In-app programmatic buying in Indonesia: Why the added cost is worth it

There are about 89.8 million smartphone users in Indonesia this year alone, and the number is on the rise set to reach 42.8% of the total population at 116.8 million in 2023, according to eMarketer latest data. Mobile ad spend too, is on a high growth trajectory to record US$692.2 million in four years’ time.While mobile ad spend currently captures only 11.8% of total media ad spend at US$371.3, Smaato managing director APAC Alex Khan said:Indonesia is one of the biggest market in Asia for in-app programmatic buying.In a conversation with Marketing Interactive, Khan said he is confident that mobile will eventually take up majority of media ad spend. The trend is driven by economic factors such as greater proportion of Indonesians with higher disposable income and lower smartphone costs. Furthermore, there is a buoyant second-hand market for smartphones, and people rely on telco network to consume content and research because there is no broadband infrastructure. Along with the increased mobile usage, mobile apps have been booming and more media buyers are turning to programmatic to have a birds’ eye view of their choices.In Indonesia, the company works with major networks such as WPP, Dentsu, Omnicom Media Group and IPG.Khan explained, “There are millions of apps in the world and media planner are not going to buy hundreds of apps for every single campaign, so they would do it programmatically." However, unlike traditional media buys, in-app advertisers are not contesting for the most value-for-money or popular media spaces.Within in-app advertising, you're buying audiences, a particular genre. It doesn't matter what app they are in because you want to target that particular segment.In the case of a sporting brand looking to reach Millennials, for instance, the company may consider social media apps, where its target audience is at. While it can cost much more than a standard banner ad, Khan said the click-through rate may be multi-fold as the ads are reaching out to an engaged and receptive audience.Khan explained: “The consumer has chosen to engage with the app, so it’s not like buying a traditional ad in a newspaper and hoping it is going to target your consumers because you think they read it.”The real competitionTherefore, the real competition amongst in-app advertisers is on how much of such audience they can buy, instead of securing spaces with the lowest bid. However, there are challenges even for those who are willing to pay.“The way the current ecosystem works is on a waterfall basis. If you have five people trying to buy the inventory, the person in the first position is given the option to buy, and only when they don't, it goes to the next in line,” said Khan. This means that the media owners or app developers are effectively not getting the best value for their inventory, and media buyers cannot deliver their campaigns if they cannot get access to enough volume of their target audience because they're too behind in the waterfall.To bridge this gap, Smaato launched a hybrid auction solution last December that places all bidders side by side and gives them an equal bidding chance. While sellers increase their revenue by always receiving the highest possible yield for their inventory, it also helps media buyers to see improved win rates.“The advertiser gets to understand how much of their target audience they're actually able to get access to as opposed to buying a lot of inventory that may have a low percentage of target audience within just because they bought it cheap,” said Khan.However, with the transition to programmatic advertising first taking place on traditional mediums, many advertisers are still not adopting the best practices for mobile. For instance, advertisers are still resizing creatives for mobile instead of creating custom-made ones.[Digital Marketing Asia Conference is returning for a fourth year in Jakarta this October! Join us on 22-23 October as we hear from the greatest minds on how you can ably navigate the ever-changing digital marketing landscape and stay ahead of the game. Secure your seats today here.]“The attention span is different between when you're sitting in front of a TV screen, and when you're walking down the street trying to avoid bumping into anyone as you look at your phone. The delivery of the message in the ad needs to come much earlier than it would in a 30-second TV ad," said Khan.Meanwhile, pre-roll and rewarded videos have given advertisers opportunities to overcome short attention spans on mobile and engage audiences longer. These spaces often offer advertisers captive audience, who are looking to watch the video content after the ad or receive in-game rewards but according to Khan, it is still not “mainstream”.It’s actually the most ideal ad format because consumers are 100% engaged, looking at their phones at a time when they’re relaxed to recognise the brand, and understand what the message is."So, you're going to get a far higher level of engagement and video completion rate,” he added.Ad requests on the riseThe number of mobile ad requests on the Smaato platform had increased 27% in the second half of 2018 compared to the same period the previous year. The top concern from Smaato’s clients mirrors that of programmatic buyers anywhere – ad fraud and brand safety.Besides partnering third-party security firms for detection of traffic anomalies, Smaato also hires about 20 human moderators across its three offices in different time zones to provide all-day coverage.According to Khan, in-app advertising is about 25% safer than web advertising by default, with less fraudulent activities. “It’s easier to spoof URLs on web, where people can make it look like you're buying ads on a particular website and viewers are redirected to a false landing page that looks like the original. It’s hard to detect,” he explained.Read more: MediaMath partners White Ops to guard against fraud in programmatic advertising More than 60% of marketers have dedicated programmatic talent, says WFA poll How can media agencies maintain an edge over programmatic disruptors? More than half of reports still done manually, say SEA programmatic traders