Category Archives: Insights

Unlocking the Untapped Potential in Asia’s Digital Economy

Rama-Sridhar (hires)
Rama Sridhar, Executive Vice President, Digital and Emerging Partnerships and New Payment Flows, Asia Pacific, Mastercard

Digitalization of Asia’s commerce brings choice to consumers and opportunity to businesses. It also provides the region’s societies with a path to greater economic growth and prosperity. Better government and business support of the digital economy is needed though, to fully reap these benefits. Greater public and private sector collaborations are also key to unlocking digitalization’s full potential.

While it can appear that the surge of digitalization in Asia – driven by better digital infrastructure, deepening internet and mobile penetration, and rapidly increasing discretionary incomes –  is already successfully driving market growth and development, there is tremendous untapped potential ahead. According to Bain & Company, the digital economy contributes just 7 per cent of GDP in ASEAN and 16 per cent in China (as compared to 35 per cent in the US) and stronger digital foundations could contribute an additional $1 trillion to the GDP of ASEAN alone.

To open new markets, the millions who are still excluded from digital marketplaces – particularly the elderly and the poor – must be addressed. Factors such as lack of access to the internet and training and education have left millions unable to participate in this digital market revolution.

Further, according to a recent Economist Intelligence Unit report commissioned by Mastercard, the digital age divide and the digital income divide have meant that the societal gains from today’s digitalization have already been unequal. In each of the region’s economies, a greater share of those under the age of 35 has used the internet to make an online purchase or bill payment than those over 55. There’s a similarly wide gulf between the rich and poor.

Differences in regulations and the level of digital infrastructure across the region compound the issue and hinder Asia’s ability to fully reap the benefits of the digital economy.

Digital Inclusion

To successfully include all of Asia’s populations in the digital marketplace, it is imperative that people have the ability to acquire the necessary technological and financial skills, and governments ramp up investment and infrastructure.

However, this can’t be left to the region’s governments alone. For one, many governments don’t have the financial resources to allocate adequately to digitalization. Two, several simply don’t have the bandwidth to look beyond other more basic problems.  

This provides an opportunity for the private sector to step up and fill the void. Whether through partnering with regulators and policymakers to shape the regulatory agenda around what is still a relatively nascent industry, investing in people and businesses so they can leverage digitalisation, or helping bring digital infrastructure and services to those left behind, the private sector must play a more active role.

At Mastercard, we are partnering with fintechs as they take digitalization to the remotest parts of Asia’s economy, resulting in both digital and financial inclusion. Through our global accelerator programme Start Path Global, we support start-ups by providing mentoring, giving them access to our global ecosystem and helping them break into new markets with the help of our relationships and customer base.

We’ve also recognized the need for greater public-private collaboration. For example, in September last year, Mastercard’s Track, a global trade platform, was integrated with Singapore’s Networked Trade Platform in an initiative led by Singapore Customs and the Government Technology Agency of Singapore. This digital trade platform facilitates secure and efficient electronic transactions and payment reconciliation between buyers and suppliers, greatly streamlining and simplifying B2B transactions to facilitate more inter-regional trade.

While there is no one template for these partnerships, a number of similar ways can be found for companies to work closely with policymakers in offering digital solutions and enhancing digital skills. Governments, for their part, can also further support Asia’s digitalization by harmonizing regional regulations with the aim of supporting the creation of seamless, interoperable platforms with uniform governance across countries.

Ultimately, only a rising tide of collective regional effort that includes a combination of greater cross-border collaboration and increased financial and digital inclusion will unlock the full potential of Asia’s digitalization. It will also help create a digital economy that benefits all.  

56% of Business Tech Environments More Complex Than 2 Years Ago

Citrix recently announced the release of research into The State of IT Complexity in Asia-Pacific and Japan that revealed over half of businesses in Singapore are struggling with complexity, coming in third behind Indonesia (most complex) and Korea.

Key study findings:

  • 56% of Singaporean businesses believe their IT environments are more or significantly more complex than two years ago.
  • 95% of employees are using non-business approved applications to get work done.
  • 42% of Singaporean businesses report using over 100 cloud and on-premise business applications.
  • 93% of Singaporean businesses believe that their organization is missing out on the full benefits of analytics due to the complex and disperse nature of their data and applications.
  • 86% of Singaporean businesses are already adopting cloud technology, higher than the regional average
  • 85% of Singaporean businesses are concerned that they would not be able to respond to a data breach required by law (such as GDPR). Of those concerned, the top reasons include:
    • 48% due to data located in different systems and applications
    • 37% due to time concerns
    • 34% due to a drain on resources

Overlapping systems, applications, and new and old infrastructure cost time, money, and affects innovation. The rise in complexity felt by Singapore’s organizations is holding back digital transformation efforts and restricting cloud adoption.

Full studies below.

The State of IT Complexity in Asia-Pacific and Japan [PDF]

The State of IT Complexity in Singapore [PDF]

All the Digital Numbers You’ll Ever Need

Ever need data to help you understand the latest digital trends and audience behaviours? Good news: DataReportal is a complete online collection of all the reports published by We Are Social and Hootsuite over the past 7 years, and it’s just launched.

The collection already includes more than 7,500 charts covering people’s use of the internet, social media, mobile, and e-commerce in 230+ countries and territories around the world, and they’re promising to add thousands more insights over the coming weeks as they publish their Digital 2019 reports.

In addition to the reports, the site also includes all the analysis articles published since 2011, from extensive global overviews, right down to commentary on individual data points.

Best of all, they’re making all of these resources available for free, so if you have colleagues, clients, or friends who might find them useful, you only need one URL:

https://datareportal.com

Enjoy.

A Duopoly of Convenience: Facebook & Google Tap New Growth in APAC

by Tom Simpson

Latest data reveals that in Q1 2018, Facebook and Google ad revenue grew by 40% year-on-year across Asia Pacific (ex. China), while ‘The Rest’ – every publisher and ad tech business outside the duopoly – saw a fall in revenue of 20% over the same period.

Total APAC (ex. China) Digital Ad Revenue (USD billions) (1)

Looking at the top-line, digital advertising is experiencing strong growth across APAC, with ad spend up $0.85 billion year-on-year in 2018. But it’s clear that while many publishers and ad tech businesses are still growing, in reality that additional $0.85 billion revenue is comprised of $1.63 billion more for Google and Facebook, and $0.78 billion less for everyone else.

As a result, Facebook and Google revenue hit 65% of APAC total digital revenue, up from 51% in Q1 2017. This means twice as much budget goes to the duopoly as every other digital publisher and ad tech platform in the region put together.

APAC (ex. China) Q1 2018 Digital Ad Revenue Share (%)

Google and Facebook also grew in terms of revenue share across all media, taking 20 cents in every 1 dollar spent in the region. This is up from 15% – or 15 cents in the dollar – last year, and represents an increase in budget flowing from traditional media, including TV and OOH.

The duopoly in perspective

From a global perspective, Facebook and Google have been strengthening their hold over digital advertising budgets for several years. Asia Pacific has actually seen a slower shift in spend than the US or Europe, where Google and Facebook already account for 80% of digital ad revenue.

While there is a huge amount for ad tech to be positive about in 2018, and plenty of genuine tech innovation on the supply side outside the duopoly – mobile, blockchain, digital retail, apps, influencers, and permission-based marketing, are all areas seeing new thinking and growth – the publishing and ad tech industries are in a challenging space right now. Concerns over ad quality and complex value chains, in addition to the impact of Facebook and Google, have left VC money looking for safer havens. With marketing clouds, telcos and consultancies worldwide positioning for unified marketing technology stacks – the acquisition rumours at Cannes in 2018 were even more outrageous than those around the downfall of Sir Martin Sorrell – mad-tech consolidation started several years back, and looks set to accelerate in the years ahead.

But it’s not only the supply side facing increased headwinds. The brave-new-era marketing stacks are already busy hunting brand agency business direct from the major holding groups, using their newly enhanced strategic and tech positioning to situate themselves both upstream closer to the CEOs ear, and downstream on the battlefield of media execution across newly rationalised, open, and addressable programmatic auctions. Whether it’s okay for the auditors to also do the work, is another question of course.

Even Google and Facebook cannot be sitting easy in the face of the increased scrutiny and margin pressure promised by these changes, alongside recent brand safety issues, an emerging 3rd advertising player in Amazon, and a resurgent Twitter. Growing antitrust concerns in the US and EU spurred by a public revolt against the increasing power of the silicon valley tech titans, fears over over-reach into our everyday lives and loss of jobs have also made headlines in 2018. Google and Facebook are yet to crack China, but each is making moves with greater and lesser degrees of success to grow influence in this hugely important global market.

The age of convenience

Human beings have long sought means to make our lives easier. From earliest times with the invention of the stone hand axe, to the swarms of gig economy apps which today get people to clean your apartments, drive you around, do your shopping or deliver you just about anything you can think of, at the touch of a smartphone screen, convenience has been the driving force behind much human-made ingenuity. Most of us in the modern world now expect gratification to be on-demand.

New ways of offering services to customers have significantly changed how organisations and companies operate and compete in all markets. So it is no surprise that the age of convenience has come to our industry. What Uber did for transportation, Netflix for TV, and AirBnB for accommodation, Google and Facebook have done for marketing. And they are justifiably reaping the rewards.

In the on-demand era, there is only one guarantee: money flows to those who offer – or at least appear to offer – the comfort of convenience. This is the inconvenient truth.

Notes

As per last year, numbers are based on Facebook and Google publicly filed earnings information and best industry advertising revenue estimates via the IAB, Zenith and Emarketer among others – but someone out there may have a better view, so corrections welcome. The major assumption in this data is to exclude Chinese advertising spend from Google and Facebook earnings information and APAC industry spend estimates. This is to avoid distorting the data by including a market where Facebook and Google have small (although not insignificant) advertising businesses. All the data is available on a public Google sheet (yes, sorry, it’s Google!) here.

Key References

Facebook Reports First Quarter 2018 Results: https://s21.q4cdn.com/399680738/files/doc_financials/2018/Q1/Q1-2018-Press-Release.pdf

Facebook Q1 2018 Earnings Presentation
https://s21.q4cdn.com/399680738/files/doc_financials/2018/Q1/Q1-2018-Earnings-Presentation-(1).pdf

Alphabet Announces First Quarter 2018 Results
https://abc.xyz/investor/pdf/2018Q1_alphabet_earnings_release.pdf

Vietnam: Digital Trends & Consumer Landscape Overview

With a population of more than 96 million, a median age of 30 years, and internet penetration standing at 50 million, or just over 54% of local population, Vietnam is a young and dynamic market representing a huge commercial opportunity for brands, marketers and investors. Vietnam digital trends emerge fast in this exciting consumer space.

Since 2013, the last time we took a detailed look at Vietnam’s digital market landscape, so much has changed in terms of digital trends. Most notable has been the rise of mobile as a channel, driven by lower handset costs and faster 4G connections. The mobile internet experience now dominates in Vietnam, with consumers naming mobile as the second most important source of news after TV, the most important “big ticket” purchase and their second favourite daily activity after spending time with family and before hanging with friends.

Digital technologies and online connectivity promise to be a key driving force in the growth and transformation of the Vietnamese economy over the coming decades, with the IT industry expected to contribute up to 10% of the country’s GDP by 2020. Ho Chi Minh City is being touted as the Silicon Valley of Asia with blockchain, fin-tech, health-tech and digital accelerators playing a key role in the emerging start-up, hipster coffee shop and co-working space culture.

Below we’ve collected a series of takeaway resources covering the key digital trends in Vietnam.

Mobile Ecosystem Report Vietnam 2017/18

Vietnam mobile ecosystem and digital sizing report from Group M and the MMA.

Digital in Vietnam 2018

Key data covering the Vietnam digital landscape.

Digital Marketing Agency & Marketer Landscape in Vietnam

Vietnam digital marketing overview from an advertiser and agency perspective.

Vietnam Digital Landscape 2017

Detailed overview of digital stats and consumer internet data in the Vietnam market.

Vietnam Digital Trends 2017

Trends to watch out for across the Vietnamese consumer internet.

Vietnam ICO & Blockchain Market

Overview of the emerging blockchain and ICO scene in Vietnam.

Vietnam Today – The Digital Economy

In depth report looking at the future digital transformation of Vietnam.

PWC Vietnam Spotlight

Deep dive into Vietnam as an investment opportunity and information technology driven market.

Vietnam Esports Market Report 2018

Insight into the growth of Esports in Vietnam..

In terms of other resources, check out Vietcetera for wider coverage of Vietnam, Tech In Asia for tech news, or Geektime and ICTNews for tech news… if you speak Vietnamese. Finally, you can find out all the practical information you need to know about the start-up scene in Vietnam at this Google Doc.

Asia’s Top 1000 Brands – Movers and Shakers

Campaign Asia has just released it’s annual Top 1000 brands survey, covering the biggest brands with Asian consumers, the brands that have risen and fallen furthest in the top 100 in the last year, plus the top 10 smartphone and social-media brands in Asia. It’s a great overview of the digital marketing landscape in APAC.

Biggest Movers in the Top 100

Biggest mover in the top 100 was Uniqlo, with other fashion retail brands, including Lazada, H&M and Zara, also having strong years.

0_500_750_0_100_campaign-asia_content_20180606084401-08_Up&Down

Top Social Media Brands

Congratulations to Facebook, still the clear leader in social media, and subsidiary brand Instagram also having a strong year, moving into the top 100.

0_500_750_0_100_campaign-asia_content_20180606084401-01_SocialMedia

Top Smartphone Brands

Apple is Asia’s top smartphone brand, with Samsung in second spot. There were strong years for Huawei and Oppo, with big launches and large marketing budgets driving growth in brand perception.

0_500_750_0_100_campaign-asia_content_20180606085646-02_Smartphone

Asia’s top 5 car, airline, luxury, cosmetic, online retail, banking, beer, soft drinks, fast food and ice cream brands can be found in the slideshow below, and more info at Campaign Asia.

This slideshow requires JavaScript.

 

The Inside Line: The Death of Agencies

What with the yo-yoing of WPP, profit warnings, and Sir Martin Sorrell’s career, all in the shadow of the rise of the management consultants, you may be just as captivated by the current mayhem in the advertising agency and marketing industry as we are.

But we’re not sure that agencies are as dead as some people think they are…

We’ve tried to get a handle on it all from a ‘big picture’ perspective in this short episode of The Inside Line with Nick Fawbert from Mutiny Consulting.

Is it really an instalment of The Walking Dead? What do you reckon?

Mobile App Predictions for 2018

[Photo] Jaede Tan, Regional Director, App Annie
Jaede Tan, Regional Director of App Annie
2018 marks the 10 year anniversary for both the Apple App Store and Android market. In the short time since the first wave of apps were published in 2008, they have impacted the lives of people all over the world on an unprecedented level. There are now apps for almost anything and everything – hugely successful apps that incorporate AR and VR, apps dedicated to events, and even an app just for popping bubble wrap.
Who could ever have imagined that apps would evolve from the simple Snake game on the Nokia phone (yes that was an app), to driving a $6.3 trillion industry in 2021?
Looking back over 2017, the app economy has hit some significant milestones:
  • By the end of October 2017, the iOS App Store and Google Play had more than 2 million and more than 3.5 million apps available, respectively.
  • New apps continue to be introduced at a strong pace. During the month ending October 31, 2017, roughly 50,000 new apps launched on the iOS App Store and over 150,000 were added to Google Play.
  • Across mature markets, users have up to 90 or 100 apps installed on their devices, 30 of which they use on a monthly basis. On average, people are spending two hours per day — which equates to one month out of every year — in apps.
  • More than 40 countries will generate over $100 million in consumer spend in 2017 for iOS App Store and Google Play combined.
  • Apps play a key role in almost every industry today, including retail, banking, travel, QSR, CPG and media & entertainment .

It is apparent that the evolution of mobile apps have transformed the everyday lives of people, and users continuously expect their favourite apps to be improved. There are several aspects of an app which users expect to be improved, but convenience is a core theme that underlies many of our predictions as we look to 2018.

1. Worldwide Gross Consumer App Store Spend Blows Past the $100 Billion Mark

The continued evolution of markets across the globe has led app monetization to continuously grow at an outstanding rate. Apart from games, which traditionally account for the majority of overall spend, we foresee spending in e-commerce apps such as Alibaba and Amazon to drive worldwide consumer spend – which is expected to grow about 30% year on year to exceed $110 billion in 2018. In APAC, consumer spend on apps hit $17.1 billion in H1 2017 alone.

2. App Store Curation Drives Higher Overall IAP Revenue and Expands Opportunity for Independent Publishers

In June 2017, both Apple and Google announced updates to the iOS App Store and Google Play aimed to alleviate this issue through app curation and editorial content. We predict that these updates will have a significant impact on apps in 2018, in particular apps that help people occupy their leisure time. These types of apps, which tend to be entertainment-centric, are most likely to connect with consumers when they are casually browsing through the app stores. Conversely, “needs-based” apps such as UberEats or DBS PayLah! are far more likely to be downloaded based on word of mouth recommendations or focused searches when a user encounters a particular need.

3. Broader Adoption of AR Apps

Pokémon GO and Snapchat sparked huge interest in augmented reality (AR) among the masses, and we foresee that AR will take another significant step forward towards realizing its massive potential in 2018.

Facebook, Google and Apple have taken the lead at their developer conferences in 2017, and together with the Chinese powerhouses Alibaba , Baidu and Tencent , have set the foundation for AR-related initiatives. These initiatives will accelerate the space by making it easier and faster for publishers to develop AR apps, while also stoking consumer interest. For example, in Japan, starting in May 2017, there has been a significant increase in iPhone app downloads for the top ranking apps by “Augmented Reality” app store search in Japan, and other APAC countries.

apps ar japan

4. Fragmentation of the Video Streaming Space Accelerates

It is now not an uncommon sight to see people catching up on their favourite Netflix series or Hollywood movies while on the move. 2017 has been another extraordinary year for video streaming services and total time spent in Video and Entertainment apps tripled to almost 40 billion hours in APAC alone.

video streaming apps

Between H1 2015 and H1 2017, time spent in the Video Players and Entertainment categories on Android phones in APAC has tripled to reach close to 40 billion hours – almost half of the worldwide total.

Year to date through October 31, 2017, these apps have driven significant growth of worldwide consumer spend for the Entertainment category on both iOS and Google Play. However, as some of the biggest names in the entertainment industry and app economy — including Netflix , Apple , Google , Facebook , Snap and Disney — have announced huge plans to expand their footprints in variety of ways, we expect that 2018 to mark the beginning of an inflection point for this space, in terms of fragmentation. In fact, our research shows that Android users in South Korea who use video streaming apps are significantly more likely than average to be accessing other video and related entertainment services.

Overall, this space will continue to see steady growth in terms of revenue and engagement, but in the years that follow, consumers may start to rationalize how they spend their time and money among a dizzying array of choices, resulting in some players succumbing to profit pressures as they get crowded out of this competitive space.

5. Mobile Pushes Towards the Center of the Retail Customer Journey

Analysts and experts have pronounced the retail apocalypse in recent times, and we see apps as a way to reinvigorate consumers’ retail experience. Brick-and-mortar retailers have already embraced apps and shoppers are now very engaged; results are telling from the Great Singapore Sale 2017 , which saw an increase in sales thanks to the GoSpree app. In Indonesia, which has a population of 261 million and a burgeoning middle class, users spend an average of just over 90 minutes per month in Shopping apps, placing it at #2 after South Korea. On 11 November 2017, dubbed Single’s Day, Alibaba generated a record breaking $25.3 billion in sales, with mobile users accounting for 90% of sales. These numbers are only the beginning of what is a rapidly evolving retail experience for consumers.

Come 2018, apps will continue to cause consumers to change their shopping habits which will in turn redefine the relationship between and even the very nature of existing retail channels (e.g., mobile app, web, brick-and-mortar). China, for instance, is one huge influencer in this area. We are seeing people in western markets increasingly use physical stores as a place to pick up items purchased on mobile. In addition, cash registers’ longstanding role in the checkout and payment process will become reduced, or in some cases replaced, by mobile. For many consumers, mobile will be a core part of the shopping experience regardless of channel.

6. Restaurant Aggregators Drive Mobile Conversion as Delivery-as-a-Service Further Penetrates Premium Markets

As we predicted last year, there was some consolidation in the food delivery space. Looking ahead to next year, we expect that aggregators such as Korea’s Yogiyo will continue to expand the addressable market for this space by opening up under penetrated markets as well as converting users who do not currently use mobile apps from intermediaries to order meals. Meanwhile, delivery as a service (DaaS) providers (e.g., UberEATS , Deliveroo) will gain market share in premium markets where customers are more likely to pay more for higher-end restaurants that don’t have their own delivery fleets. Furthermore, we expect more quick-service restaurants (QSR) to respond to the increased competition from food delivery by partnering with DaaS apps, similar to McDonald’s growing partnership with UberEATS . As with video streaming, this space will face consolidation in later years as it needs to rationalize the fragmentation felt by customers and the profit pressures felt by service providers competing in a crowded space.

7. Finance-Related Apps Poised for Most Significant Transformation in 2018

In 2017 in Asia-Pacific specifically, the growth of downloads in the Finance category outpaced all app categories (non-games) combined, with China leading the way. Person-to-person (P2P) payment apps, like WeChat, AliPay, GoPay, Grab Pay and PayTM have been some of the shining stars in the fintech app revolution. They have transformed how consumers, particularly millennials, exchange money, by displacing the use of cash and checks. In the next year, we expect these services to capitalize on their popularity and broaden their range of services in an effort to expand their revenue potential, fend off increased competition from traditional banks and deepen user engagement. With retailers adopting such apps as an option for customers, we expect P2P payment apps to see increased transaction volume. These initiatives have been well received by users, as they will provide even greater levels of convenience. In addition, this space will see increased activity from successful players in other categories, like messaging and social networking, who are constantly looking for additional ways to serve, monetize and engage their large user bases.

These are just a handful of areas where we expect the app economy to evolve over the near future. Despite how far this space has advanced over its first decade, it is just scratching the surface of its full potential. Users increasingly expect apps to completely transform the very nature of how they accomplish goals and tasks, as well as create brand new experiences not possible on other platforms. We are excited to see how app developers change the world by delivering on these needs over the app economy’s second decade.

How Google and Facebook are Eating the APAC Ad Industry

By Tom Simpson

Please check out our latest overview of the Facebook and Google advertising duopoly updated with 2018 data.

A quick check of their books reveals that in the first quarter of 2017, 92 cents of every new dollar spent in online advertising across Asia Pacific (ex. China) went to Facebook and Google.

APAC Ad Revenue - Digital in Asia.com

That’s an incredible statistic. The good news is that digital marketing in the region is clearly experiencing strong growth, with revenues up by $1.23 billion year-on-year in 2017. The bad news? Of that $1.23 billion in growth, virtually all of it – $1.13 billion in total – goes to Google and Facebook, with only $100 million to share across the remainder of APAC publishers.

apac ad revenue growth yoy

Facebook and Google combined revenue this quarter hit 51% of all APAC revenue, meaning more budget goes to to Google and Facebook than every other digital publisher in the region put together.

Share of APAC Ad Revenue

Google and Facebook also forge ahead in terms of revenue against all media in the region, taking 15 cents in every 1 dollar spent. This is up from 12% – or 12 cents in the dollar – last year, and represents the increase in budget flowing from traditional media, including TV.

share of apac all media ad revenue q1 2017

None of the above is new news, with commentators globally highlighting the hold this duopoly already exerts over the advertising industry.

But in a week where Fairfax journalists in Australia strike in protest at cutbacks, and against a wider backdrop of losses and job cuts at traditional media outlets across Asia Pacific, it is especially concerning.

Where next? Publishing in general, and the ad tech industry specifically, is a challenging area, with multiple undifferentiated players, sometimes murky value chains, and VC money looking for safer havens. Many analysts predict massive consolidation in the years ahead. In fact with telcos and consultancies worldwide already positioning for unified marketing technology stacks, most would say the consolidation has already started.

Beyond that, The TradeDesk continues it’s roll with an IPO and recent big win on P&G; AppNexus and other major players forge a data alliance to bring much needed people based marketing data to open programmatic; and Integral Ad Science plus other key players have launched in the region, aiming to bring much needed transparency to what can be a difficult to navigate ecosystem. Even Google and Facebook cannot be sitting easy in the face of recent brand safety issues, fake news and Amazon putting increased focus on a server-to-server header bidding product that promises to put power back in the hands of publishers. P&G’s Chief Brand Officer Marc Pritchard has made a call for transparency and open measurement across walled gardens in recent speeches, and this also seems to be making an immediate – and deserved – impact.

Finally, a note from history. In the early 1900s, the United States had around 2,000 firms producing one or more cars. By 1920 the number of firms had decreased to about 100 and by 1929 to 44. In 1976 the Motor Vehicle Manufacturers Association in the US had only 11 members.

In many ways digital advertising, and the industry that surrounds it, is it’s own worst enemy. All dollars eventually become digital dollars, so it is the only show in town. But a show obsessed with the next shiny thing, full of incomprehensible – and often meaningless – metrics, and more importantly, critically lacking in real transparency. Programmatic has only accelerated these tendencies.

Google and Facebook have done a huge amount to bring new money into digital advertising by simplifying advertising for brand marketers. And they have reaped the rewards.

However, they are now part of a systemic change representing an existential threat to an entire industry – media, advertising, agencies, publishing, journalism are all caught up in this – across the region and globally. Change rarely comes without casualties. The struggle for monetisation continues.

A huge debt to Jason Kint (this chart in particular) and Brian Nowak at Morgan Stanley for the inspiration for this article, and the work they have done creating similar graphs for Global and US ad revenues. Corrections welcome. Numbers are based on Facebook and Google publicly filed earnings information and best industry advertising revenue estimates – but someone out there may have a better view. The major assumption in this data is to exclude Chinese advertising spend both from Google and Facebook earnings information and APAC industry spend estimates to avoid distorting the data in a market where Facebook and Google have small (although not insignificant) advertising businesses. All the data is available on a public Google sheet (yes, sorry, it’s Google!) here.

Notes and References.

1. Google 2017 1st Quarter Earnings Report: a. Estimated based on reported total APAC revenues x 90% (percentage of Google revenues represented by advertising) b. Excludes Google revenue in China estimated based on APAC revenue data sources.

2. Facebook 2017 1st Quarter Earnings Report: a. Estimated based on reported total APAC revenue by User Geography b. Excludes Facebook revenue in China estimated based on APAC revenue data sources.

3. APAC digital revenue data compiled from: IAB, eMarketer, GroupM, ZenithOptimedia, McKinsey & Company

4. APAC all media revenue data compiled from: IAB, eMarketer, GroupM, ZenithOptimedia, McKinsey & Company.

iKorea: Media Reps – Past, Present, and Future

iKorea is a new column by Soyoon Bach, a Digital Marketing professional in Seoul, covering developments in the Korean digital ecosystem.

If you work in advertising in Korea, you will most definitely have heard of the term “rep sa.” “Rep” is short for “representative” and “sa” in Korean means “company.” This is a shortened phrase for agencies that Koreans refer to as “media representatives.” So what exactly are media reps?

The general hierarchy of the Korean digital advertising landscape goes like this:

Advertiser → Ad Agency → Media Rep → Publishers

Simply put, media reps act as liaisons between agencies and publishers. They arrange the sale of media inventory on behalf of advertisers (or agencies). Media reps also provide media plans, intricate reporting, optimization recommendations, updates about the newest publishers and ad types, etc. Many media reps have proprietary technologies that make setting up ads easier, provide key insights, and run ads more efficiently.

The first ever media rep can be traced back to 1980 with the establishment of KOBACO. They were resellers for TV ad inventory and became the sole entity to control all the domestic TV ad inventory. They retained their power until a constitutional court ruled this as illegal monopolistic practice.

Since then, Korea has diversified its media rep offerings and media reps have especially become a key player in the complicated world of digital advertising. Usually, ad agencies don’t have the time or resources to keep contact with every single publisher or media platform out there and know which ones are best for their needs. This is where media reps come in. They synthesize all media-related information and updates and provide agencies with the insights they need. They let us know which creative is best served on which platform. Some platforms also have strict inventory booking processes. There are minimum spends, minimum ad periods, and cancellation fees. Media reps keep track of these processes and give ad agencies a heads up when they think certain bookings will become an issue.

The initial idea of media reps started out as a broker, a simple reseller. Now, they have evolved to so much more. They are media agencies for ad agencies, providing critical services that they can’t get from publishers directly. For instance, if an ad agency is working with multiple media platforms without a media rep, it’ll be up to them to individually communicate and negotiate with the publishers, set up the ads, aggregate the data, and compile the reporting. However, when you go through a media rep, they provide all these services for you so that you can spend more time tending to your clients.

Because this is such a common practice that’s taken for granted, it’s easy to forget that there are actually no regulations in place regarding this process. There’s no restrictions preventing agencies from bypassing media reps and going directly to the publishers. Similarly, there’s nothing to stop media reps from reaching out directly to advertisers. However, this practice continues to exist because this breakdown and distribution of tasks lets everyone do their jobs more easily.

A client can have one contact point for all their media dealings (the agency) instead of having to individually contact the publishers. Agencies can also focus more on making creatives and strategizing on the overarching direction of the campaigns. Media reps gain more clients and without much effort by teaming up with an agency and publishers also have the same benefits by teaming up with a media rep. The benefits are so real that Korean publishers will also pay back some of the money to media reps or agencies as a sales commission. And this commission could be as high as 20%.

For how much longer this model will persist, only time can tell. But media reps are already starting to feel the onset of programmatic media buying as a threat to their business. Global agencies are receiving pressures from their global headquarters to implement systems such as DBM and manage it internally, taking some business away from media reps. Media reps are frantically trying to develop their programmatic departments so that agencies will still be incentivized to use them for these services.

What’s for sure is that we’re hitting another disruptive phase in digital advertising and how media reps will fit into this picture is still to be determined.