[PubMatic x 4M]What are PubMatic's strengths and future prospects as it celebrates its 10th anniversary in Japan? Vol.2 | Media Innovation / Accelerating innovation in digital media

PubMatic, Inc. (hereinafter referred to as “PubMatic”) is one of the leading companies in the digital advertising field and plays a central role in the evolution of programmatic advertising. Kazuma Watamoto and Ren Kubo, Directors of 4M Co., Ltd., spoke to Ryo Hishida, Director Customer Success of PubMatic, about the differences between the Western and Japanese markets in the ad tech industry and the future outlook for PubMatic.

Interviewer profile

Name: Ryo Hishida
Position: Pubmatic Co., Ltd. / Director, Customer Success

Joined Cyber ​​Communications (currently CARTA COMMUNICATIONS) in 2013 and worked in ad network media development and ad exchange products. He joined PubMatic in 2015 as a Strategic Account Manager and will be in his ninth year in 2024. Since joining the company, he has been in charge of existing customers on the supply side, supporting the introduction and monetization of in-house products, and currently serves as director of PubMatic Japan's customer success team, leading businesses in web media, apps, and OTT/CTV.

For the previous content, go to Vol.1

What is the future outlook for the ad tech industry?

Kubo
Please tell us about the future outlook for the ad tech industry and the solutions your company offers to publishers in terms of how to address the phaseout of third-party cookies.

Mr. Hishida
Our company provides “Identity Hub”, an identity management solution. Identity Hub acts as a “hub” for enabling ID alternatives to third-party cookies, making it easy to use ID solutions. Such solutions may often already be included in wrapper solutions. What makes us unique is that the platform for leveraging that identity solution can be decoupled from our wrapper and used on its own. Recently, we have received an increasing number of inquiries from publishers who have introduced the open source header bidding framework “Prebid”, which is one of the technologies for maximizing revenue in programmatic advertising, and wish to use it alone with Identity Hub.

Effects and future possibilities of Identity Hub

Kubo
How do you feel about the effectiveness of Identity Hub?

Mr. Hishida
There are still some areas where concrete data and visualization are difficult. It is unclear whether the purchase was successful because the ID is included in the purchase from the DSP (Demand-Side Platform), or whether other factors had an effect.

The future challenge is to clearly visualize how much effect ID has on revenue and monetization. . However, if we compare the profitability of requests that include an ID and requests that do not include a cookie, it is clear that the profitability is higher when an ID is included, so we believe that there is some kind of effect.

On the other hand, in conversations with buyers (advertisers, advertising agencies, DSPs), we hear that they are actually experimenting with targeting using alternative IDs. This suggests that there are cases in which targeting that utilizes IDs in addition to cookies is actually used. In addition, the data linked to our platform is not limited to cookies, but an increasing number of data are linked based on IDs. Although we may not have a concrete sense of this yet, we believe that there is a very high possibility that this will contribute to profits.

What is the difference between the markets in Europe, America and Japan?

cotton book
There is an argument that the demand side will not follow ID unless the media takes the lead, but I believe that there are actually differences with the European and American markets. If the European and American markets are currently at 100, what is the current state of Japan in terms of progress rate?

Mr. Hishida
I feel like I haven't even reached half of it. In Europe and America, ID solutions are already being used in the field of CTV (Connected TV). In Japan, things are still closed, so I feel there is a gap in that sense. . Also, since the amount of first-party data that media companies have differs, I feel that the environments that serve as the basis for ID implementation are completely different.

cotton book
In the case of Europe and the United States, definitive IDs are more central to business than analogical IDs. Do you think that analogy ID has a complementary role to that?

Mr. Hishida
I think so. If you are a premium publisher, I think fixed IDs are the mainstream because they have first-party data that can be used in-house for advertising. On the other hand, in Japan, the development of this area has not caught up, so we see an opportunity for analogous ID.

Comparison of display ads and video ads and future outlook for formats

Kubo
Lately, we've been hearing a lot about how display advertising prices are dropping. Many publishers are promoting the use of video ads and in-stream/outstream, but what is your impression when comparing display ads and video ads from your company's perspective?

Mr. Hishida
I think the situation is still a little different between the global market and Japan, but I feel that display advertising revenue is decreasing in Japan. I think the trend is similar globally, but in fact, according to our financial results, display advertising revenue in Q4 increased by 9% compared to the previous year. We believe this is the result of our SPO deals with buyers working effectively in a difficult market overall. On the other hand, video advertising is also growing rapidly in Japan.

Kubo
From a demand-side perspective, I think video advertising budgets are on the rise, but I don't think display advertising will go away completely. From the demand side of your company, do you have any strategic initiatives regarding display advertising and video advertising, and their respective budgets?

Mr. Hishida
I also don't think display advertising will disappear completely. There was a long period when header bidding became popular, the programmatic market had more display ad inventory available for bids, and more bids naturally increased revenue. As a result, I think there has been a slight excess of display advertising inventory in the programmatic market. Some inventory is of high quality, while others have low viewability or are rarely seen. In the worst cases, some are not seen at all.

The important role of an SSP is to select high-quality impressions that increase the advertiser's ROI (Return on Investment) from a huge inventory of display ads and provide them to the DSP. To achieve this, we believe we need advanced technology that uses machine learning and algorithms to identify high-value impressions and encourage purchases.

What is the definition of a quality impression?

cotton book
I understand that there is also the issue of MFA (Made for Advertising), but what metrics do you use to evaluate whether your company has good quality impressions or not?

Mr. Hishida
First is viewability. Some ad spaces have high viewability and some have low viewability. Items with extremely low viewability will be excluded from the bit requests sent to the DSP as the minimum quality cannot be guaranteed, and will be removed at the pre-auction stage. We also use high fraud rates as an indicator, and take measures such as excluding domains with high fraud rates.

Additionally, as this may lead to MFA issues, we carefully evaluate the quality of content and traffic, and exclude sites with extremely low quality scores from monetization on a site-by-site basis, rather than on an ad space-by-advertisement basis.

Kubo
Comparing the US and Japan, are there any differences in the amount and maliciousness of ad fraud and MFA sites?

Mr. Hishida
The Inventory Quality Team, which manages global quality, has never specifically pointed out Japan as a problem with MFA. While bot traffic has been an issue in the past, our data shows that IVT-related quality issues are much lower than the global average. In Japan, I get the impression that as the unit price of displays has fallen, the number of ad slots that are hindering the quality of ads and user experience is increasing. However, I think the maliciousness and impact of fraud is greater overseas.

What are PubMatic's future prospects and focus areas?

Mr. Hishida
As I mentioned earlier, our company is expanding its services beyond SSP to a variety of other areas. We are also strengthening our efforts with buyers through “Activate,'' which we have started offering to buyers, and SPO contracts. We also offer solutions for mobile apps and a product called “Convert'' for commerce media that can be used both on-site and off-site. Growing the OTT (over-the-top)/CTV (connected TV) business is another area we would like to focus on this year.

Kubo
Please give a message to all publishers.

Mr. Hishida
We want to be a company that provides solutions to all publishers' concerns and issues. There may be some problems that we cannot solve on our own, but we have an environment in place where we can provide support in a wide range of areas, from technical issues to consultation on data utilization. We welcome any consultation regarding any concerns or issues you may have. Please feel free to contact us through 4M or directly.

About future initiatives with 4M

Kubo
Lastly, please let us know if there is anything you would like to work on together with 4M in the future.

Mr. Hishida
The first is cookieless support. I think we will need to provide detailed explanations to publishers regarding this, so we would like to work with 4M to promote understanding and advance cookieless measures in Japan. We believe this will also include support for Google's privacy sandbox. We would like to work together to find a way out in the difficult display field. We would like to grow together by discussing how to add value to display inventory and all possibilities such as data utilization, ID, rich formats, and PMP (private marketplace).

■About PubMatic

​​PubMatic is an independent technology company that maximizes customer value by providing the future supply chain for digital advertising. PubMatic's sell-side platform empowers the world's leading digital content creators on the open internet to control access to inventory, while helping marketers increase ROI and reach addressable audiences across ad formats and devices. We help you improve your profitability. Since our founding in 2006, our infrastructure-driven approach has enabled us to efficiently process and leverage data in real-time. We deliver scalable and flexible programmatic innovation to improve customer outcomes and support a vibrant and transparent digital advertising supply chain.​