What is PubMatic's solution to the challenges of Japan's connected TV advertising market?[インタビュー] – Exchangewire Japan

PubMatic, an independent technology company, has launched an ad distribution platform focused on connected TV and OTT. Why did the company, which was founded as an SSP, focus on building a framework that directly connects broadcast stations and advertising agencies? We spoke about the issues and prospects for the connected TV advertising market in Japan.

(Sponsored by PubMatic)

Latest status of connected TV advertising

-Please introduce yourself.

My name is Paulina Klimenko and I am PubMatic's Chief Growth Officer, in charge of business partnerships and corporate planning initiatives in the global market. She has been in her current role since 2011 after holding similar executive roles at e-bay, AOL, PayPal, etc. She is currently ramping up her efforts specifically around connected TV advertising.

-Please tell us your views on the connected TV advertising market.

As you know, an increasing number of viewers are switching from terrestrial (linear) television to streaming video services. In particular, the free distribution format with advertisements called AVOD (Advertising Video On Demand) is growing rapidly. Naturally, advertising budgets are shifting away from TV and toward video distribution platforms as advertisers invest in media that consumers are more interested in.

As advertising transactions with video distribution platforms become more active and complex, it becomes realistically difficult for advertisers and advertising agencies to conclude advertising contracts for each medium. It's inefficient and doesn't allow for cross-cutting efforts like frequency capping and ad optimization. Therefore, a shift to programmatic trading in video advertising is underway.

-How is your company responding to these environmental changes?

We launched Activate, a dedicated solution for video ads viewed on video distribution platforms. By directly linking advertising agencies and broadcast stations or video distribution platforms through this solution, we are creating an environment that improves work efficiency, reduces fees, utilizes data, and applies algorithms related to video ad distribution. .

Activate will begin operation in May 2023 in the US and European markets, and in October 2023 in Asia-Pacific markets other than Japan. In the Japanese market, where infrastructure development including data centers took some time, we officially launched in February 2024.

Technology ahead of the future

– Please tell us about the specific functions of Activate.

First is operational efficiency. Until now, advertising agencies have spent considerable time and effort configuring the distribution of video ads. We sign contracts with multiple DSPs and DMPs, log in to each one, and perform various configuration tasks and data processing.If a failure occurs at one location, we not only handle the problem on the spot, but also perform adjustment work at the connected destination. I was just busy working with my hands.

Aggregating data into Activate provides a unified platform for one-stop campaign planning, execution, troubleshooting, and optimization. Activate also has a built-in measurement function, allowing cross-media frequency capping and attribution measurement.

You can also develop new advertising products by applying data provided by third-party data providers to your advertising inventory.

– Activate is not connected to other DSPs or SSPs.

yes. This direct connection between advertising agencies and broadcasters or video distribution platforms allows advertising agencies to save on fees.

Furthermore, the more intermediaries there are in the advertising transaction process, the more opportunities for data transfer, which increases the likelihood of delays. This is fatal for video ads. Activate connects advertising agencies and video distribution platforms directly, reducing the risk of delays.

-In the sense that a business like your company, which was founded as an SSP, directly collaborates with the demand side, can Activate be considered a kind of initiative equivalent to supply path optimization (SPO)?

yes. I think you can understand that this is an SPO tool exclusively for video ads. There is no doubt that DSPs will continue to play an important role in the online advertising industry ecosystem, and will continue to be a key partner for us in areas such as display advertising and app advertising. However, in conjunction with the development of Activate, we are proposing a unique transaction format for video advertisements delivered to connected TVs and other devices.

-Please tell us about Activate implementation examples.

Since its launch in May 2023, it has worked with global companies such as Dentsu Global, Dentsu APAC, Havas Media Group, and Group M, as well as advertising agencies such as India's KINESSO India and South Korea's Wishmedia, as well as fubo TV and China's iQIYI. Its adoption by both broadcast stations and video distribution platforms is progressing. Some success stories have shown that user acquisition efficiency has improved by 20% through the use of Activate.

In the Japanese market, it has already been installed by major broadcasting stations such as Asahi Broadcasting Television, Kansai Television Broadcasting, DAZN Japan, TBS Television, TV Asahi, TV Osaka, TV Tokyo, Nippon Television Broadcasting Network, Fuji Television, Mainichi Broadcasting, and Yomiuri Television Broadcasting. Masu.

-Please tell us your impressions of the Japanese market.

When it comes to connected TV advertising, I feel like we're about a year to a year and a half behind global trends. Ad inventory for connected TV advertising is still limited. Additionally, many broadcasters lack first-party data, making audience targeting in connected TV advertising almost impossible.

However, it is almost certain that connected TV ad inventory will rapidly increase in the Japanese market in the future. Activate brings standardization of data transactions to Japan's still immature connected TV advertising market. In other words, we are trying to create a common language that will work between broadcasters and advertising agencies as a standard for conveying the various information necessary for targeting.

Activate can be said to be a product that anticipates future trends in the Japanese market. We hope that it will be used as a tool to further increase the value of scarce advertising inventory at this stage, and that it will also be useful in preparing for the coming future.

– PubMatic's Japanese subsidiary is celebrating its 10th anniversary this year.

This is a market that I have been watching since the launch of our Japanese subsidiary in 2014, so I am personally very moved by it. Through our collaboration with over 120 premium publishers, we will handle over 7 trillion ad impressions in 2023 alone, 643 times more than in 2015.

Although Japan is one of the world's largest economies, according to eMarketer, digital advertising only accounts for 43% of total advertising spending. Considering that it accounts for nearly 80% in the US and Europe, there is still room for growth. We hope to further expand our business over the next 10 years.

-Please tell us about your future focus areas.

In addition to the connected TV advertising that we have already mentioned, we also plan to strengthen and expand our commerce media in the market. Currently, there are a lot of businesses in various fields, such as e-commerce, travel sites, and food delivery, and they are not functioning as ad networks. Therefore, in July 2023, we announced Convert, an integrated self-service advertising platform for commerce media. Through this Convert, we would like to improve the advertising distribution environment for so-called retail media.