What's behind the shift in localised media investment in APAC?

From a brand marketing perspective, tuning creative advertising to local markets has always been important. The requirement for local knowledge to inform campaigns and brand strategies has created the networked agencies we see today.

But as digital media increasingly dominates brand marketing investment and the structure of the digital channel eco-system is skewed towards tech giants, brands face a media dichotomy.

On the one hand, local optimization of programmatic investment has never been more important and on the other investment in technology, channels are increasingly being decided at a pan-national, regional, or even a global level. There is therefore an inherent and growing pressure to regionalize digital investment management which will be going to influence brands within APAC.

Coping with diversity

APAC is forecast to be the world’s fastest-growing region in terms of real GDP growth according to the International Monetary Fund.

From a marketing perspective, the way consumers live their lives in regards to the apps they use and how they interact with brands is very different from North America and Europe.

In terms of digital media investment, APAC has quickly developed to become the second-largest programmatic region in the world, representing $13 billion.

This impressive macro picture belies the diversity across different areas – Northeast Asia (NEA), Southeast Asia (SEA), China, and Australia New Zealand (ANZ) – should all be approached differently by brands, as cultural differences and technology behaviors can have a huge impact on the effectiveness of how a campaign is run.

In NEA strong local digital ecosystems can be found, for example, Yahoo is one of the primary search engines in Japan, Naver for South Korea, and Taiwan. Hong Kong is big on in-market forums for any form of digital interaction.

SEA meanwhile is made up of many different markets, so we see more diversity. Given it remains an emerging region, consumers are tending to connect via smartphones rather than desktops – with 88% of DV verified video impressions in APAC delivered through mobile devices.

China naturally has its eco-system with a localized version of everything western digital advertising has. Baidu for search, Alibaba for e-commerce, and Tencent for social messaging. As a result, it also has its trends when it comes to digital platforms, isolated from other APAC and global markets. For example, social selling, where retailers will do live auctions on social media platforms to market brand products.

But how can this be done well across such a diverse and dynamic part of the world? And will this mean brands will place less value in local media investment teams?

Centralizing programmatic investment with local insight

In the US and EMEA, deals with Google, Amazon, and Facebook are now dominating investment strategies and are done above market level. Eventually, the same will happen in APAC as platforms expand.

There are several tech platforms and ‘super apps’ in APAC that are a big part of everyday lives in many markets. One of the main challenges is to contextualize their messaging and read the right audience.

Grab is used widely across SEA, originally started as a transport app, and has since branched out into food and logistics delivery, fintech payment, digital banking, groceries, and more. Line, the Japanese messaging app also popular in Taiwan, Thailand, and Indonesia, started as a messaging app but has also ventured into food delivery and financial services. WeChat and Alipay in China support everything Grab does and more, including healthcare services, utility payments, stock trading, insurance buying, shopping on major e-commerce sites like Taobao, and movie ticket bookings.

As these platforms grow, they’ll likely seek greater investment from global brands, encouraging greater investment connectivity.

This is important as global brands and large regional ones are shifting towards regional investment models. Dealing with the technology platforms in the West is one factor driving this trend, but so is internal digital transformation and as part of this investment is first-part data management infrastructure, in-house programmatic technology, and human expertise.

This regional model will see agency operations suck local data learnings into regional technology, which will build region-wide insight, tailoring regional campaigns to markets across APAC more efficiently. Centralizing programmatic investment in this way will enable brands to apply learnings from one market to another more effectively.

With greater centralized data processing, a localized approach doesn’t work for programmatic. Allowing in-market teams to be guided by local insights and nuances in how they execute strategy can create more customer-first advertising in isolation. But if they are given too much freedom in decision-making, a well-thought-out strategy can be heavily diluted to the point where it is harmful to a brand. If you need strategic and technical expertise in smaller markets, especially for APAC where it is so diverse in terms of culture, talent may be hard to find, and it risks individual markets being left behind as other, larger markets mature.

However, the degree to which you centralize also depends on the markets in which you are active. If there is a presence in highly regulated markets, such as China, local experts will need to have relied on more than they would for more open markets.

In unison with in-house teams

Agencies in APAC will increasingly be judged on their ability to interface with in-house teams.

The move towards a hybrid model – with certain elements of the programmatic mix brought in-house and others involving best-in-class suppliers - will become more important. In the US and Europe, in-housing in a variety of forms is now an established trend and there are signs a similar pattern will follow in APAC.

In this context, agencies might offer as much value through technology and data engineering, supplying human talent to mixed client and agency teams as much as activating investment campaigns.

Trust and transparency are also becoming deciding factors in agency/client relationships. Transparency is about choice and we can see many brands understand this and are taking direct action to ensure they have more control through blended in-house and agency relationships.

High-level technology consultancy delivered at a regional level that can advise brands transparently and provide fresh ideas in the face of changing technologies, regulation, and consumer behavior may define the future of agencies.

Andy Cocker is the chief operating officer for UK and APAC at Kepler