When programmatic burst onto Japan’s advertising scene, the effect was immediate. Quick to recognize and realize the opportunities of automation, the market expanded quickly — by 2016 it was home to the third-biggest programmatic trading center in the world.
Now, the market is maturing as brands, agencies, and publishers build on the original programmatic model. While continuing to utilize core benefits — high publisher yields and strong advertiser yields, driven by data-based targeting and large-scale efficiency — there is a growing movement towards another branch of programmatic: Private Marketplaces (PMPs).
Formed in a slightly different mold, PMPs are predominantly about precision: only accessible for select buyers and sellers, who conduct deals for targeted audiences. Let’s explore what PMPs are and why they are growing in popularity amongst publishers and buyers.
Keeping relationships personal
Relationships are a fundamental element of trading in Japan. Indeed, it could almost be said that personal relationships are just as important as the terms of a deal.
This is why agencies consider trustworthiness to be a powerful differentiator — for example, Hakuhodo recently described its in-market reputation for trusted relationships as the basis for its U.S. expansion. And this is also the reason for rising popularity of programmatic permutations that enable buyers and sellers to develop relationships, such as PMPs.
The ways in which PMPs achieve this are varied. Firstly, access is invitation only: publishers can limit seller access by giving unique IDs to those they wish to trade with, which is good for maintaining brand safety and fostering relationships. In return, buyers get access to premium inventory, which in turn boosts relationships with the brands they represent.
Secondly, there is capacity for privilege, as particularly favored or frequent buyers can be given preferential treatment in exchange for purchase commitment. This is beneficial to all because it enables publishers to secure revenue and prominent brands or agencies — such as Lexus or Hakuhodo — can gain a buying advantage.
Finally, there is the opportunity to keep scale yet retain trading closeness with multi-publisher PMPs. For brands, this means a wider pool of inventory, and for publishers it means simple and safe access to incremental demand.
Maintaining total transparency
Transparency is a vitally important topic in Japan, especially in the wake of the Dentsu billing story that rocked the online advertising industry. Consequently, the need to define exactly how resources are allocated is growing.
With PMPs, all parties know who they are dealing with and where spend is going. Buyers know with confidence what they are purchasing, where and when ads will be placed, and how much they are paying. Sellers also gain an accurate view of CPMs and the ad creative due to appear on their site, with the assurance that their premium inventory will capture its highest possible value.
Precise audience targeting
Lastly, we come to one of the attributes of PMPs that make them attractive to all markets focused on accuracy: within a private trading environment, advertisers can obtain valuable first-party insight and target specific audiences.
In a PMP, publishers have full control over access, which means they can safely offer targeting based on audience behavior. For advertisers, this presents the opportunity to buy inventory they know will reach their target audience — saving budget wastage and enhancing impact. For instance, say a sportswear brand, such as Mizuno, is part of the Mainichi’s PMP; using its audience data, Mizuno can ensure it only buys inventory that appears beside content viewed by sports fans.
And like any precision marketing campaign, targeting can be refined over time. The closer publisher, advertiser and agency relationships become, the better deals can be formulated to benefit everyone.
Programmatic is continuing to grow rapidly, with spend predicted to reach ¥279.4 billion by next year. Yet the future will be different from the early days of programmatic. As demand for transparency, better targeting and closer relationships grows, programmatic guaranteed buying models like PMPs will gain wider adoption.
And the global programmatic space should keep an eye on Japan too – in addition to the rapid growth in digital advertising, close links between buyers and sellers make Japan a prime region for ad tech innovation.
Paul Sternhell is general manager of programmatic direct and ad server at OpenX.