal not be on equal priority if it has a higher CPM?
Unified Auction for CTV and OTT
One solution to the above challenge is to implement a unified auction, which allows direct and indirect campaigns to compete so that inventory value is maximized. Unified auctions still allow for publishers to prioritize campaigns within the auction if necessary, and monitor pacing to ensure the important agency campaigns are served. As such, full control is maintained and publishers should achieve a healthy increase in revenue.
Solutions like PubMatic’s OpenWrap OTT can help a publisher introduce ad podding to increase their supply in a controlled manner, while also democratizing access to their supply so there is maximum competition for every impression. A few of the publishers at the event have implemented OpenWrap OTT and the initial results have been very encouraging.
Getting Measurement and Targeting Right
Measurement and targeting were hot topics of discussion. Managing reach and frequency is hard for buyers to implement across a fragmented landscape, which plays into the hands of the walled gardens and makes it harder for buyers to justify moving spend away from linear TV.
On a national basis at least, linear TV has established and trusted measurement in most Southeast Asian countries, which makes it easy to rely on old practices and stagnate. I believe this is one of the biggest challenges the region faces. There are third-party identity solutions that may help solve this challenge, and I believe these should be carefully evaluated by the publishers and agencies to see which meets their needs.
The passing of Content Object signals has been encouraged as a way to enhance and standardize contextual targeting (think genre, show title, language, rating etc) and increase transparency as it gives advertisers a much better idea of the inventory on which they are bidding. With these data points made available at scale, buyers can bid higher on the inventory they value most, which creates a positive outcome for both sides.
Maintaining Control
Creative approval tools were cited as being very important to ensure there were no regulatory infringement around events such as elections, where the laws vary greatly across the countries. Different cultural norms also mean that certain products or creative executions are acceptable in one country but not its neighbor. Publishers feel far more in control and can mitigate risk if there is the ability to review creatives before they go live.
Based on what we heard the path to success is predicated on delivering a TV-like experience, and includes: increasing ad supply through ad podding to help build scale, introducing a unified auction to maximize the value of inventory while maintaining control, and implementing well thought through measurement and targeting solutions that provide buyers with the tools they need to make decisions effectively.
As always, choosing the right partners is critical: Are they are innovating, listening to you and aligned strategically? If so, the outcome will be a vibrant and profitable advertising environment in one of the world’s most exciting growth regions.
