Opinion: Marketers should latch onto Japan’s programmatic boom

Photo credit: Max Pixel.

In just a few years, programmatic in Japan has gone from budding to booming. In 2013, real-time bidding (RTB) spend stood at US$10 million and is expected to reach US$1.1 billion in 2016—one of the highest growth rates in the world. And that’s just the start.

A recent research from PwC predicts that the increasing demand for programmatic technology is set to “push Japan’s media market to US$170 billion by 2020.”

So, what’s fueling the explosion in programmatic adoption and how can Japan’s marketers realize the potential of this growing opportunity?

What’s driving the programmatic fever?

High standards of accountability have always been a major focus for Japan’s digital advertising market. In fact, in the early 2000s, Japan Advertisers Association discussed how agencies could be more transparent about their buying practices, particularly where and how brands’ ad budgets are spent. Now, with investment in online ads expected to increase by more than US$3 billion in the next few years, the focus on accurate measurements and ROI is even sharper.

Consequently, it’s not surprising that programmatic implementation is rising. Not only does RTB enable brands to buy inventory that meets their specific targeting criteria and business objectives but also allows them to track those objectives and create a detailed picture of campaign performance and spend allocation.

With its ability to provide a clear view of ROI, programmatic is emerging as the catalyst for Japan’s ascent to digital advertising dominance, strengthening trust between brands and agencies and thereby driving the investment needed for the industry to prosper.

What’s next for programmatic in Japan?

Remember the record-breaking advertising success of the Rio Olympics last year? Japan’s media scene is about to grow substantially as Tokyo hosts the games in 2020.

The immediate future will see publishers and advertisers bring programmatic efficiency to more channels such as TV, video, and mobile, a tactic which has already delivered substantial returns on investment to early adopter like the US.

Mobile has already been identified as the next major area of growth in Japan, with programmatic spend due to hit US$2.4 billion before the games. And with video experiencing a rapid influx of spending too—due to top US$650 million by 2020—it’s a safe bet that we will see increased usage of private marketplaces in the coming months as Japanese publishers and brands look for fast yet secure ways of trading premium video ad space.

How can marketers make the most of it?

Although its programmatic footprint is ever extending, Japan’s portion of ad spend is still slightly lower than that of other advanced markets such as the US and China. One reason is Japan is only beginning to tap the power of programmatic to boost advertising reach, relevance, and impact.

To get ahead of the pack, marketers need to understand programmatic better, especially that the technology offers benefits that traditional media doesn’t have—data-driven prospects, higher yield for publishers, and measurable evaluations. But learning how to use such capabilities to their advantage will mean following the footsteps of other markets. By taking early adopters as their model, marketers can pick the most effective techniques and systems to increase their programmatic prowess and elevate Japan’s global position.

Indeed, it’s a sign of Japan’s growing presence on the programmatic map that international players like our company, OpenX, are flocking to the region. And, as the influx of platforms continues, there will be more opportunities for marketers to capitalize on their experience: harnessing their knowledge to avoid programmatic pitfalls, optimize strategies, and keep quality high.

There’s no doubt that the boom has arrived for Japan’s programmatic market and that this year will bring an explosion in automated efficiency. For those who want to ride the tide, the best place to be is in at the forefront, which means preparation will be key if marketers want to ensure programmatic profitability today and in the future.