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Data Orchestration Crucial for Better Online Customer Experience

Joseph Suriya, Director, Marketing, Tealium
Joseph Suriya, Director, Marketing, Tealium

What are the biggest changes you have seen in digital technology across APAC over the past 10 years?

There is greater customer demand for first-rate user experiences compared to a decade ago. Brands have to evolve their strategies to keep up with the customer, providing seamless interactions and a consistent experience across a wide range of platforms. This is resulting in marketers shifting their focus from the transaction to the experience, where the customer and their lifetime engagement with the brand are at the centre of every marketing strategy.

From a technological viewpoint, this customer-centric focus requires marketers to bring together the vast number of digital solutions used to optimize the customer journey over the last few years into a more manageable stack. It is also leading to an increased focus on granular first-party data to help understand the customer and their needs through detailed profiles. Where brands may once have acted on instinct, or what they felt was right, they now use data to ensure they are making the best decisions.

How has regulation such as GDPR impacted businesses in APAC and their ability to manage and use consumer data?

GDPR covers any organization that handles the data of EU citizens — and in today’s global economy, this means it impacts most companies; including those in APAC. Yet attitudes towards the regulation remain mixed. On the one hand, there is an appreciation that complying with the new rules brings many advantages: by giving individuals power over data and more visibility into usage, the GDPR can reduce privacy concerns, increase trust, and build lasting customer relationships. But on the other, following legislation that goes beyond regional law is difficult. Ahead of enforcement, more than half of firms in Singapore weren’t ready and one month later, only a quarter of Japanese companies had met fundamental rules.

Businesses must keep working towards compliance and recognize that the GDPR doesn’t necessarily require a total internal overhaul – a common misconception. Companies will often find they can make existing systems adherent by connecting them, instead of replacing them.

What can businesses do to better leverage the explosion of customer data we’ve seen as a result of the digital age?

In short, it means putting the data created by greater connectivity into action. As adoption of smartphones, tablets and wearable technology has grown — with 8.6 billion devices set to be in use across Asia by 2020 — the quantity of data produced by consumers has exploded. So, brands now have a larger pool of transactional, demographic, and behavioural information to draw upon than ever. But before they can harness this data as a basis for tailoring customer experiences, companies need to translate it into cohesive and usable insight. And this is no simple task; in fact, 34% of marketers state that the difficulty of unifying data sources is the greatest barrier to better understanding customer journeys.

The evolution from brands talking about DMPs to CDPs as their primary consumer data tool has been very apparent over the past few years in marketing. What’s the difference between these platforms from your perspective?

The answer to this lies in the history of both tools. DMPs were originally designed to gather information about online activity, categorize it and build audience segments, which then fed into other systems such as DSPs. As the complexity of consumer journeys increased, DMPs tried to meet the need for a persistent view of individuals. But because they were only able to store third-party cookies, it was difficult to effectively resolve the many identifiers created by different channels and devices. And this is where CDPs come in. CDPs can collate, synchronize, and activate data from varied sources: generating one centralized store of insight marketers can use to understand and trace individuals across touchpoints. This results in the capability to take consistent and relevant action in real time across an organization’s entire tech stack from a universal data foundation.

This isn’t, however, to say CDPs supersede DMPs; the two can be effective when used in partnership. For example, a CDP can give marketers a ‘single source of truth’ and a complete picture of customer journeys. This insight can then be shared with DMPs to produce better audience segments that ultimately boost ad targeting precision and results.

What can brands do to get closer to the holy grail of a true 360-degree view of their customers in real time?

If brands want to obtain a real-time 360-degree customer view, they must ensure data is well orchestrated. And this means following several core stages that aim to continuously harmonize data. To start, customer interaction data must be collected from every possible source such as apps, sites, and stores combined into a single layer, standardized, and cleansed. Simultaneously, this information should also be stitched and enriched; with smart tools used to assess incoming data and transform it into individual profiles that are linked with data from particular devices, once owners are identified.

Because all of this is done in real time, the end product is a complete up-to-date customer profile. Exactly the insight marketers need to understand customers and deliver engaging experiences across channels. Though it’s worth noting that to accommodate ever-evolving individual preferences and habits, they must also check that their orchestration platform integrates with other systems and constantly ingests new data.

How are AI and machine learning changing the way brands engage with their customers?

AI and subsets such as machine learning are already beginning to broaden the horizons of customer interaction by adding new channels to the mix. The best-known examples of this are chatbots — used to provide instant 24/7 services by major brands from Starbucks to MasterCard — and the growing presence of digital tools in physical stores. As recently seen with the Guess and Alibaba FashionAI store, which trialled blending real shopping and a range of intelligent tech; facial recognition, smart touchscreen mirrors, RFID-tagged items.

But it’s also important to highlight the applications that are making a sizeable difference to customer experience behind the scenes. Machine learning, in particular, is fuelling advances in data processing; giving brands the means to collect and analyze customer information at scale, and extract valuable insight. This in turn, means data can be quickly harnessed to improve interactions by enhancing contextual relevance and personal resonance. So long as marketers are taking adequate measures to keep quality and accuracy high, including avoiding bias among the human teams driving AI and data fragmentation.

What are the biggest challenges you see with brands getting to grips with big data in APAC?

One of the most significant challenges is providing communications that keep pace with omnichannel activity. According to a Google study, the majority of APAC consumers prefer to research online and buy in store; with 70% doing so while browsing real shelves. But activity varies by market; Australia and Japan, for example, have large numbers of digital shoppers – especially Japan, where e-commerce revenue is currently more than $80 million.

So, there is no room for archetypes; marketers need all-inclusive insight into the behaviour of specific target audiences. Only by identifying which devices, shopping environments, and ad types work best for individuals can they provide personalized experiences that flow as part of a seamless cross-channel conversation. And that necessitates agile integrated tech, which can be problematic in certain markets that have historically relied on legacy systems. Despite its forward-looking approach to mobile, Japan still tends to use CRM databases that don’t necessarily have the capacity to work with other systems and therefore can’t share data easily.

Finally, how can brands intelligently pull all their data together to build a better, more personalised and more holistic customer experience for 2019 and beyond?

The role intelligent data plays in customer experience will continue to grow as more brands recognize the value of building communications around individuals. Forrester research has shown brands focused on customer experience achieve an annual growth rate of 23% and twice as much return on ad spend — and data is an integral element of this.

But to get every interaction right, brands mustn’t overlook the basics. Constructing a strong foundation of compliant, accurate, objective and perfectly orchestrated data is critical for communications to make a positive impact.

TV and Video Ads Converging Slowly as OTT Continues to Grow

Rashmi Paul
Rashmi Paul, Commercial Director, APAC, FreeWheel

We’ve all seen the huge rise of interest in programmatic over the past few years – what lies ahead for this technology?

It has taken a number of years for media buying to adopt automated ways of transacting in the region. This is mainly due to this being a more conservative part of the world, where change is not always welcomed, and which still relies on more traditional marketing methods. What lies ahead is a deeper adoption of automation, which will not be limited to standard display or video advertising, but will also include other media too, such as outdoor ads.

As money has always been invested in TV, the shift to digital and then from digital to basic IO has been a lot slower here than it has been in Europe, for example. What’s next for FreeWheel is to use the experience we’ve gained in other parts of the world to help the smoother adoption of automation in this market.

What are your thoughts on the growth of digital advertising in APAC?

Obviously, when it comes to digital growth, the most significant development has been in mobile, which has a massive market share. In certain parts of the region, consumers have on average two to three mobile phones per person. And as APAC is made up of a number of developing mass markets with large populations, it will only continue to grow. Broadcasters are also changing their strategies and moving inventory to digital from traditional TV.

How does the video advertising market in APAC differ to other regions?

The APAC region is very different from the rest of the world, as it contains a number of global markets – each of which has its own complexities and compliances for marketing. Each market has different, local factors that need to be considered. We also have to consider local language requirements, as some might only run campaigns in the local language, whereas others might prefer a mix with English.

Will we see TV and video continuing on their path of convergence?

Yes, I believe this convergence will continue. Traditionally, we spoke to agencies and digital buyers to try and get digital video inventory. Now media buyers are transacting across TV and video.  Our aim is to get broadcasters to think about how they trade and bring the two forms of media together, and we want to see this happen on a large scale in the APAC region. Customers who have had success with digital need to start seeing their linear offering in the same way that they view their OTT offering.

The APAC Data Landscape in 2019

Joseph Suriya, Director, Marketing, Tealium
Joseph Suriya, Director, Marketing, Tealium

With the continued explosion of data from a wealth of connected devices, there is more focus than ever on the way companies collect, manage, and use their data. The last 12 months have seen some big names under the spotlight, but as we shift our attention to the year ahead, what lies in store for digital marketers?

There’s no denying, 2018 was probably one of the most significant years to date in terms of shaping the data landscape. In a year where more than 3.6 million Asian Facebook users may have had personal information inappropriately shared with Cambridge Analytica, data has never been more prominent in the headlines.

And data isn’t set to fade into the background any time soon. Rightly, the world has woken up to the importance of data in our everyday lives and, for companies, the ability to mobilise insights from data to drive decisions across all areas of the business is firmly on the radar.

So, amid the introduction of stronger legislation and increasing opportunity – and responsibility – to harness the power of data, plus the potential lure of artificial intelligence (AI) and machine learning, what will the data landscape look like in 2019?

Customer-centricity is priority

In light of new privacy regulations – led by the EU’s General Data Protection Regulation (GDPR) launched in May 2018 – there’s been greater awareness from consumers regarding the use of their personal data. In a world where technology has fuelled rapid advances in all areas of life – from e-commerce to financial services – legislation has been somewhat slower to keep up.

But, thanks to high-profile breaches and changing laws, we’re transitioning to an era where the importance of personal data is much higher on the agenda. In turn, this is forcing companies to ensure they have a customer-centric strategy in place, which clearly places the user’s experience at the heart of all business decisions, with the power back in the hands of the individual.

Build a data foundation first

It’s tempting for companies to get caught up in an exciting digital future – we have already seen AI adoption rates across Southeast Asia grow from 8% in 2017 to 14% in 2018. And while some countries, like Singapore, are storming ahead in terms of innovations – with start-up companies such as CashShield creating noise on a global scale – the picture varies from country-to-country. Most are still working to get the data basics in place first; after all, even the most advanced of machine-learning algorithms are only as good as the data that fuels them. So, it follows that companies must concentrate on building a strong data foundation before implementing any ‘must-have’ technologies.

Many businesses throughout Southeast Asia are still facing challenges with relying on legacy back-end systems, and their priorities at the moment are focused on connecting disparate data silos. In 2018 we saw the premise of Customer Data Platforms gather pace, as companies switched on to the need for a tool to help them collate, enrich, and manage the high volume of event-level data across multiple channels – both online and offline – to create a comprehensive view of the consumer. Putting these building blocks in place is fundamental to delivering a first-class customer experience, and it’s the point from which every other business decision should pivot.

Now is the time to talk about ethics

And what about the appeal of AI, with initiatives such as facial recognition, voice-activated search, and online chatbots? There’s no denying its potential and – while companies ready their datasets with clean and accurate data to get to a point where they can successfully adopt these technologies – now is the time to talk about the guidelines we need to ensure machine learning algorithms are unbiased and ethical – rather than waiting until mistakes have been made. It’s our responsibility, as an industry, to get this right.

We have already seen the creation of the Singapore Advisory Council on the Ethical Use of Artificial Intelligence (AI) and Data, set up with representatives from Google, Microsoft and Alibaba – designed to develop a trusted and vibrant AI ecosystem in Singapore. And with India releasing an AI strategy discussion paper, the UK creating a Centre for Data Ethics and Innovation, and worldwide issues being monitored through the AI Global Governance Commission, there are signs of a shift across the globe which will continue in 2019.

While this reflects the need for new and updated regulations that are relevant to today’s digital landscape, it also addresses a changing approach from companies about how they view consumers’ data. No longer just an ‘asset’, we are starting to see a real understanding and respect for its true value, with focus returned to the individual – rather than a collective audience segment.

The data landscape in 2019 may follow a theme of regulation – but at its heart will be a strong emphasis on the customer – regardless of what new tech may be dominating the headlines.

Mass Automation, Mobile Growth, and AI Mastery: Key Trends for 2019

The start of 2019 sees digital facing a bright future. Not only are consumers optimistic about smart technology — with 73% in China anticipating a positive impact — but the advertising industry is also flourishing. Digital spend in Asia Pacific hit $70 billion in 2018, and by 2022 that figure will reach $110 billion: over half of the total ad market. 

So, what does this mean for 2019?

According to industry leaders, the popularity of automation will see programmatic become the norm, while mobile retains its advertising crown and TV becomes increasingly entwined with digital. At the same time, marketers will also start to realise that effectively mastering artificial intelligence (AI) takes more than simply tech know-how.

Let’s explore the key trends:

Rashmi PaulRashmi Paul, Commercial Director, Asia Pacific at FreeWheel

“While the adoption of automation has been slower in South East Asia than in other regions, advertisers – in their quest for qualified and measurable audiences – are making it the driver of change in 2019 and beyond. We’ll see less media buying through a site-list or a programme-list only, but a deeper commitment to automated content, not just in standard display and video advertising, but in other areas such as outdoor media.

“With people in the region owning two to three mobiles each on average, the mobile app market will continue to grow in 2019, thanks in part to the popularity of gaming and social media. But we will also see an increase in the OTT market, which hasn’t taken off in APAC up until now – both in app, and through the TV. This will be helped by improving internet strength, making it easier to watch content on the move.”

Luca Mastrorocco, GlispaLuca Mastrorocco, VP Global Sales, Glispa

“One of the best things about pioneers is that they blaze a trail for others to follow. China, for example, has so far led the mobile market: aggressively investing in m-commerce apps and testing new features. It is also the biggest driver of global digital advertising spend in Asia Pacific. But due to the groundwork put in by China, there is now a booming mobile economy and programmatic advertising scene for its neighbours to leverage.

“In 2019, we can expect an influx of new players in automated mobile advertising and app development. And these market entrants will have many advantages. In addition to gaining insight from this mobile advertising evolution – such as the formats that drive high engagement, like interactive ads, and those that inspire use of blockers, like interstitials, they will have an understanding of what works well in their region. This might include offering lower app prices in particular areas and the option to pay via carrier billing. The time is coming for new innovators who have watched mobile advances from the sidelines to put their knowledge into action.”

Satoru Yamauchi, Director of Partner Services, OpenX

“Video already dominates Japan’s digital advertising landscape, with spend set to top $200 million this year. Moving into the new year, video will command even more advertising dollars especially on mobile, where consumers are increasingly spending more of their time. The number of smartphone video viewers will grow to nearly 40 million in 2019 and advertisers looking to reach these audiences will need to build campaigns with a mobile specific user experience in mind. Formats that interrupt user activity or delay content access are likely to irritate consumers and fuel negative brand associations. This is especially true in the mobile context, where large ads block content on small screens, slow down load times and eat into data allowances. To ensure a positive user experience, advertisers should harness engaging ads that give consumers a choice about how much they wish to interact with brands, such as opt-in video, which provides a genuine value exchange between advertisers and consumers.”

Joseph Suriya, Director, Marketing, TealiumJoseph Suriya, Director of Marketing, Tealium

“With a growing emphasis on connected devices, and the subsequent explosion of data, in 2019, there will be even more demand on companies to manage an increasing amount of insights. While in 2018, businesses were keen to harness artificial intelligence (AI) and machine learning, they didn’t necessarily fully understand it enough to utilise it to its full potential. In 2019 we will see a greater focus on the quality of datasets behind the algorithms – which fuel tools such as these – and businesses will look to build a strong data foundation before jumping on the latest tech bandwagon. We think a mantra of ‘go boldly, tread lightly’ will be particularly relevant to many companies. They will need to put in place the tools to effectively collate, manage, and enrich data insights – and be able to connect disparate data silos, such as ecommerce, call centre, and legacy back-end systems to create a 360-degree view of each customer.                                                                                               

“In addition to this, we will see changes to roles within the workforce to better understand technologies such as AI and to cope with the increased focus on data as the basis for business decisions. Already, the World Economic Forum suggests the leading job roles over the next five years will include data analysts and scientists and there will be a focus on training new talent. There is evidence of this taking force with Asia’s investment in education and the digital economy, which will ensure employees are better equipped to manage emerging technologies like AI.” 

With industry innovators poised to drive market diversity, efficiency, and expansion across Asia Pacific, the outlook for 2019 looks promising. Existing forces such as mobile and video will gain greater strength, and emerging developments in connected TV will bridge the gap between online and offline. As long as quality remains the foundation of progress — covering user experience and data — digital advertising will continue to offer equal value for all.

How Blockchain Technology is Reshaping the Future of Global Payments

Since the creation of Bitcoin in 2009, cryptocurrency has been touted as the future of banking, payments and financial services. And the future of every other global industry obviously.

Sometimes blockchain use-cases can seem a little bit of a stretch, but for financial services at least, a fintech fuelled, cryptocurrency, blockchain and smart contract enabled future looks realistic.

In a number of ways, blockchain technologies offer advantages over the current financial system. A case in point is foreign exchange, one of the key speculative use cases for the blockchain maximalist: in short, it’s difficult, expensive and slow to send $10,000 overseas using our current system of banking; but it’s easy, cheap and fast to send the equivalent amount in cryptocurrency, free from foreign exchange fees, in just seconds. But no one has actually proved out this use case. Yet.

Enter Singapore startup TenX. They’ve created a global credit card, using blockchain technology to take advantage of fast and cheap foreign exchange, but running on existing MasterCard and Visa infrastructure to ensure payment is easy and scalable.

On the front end users can make payments anywhere Visa or Mastercard are accepted. On the back end, the credit card is linked to a cryptocurrency wallet, meaning assets are held in Bitcoin, Ethereum or Litecoin. TenX instantly converts the cryptocurrencies stored in the wallet into the native fiat currency when a transaction is made, whatever the location.

A few weeks back Digital in Asia met with Toby Hoenisch, one of the founders of TenX, to talk about their ambitious vision to become the only platform necessary to create a bridge between cryptocurrency and existing global payment systems.

Toby Hoenisch_TenX Co-founder & CEO_photo
Tobey Hoenisch, CEO & Co-founder, TenX

Digital in Asia: Good to catch up Toby. Is it true that you launched your first start-up four years ago? That’s pretty early for blockchain.

Toby Hoenisch: Back then, we pitched another startup, not blockchain. It was the same co-founders or partially the same co-founders anyway. It never went anywhere but we learned a lot of lessons back then.

DIA: What were the biggest lessons?

TB: Get users. Don’t just build and hope for the best.

DIA: That’s solid advice for any startup! So, when did TenX kick off?

TB: Three years ago. And that was still quite early for blockchain, three years ago. I’ve been in the blockchain space for five, six years. Part of the funding we used for the previous startup was through early gains and Bitcoin. I’m not a trillionaire right now like how I might wish, because we spent all the Bitcoin we had back then on the previous startup. But we’re doing quite well for our company, so it’s all goo

DIA: What was the inspiration behind TenX?

TB: Connecting the blockchain and crypto world with the real world. Three years ago, it was still crypto-geeks and nerds like myself, and everyone else was like, “What the heck is this?” And it was really disconnected. We wanted to bring the benefits of cryptocurrency to real people. And the first thing to solve is making it spendable.

DIA: Can you just quickly detail what TenX does and the value proposition?

TB: TenX makes cryptocurrency expendable. We have a cryptocurrency wallet. You deposit Bitcoin, Ethereum, tokens – whatever it is – and we give you a debit card that you can attach to your wallet, and then spend it anywhere in the world where Visa and Mastercard are accepted.

DIA: In many ways, you’re moving into an area that is almost the inverse of cryptocurrency, certainly ideologically. And payments are also seeing more regulation recently.

TB: You’re right, it can be complex. But what we do is simple. We’re basically the bridge to the real world of payments. Right now, we have Bitcoin, Ethereum, and Litecoin. But our goal is to get to 200 cryptocurrency and tokens ready for payments within another year.

DIA: And what do you think is the future of the payment space in the short and long-term? Who will be the big winners and losers?

TB: Very early to tell. Depends on the timeframe. We’re still so early in crypto that what we do actually makes sense. Because we connect this new industry to the existing payment rails that are out there. Visa, Mastercard, maybe UnionPay or Alipay in the future. You have to remember, merchants don’t care about crypto right now because there are not enough users out there. Merchants care about revenue first. So for the next five years, I think it will be players like us bridging crypto to existing payment rails. But once you have sufficient penetration on the general population, you actually can do peer to peer payments. And then you can actually directly own merchant payment relationships. Our business will have to change and adapt because there are major interests betting on those legacy players. Crypto will disrupt, but it will take a while, and it may shape up quite differently to how it looks now.

DIA: So what does the future look like for Visa and Mastercard?

TB: They will still be around for a long time. Simply because they’re already there. But they will have to lower their fees to compete with crypto, and the channels will change. The cards themselves have a ten-year shelf life. You might still be paying using Visa payment rails in the future, but you’ll use your phone or other technology. The terminal will still stick around for a while.

DIA: TenX is based in Singapore. How many people do you have? How have you found Singapore as a place to set up a blockchain business?

TB: We have 60 people in total at TenX, and 80% are based here in Singapore. We’re a global company. Crypto is always global. We do have a big user base in Europe. Mainly because three of the four co-founders are Austrian. We have a very strong German-speaking user base. Singapore is good because it’s a relatively friendly regulatory environment. It was a bit of a bet three years ago as a place to build a cryptocurrency finance app in Asia, but today, it turns out it’s one of the top countries to be as a cryptocurrency business.

DIA: How many users do you have and how fast is your growth?

TB: Maybe I should share that we had a bit of a setback earlier in the year. We launched our cards last year, and we scaled really quickly to 200,000 users towards the end of the year, and then our partner bank lost their license. Their Visa license. So our card stopped working. And now we’re working with five different insurers to deliver a live product. So the growth metrics don’t make sense at this point. We are on it. We have new insurers. We have multiple strategies, and we’re trying to get our own license so we don’t have to worry about that anyway.

DIA: Something similar happened to Coinhako, in that their fiat on and off ramps got locked down. Was your issue a Singapore problem, or a global problem?

TB: No. It was a European bank, actually. The good side to that is that this specific payment bank was also the issuer for many of our competitors. So now we know that 200,000 is not the market users. The market is way bigger than that, and all of those users are waiting for a card.

DIA: Who wants to spend their crypto? The market is so focused around HODL right now.

TB: That’s looking at it in reverse. Of course, a lot of people still look at crypto as an investment and hope it should go up. Our users have passed this step, and are like, “I don’t want the old world.” Because there is more friction in the old world than there is in the new world.

Even though the crypto world is still smaller, the financial services you can access here are still less in number than in the old world, this is changing rapidly. And advanced users want to stay in this world.

Some of them, yes, they want to get the maximum upside, but they stay in this world because it’s a more seamless experience everywhere on the planet. And we just add payments to that, so you don’t have to actually go back.

DIA: How do they get their crypto in the first place?

TB: They are already in this world.

DIA: Sure, but unless they’re mining, sitting on a massive pot of crypto which they’re spending bit by bit, or they get paid in crypto, they’re still going to be operating in the non-crypto world. They’re still going to have a bank account where real money can come in. How many people are 100% in the crypto world right now?

TB: We pay salaries in Bitcoin for a lot of people. It’s just so much more convenient. If you run an international company, a small one, you can’t figure out payroll in every country in the world. That’s hard. Bitcoin solves that problem, super easy.

DIA: Cool. Do you think that supports the Bitcoin store-of-value argument?

TB: I mean, Bitcoin has a volatility problem, which is one of the things that people don’t like, or don’t want to put all their money in it, which is a very valid point. In the crypto world, Bitcoin is still the strongest store of value. If it’s the one you should bet on depends on your personal situation. I would say everybody should have some money in the crypto space, some Bitcoin, and then allocate, whatever.

DIA: So, at the moment, you’re a bridge between cryptocurrency and the world of ‘real’ money. Do you have your own token to facilitate this?

TB: Yes. We have the PAY Token, and we launched token sale last year, June. And we continued to work on the exact model, mainly because the regulators keep changing the rules, but yeah. It’s been working very good. When you compare a token sale or a token, compared to venture capital, venture capital, you get around one, two, three investors. Hopefully, they’re all strategic, which they never are, maybe one.

Or you have like us, 50,000 token holders, probably most of them are users. They’re directly related to you. They will tell you what you do wrong. They will care. They will come to your user testing. It’s just so much better. That’s the huge upside that a token sale can do that venture capital just cannot do. Base it on your boredom, hopefully, you pick the right guy to tell you what to do, but maybe one or two. You have 50,000.

DIA: And that community markets for you as well, and they’re influencers.

TB: Yes. Of course. It just goes hand in hand. It’s like, token holders and users, it becomes like a community form of money, or token, or whatever you want to call it. And it incentivizes people to really stick with us.

DIA: That’s awesome Toby. Thanks very much. Very interesting discussion.

TB: Yeah. Thanks for the chat.

The State of Programmatic Advertising in Japan

Jason Fairchild
Jason Fairchild, Co-founder, OpenX

Digital in Asia asked Jason Fairchild, Co-Founder of OpenX, one of the largest global sell-side platforms, to tell us about the state of programmatic advertising in Japan.

Digital in Asia: How is the Japanese market approaching programmatic advertising? Is Japan ahead, behind, or just different compared to other global programmatic markets?

Jason Fairchild: Programmatic is taking off in Japan, however, the market is still in its nascent stages, and spend is lower than other markets, such as the US and China. Despite this, more marketers than ever are using the technology to boost reach, relevance and impact, and a recent study from PwC predicts that the increasing demand for programmatic technology is set to push Japan’s media market to US$170 billion by 2020.

It’s not surprising that programmatic is growing as the technology streamlines the buying and selling of online ad space, allowing publishers to efficiently monetize their online content and brands to execute audience-based buying at scale – that is, putting the right message in front of the right user at the right time at massive scale. With investment in online ads expected to increase by more than US$3 billion, marketers will benefit from leveraging this technology to make their advertising more efficient.

DIA: How is OpenX addressing the issue of quality in digital advertising?

JF: As programmatic grows in Japan, it’s important to ensure the advertising ecosystem remains a clean and safe place in which to do business. In 2018 alone, OpenX is investing US$25 million in different quality-assurance measures, and we’re making sure we comply with industry recognised quality standards and have received independent certification for our efforts.

It’s important to note, however, that there are steps that everybody can take to take to stamp out bad practices and tackle fraud. Technology companies, marketers, publishers and every other part of the supply chain all play a role in solving for the quality issues across the industry.

With the recent emergence of new industry standards and initiatives, marketers are now at a point where they can make informed decisions about their technology partners, based on the partners’ commitment to quality.

One example is the IAB’s ads.txt initiative, which has nearly stamped out the threat of domain spoofing, also known as misrepresented domains, and dramatically increased clarity in the supply chain by public record of who is authorized to sell a publisher’s inventory. Another is third-party certification with Trustworthy Accountability Group (TAG), a cross-industry accountability program to create transparency in the business relationships and transactions in digital advertising. Technology companies who meet the stringent standards for certification outlined by TAG earn a seal of approval, and because these demonstrate good practice among vendors, these standards can help buyers and sellers make better decisions on technology partnerships. But it’s important to note that these quality controls are not automatic – they require proactive choice by buyers.

DIA: Mobile now accounts for half of all digital ad spend in Japan. What does this mean for advertisers?

JF: More Japanese consumers own smartphones than ever before, so it’s not surprising to see users spend more time on mobile devices, which in turn drives a marked shift in content consumption towards mobile. Advertisers and publishers have picked up on this trend and now understand that mobile has become the place where consumers spend a majority of their time, and they must adjust their digital strategies accordingly.

To effectively take advantage of this growing channel, advertisers will need to incorporate a range of mobile-specific ad formats and move aggressively away from the desktop-first mentality that most of them have been using. This includes building creative that considers the smaller screen sizes and leveraging rich location data to add more context to their campaigns. On the other hand, publishers must also think about screen size and the user experience to ensure that users aren’t bombarded with too many ads or ones that impede a users’ ability to see or read the content they want.

DIA: Speaking about mobile, what is the future of in-app advertising in Japan and globally?

JF: Quite simply, in-app advertising is the future of mobile advertising. Japanese adults spend three hours and three minutes every day consuming digital media, and in 2017, mobile accounted for more than half of all time spent on digital, so the opportunity is huge.

Studies reveal that the most lucrative in-app ad opportunity is a new innovation called opt-in video, where the consumer is given something of value in exchange for engaging with a video ad. This type of video advertising has proven to be the most consumer-friendly ad format in mobile, and in fact, consumers like it three times more than a non-skippable pre-roll. Completion, viewability and engagement rates are significantly better with opt-in video than other types of mobile video, and the consumer-friendly nature of the ad format makes it a great option for publishers and app developers trying to monetize their content as well.

DIA: What are OpenX’s plans for the wider Asia Pacific region?

JF: Both our Japan and APAC business are continuing to grow. In fact, early this year we announced record new revenue growth in Japan of 52% year-on-year and have signed more than 40 new clients in 2018 alone. The growth derives from us being the largest independent advertising exchange in the country (second only to Google) at a time when programmatic is gaining traction in Japan.

As a result, last quarter we announced that we will be opening our Singapore hub, and plan to move into Australia by the end of Q1 2019. To complement our expansion, we’re committed to growing our team in the Asia Pacific region. We appointed Satoru Yauchi as the director of partner services in the region, who has already played a key leadership role on the team since joining late 2017 and will continue to support us in delivering on our ambitious plans for growth across the region.

‘Advertising at a Crossroads’ as AI the new Focus for Marketers

Arshan Saha Xaxis APAC President
By Arshan Saha, President APAC, Xaxis

There’s been a lot of scepticism recently about where advertising is headed. Online advertising has seen massive growth over the past decade thanks to its flexibility, transparency and measurability—not to mention the ROI. But with this growth comes a new challenge: more than before, marketers must fight to break through the clutter and connect with their target audiences. The rise of obtrusive and irrelevant ads on the web has led to a concurrent surge in ad-blocking software as consumers become frustrated with or indifferent to the content bombarding them. In response, some of advertising’s biggest spenders have started to shift their focus back to real-world tactics such as experiential marketing. This leaves advertising at a tricky crossroads, and got me thinking: Will digital advertising always remain an important instrument in a company’s marketing toolbox? And as an advertising company, how can and should we push advertising to adapt if we believe it to be the way forward?

Xaxis wholeheartedly believes that digital advertising needs to deliver tangible results to continue to be relevant, and as such has repositioned to focus its entire offering on client outcomes. The best way to do this was to understand the client’s advertising goal that ties as closely as possible to the true business outcomes they are trying to drive. So what do marketers need to think about and do differently to truly engage consumers and drive measurable business results?

Artificial intelligence (AI) has completely changed what we can achieve in advertising, from media buying and planning, how to achieve set targets, and the metrics used to understand success. As my colleague Sara Robertson, VP of Product Engineering for Xaxis once said: “AI is like a spreadsheet on steroids”. The potential of AI lies in its ability to see the bigger picture. We’ve made AI and machine learning an integral part of our offerings, used to find and define audiences, refine our creative messaging, generate audience personas, and develop bidding strategies, all of which can transform a digital advertising strategy to drive remarkably improved results for clients.

And while it is true that consumers hate interruption, it’s never a bad thing when advertisers are forced to adapt by creating content that consumers enjoy. One example is a creative new type of ad that has emerged in China to play in breaks of TV dramas online. These ads utilize the TV shows’ original content and narrative arcs, and feature the same actors in their on-screen costumes, making the ad almost indistinguishable from the original content to hold the audience’s attention and pique their interest. This type of advertising is expected to surpass 2 billion yuan (US$311 million) in sales revenue this year, up from 800 million yuan in 2016.

Advertising with influencers also holds increasing importance in the marketing mix as a way for brands to create trust and credibility with consumers. Over the last few years, influencer marketing has skyrocketed to the point that it has become a category of its own. The premise for this is that consumers trust people they already follow rather than an obvious advertiser. Brands are therefore working to get attention from consumers by channelling their message through people with extensive and trusting networks, commissioning influencers to co-create ‘native’ content that advertisers can then amplify. All of this shows that content needs to mimic what consumers already enjoy in order to engage, but advertising itself won’t disappear.

At the end of the day, approaches such as experiential marketing can be a highly valuable way for many companies to increase brand exposure and customer loyalty. But they shouldn’t necessarily replace advertising altogether. Marketers need to look at the bigger picture and focus on reaching business objectives by quantifying success with real metrics and conversions—regardless of the marketing tactics they choose to convey their messages. That means connecting with your customers authentically and holistically, wherever they happen to be – though as we know, people are spending more time online now than ever.

For Xaxis, repositioning our offering to focus on client outcomes was the most logical move. To align with a client’s true marketing and business objectives—and deliver results to hit those objectives and maximize ROI—should be the goal of any marketing tactic. What really sets digital advertising apart is its ability to do exactly that, with more transparency, efficiency and measurability than any other approach. For this reason, we don’t see it dying out anytime soon.

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.

Ethereum, Cats and Infinite Extensibility on the Blockchain

Last December, a new game became an overnight mega-trend in the blockchain world. CryptoKitties allowed users to buy, own, and trade unique collectible cartoon cats on the blockchain. Around the time of launch, CryptoKitties was so successful that it slowed the Ethereum network.

This is a big deal, as the Ethereum blockchain is, without a doubt, the most active smart contract platform in existence. Of the top 100 tokens by market cap, 94% are built on top of Ethereum. Of the top 800 tokens, 87% are built on Ethereum. Most of these tokens are ERC20 tokens, which made possible the majority of the $5.5 billion raised through ICOs in 2017 and the $6.5 billion raised in token sales during just the first quarter of this year.

The driving principle behind the creation of CryptoKitties was to demonstrate the potential of Ethereum and the blockchain ecosystem for trading and securing digital assets. In the white paper, the founders discuss the narrow focus of most blockchain projects on payments. Ultimately, they hoped CryptoKitties would help people expand their vision of what a blockchain could do.

A few weeks back Digital in Asia met with Benny Giang, the founder of CryptoKitties, to talk Ethereum, cats and art on the blockchain.

Digital in Asia: So Benny, where did the inspiration for CryptoKitties come from? How did it start?

Benny: We love cats, and we know it’s a fact that the internet and cats is just married, right? Basically any new internet technology always starts with cats.

We also thought that blockchain seemed pretty interesting, but we wanted to make it more accessible. We saw so many ICOs happening, and we loved the variety. Some were solving really big interesting problems, like world hunger level. But there were some that were just … I don’t even know what they were doing. It’s just getting DJ Khaled to hype up their ICOs! It felt like what was missing was the education and accessibility piece. So we had the idea of putting cats on the blockchain to drive our education and accessibility agenda.

This turned our attention to a couple of existing crypto collectibles like CryptoPunks and Spells of Genesis. These were the first to use the ERC20 token standard from Ethereum, and then create a collectible on the blockchain. But the limitation with the existing collectibles was that they were only an image. We wanted to take it to the next level. So we started exploring the game play, and we arrived on this interesting idea of allowing people to breed their kitties on the blockchain.

We then spent a month on genetic simulations, trying to figure out how deep we could go and how we could evolve the idea. We established a 256 bit genome. That results in about 4 billion variations of kitties. In terms of human genetics, that’s nothing, it’s very controllable. But in game play, 4 billion potential kitties is quite a lot of variations. It was more of an experiment, playing around, and that was the initial genesis of CryptoKitties.

Digital in Asia: Where did you get started with blockchain? Because it seems as if you were already very familiar with the technology. CryptoKitties was more about doing something in blockchain, as opposed to doing CryptoKitties.

Benny: It started in the spring of 2017. I began reading more, specifically on Ethereum. Most of our team, except a couple of members, were already involved in blockchain, the Bitcoin side. They mined Bitcoin, they bought them, they sold them from way back.

From a more typical internet technology perspective, a lot of the product teams and my background was around building B2B Enterprise SaaS Software. I was interested in the concept of the world computer, and creating a decentralised app store to build real utility. That’s really fascinating, and the whole decentralised aspect really caught my attention.

But I love the quote: “Any disruptive technology starts off as a toy”. And in there I saw the opportunity to bring the educational piece forward, in a way that people could learn, but also have fun.

Digital in Asia: Crypto can be complicated. How long did you think it would take people to get their heads around digital wallets, Gas price and all the other complexities of blockchain, and Ethereum specifically.

Benny: In the first week about 80,000 people signed up. These are new users we had never interacted with, and probably don’t even know what a digital wallet is. So that was already a huge factor. 80,000 new people were so attracted to this game that they were willing to jump through all these hoops.

My biggest goals always involve optimizing the experience for the end user. That’s all I care about, that’s all our team cares about. But in blockchain, and Cryptokitties, we’re still pretty far away from having it where you click on the button and everything just works.

Are people scared of Gas and all these things? I would say they are. Sometimes Gas price goes up and they don’t understand why, but that’s kind of our role, and part of why we created the game. Right now we’re building a whole new onboarding process that will help educate: “Hey this is what Gas is, this is why we need it, this is why it keeps fluctuating.” So people will understand.

Digital in Asia: Why did you decide to build on the Ethereum blockchain? There are alternative blockchains out there like Neo, and as we’ve seen with Gas price increases, and congestion, it’s not always an easy environment.

Benny: It was a timing thing and also more of a mission alignment thing. We met some of the Ethereum team last year and saw that these people really do have the builder mentality, they’re very product focused and development focused. Looking at other blockchains there is potential scalability, but in terms of full production readiness, with thousands of dApps already built on top of it, and battle tested, I would say there is only one at this point.

There are some blockchains being talked about in terms of being Ethereum killers, and that may be true, but let’s see when they get full production ready. Practically, if we were to consider these other chains then we wouldn’t have launched CryptoKitties when we did, as we would’ve waited six more months. It was more of we need to do it now, and we need to ship the product because the timing was right, it was when ICOs were popping like crazy. But as you know we didn’t do an ICO. We actually did the reverse ICO where we built the product, and we sold people kitties!

Digital in Asia: Where is CryptoKitties going? What are your future plans?

Benny: We’re going to work towards deepening the user experience. That means more game play features and expanding to new ways of thinking about the platform. It’s very interesting the three areas we play in. One is crypto, the other one is gaming and the final area is art. We were invited to the Rare Art Festival New York, and we asked a bunch of people to basically talk about this new contemporary art form which is digital collectibles. And some people laughed, definitely.

Screenshot-2018-04-10-at-11.24.05

What’s interesting to me is these Kitties will live for thousands of years. What we have done is basically made history. No matter if we are alive, or the company is alive, these kitties will live. We have this concept of infinite extensibility which is related to the kitties as art form.

Digital in Asia: This is an interesting area. What do you mean by infinite extensibility?

Benny: You buy a painting, let’s say it’s the Mona Lisa. It’s pretty old. You just keep it, and you just look at it, right? And as it ages with time, it just deteriorates. But with the digital collectibles as an art form, as time passes, more functionalities can be added. Right now all you can do is buy and sell and breed. But what if you could walk it, what if this kitty could be a real kitty in your mind. So it’s like an art piece that you can continually interact with as time progresses.

Digital in Asia: It’s apparent you’re not actually a blockchain business, you’re a gaming or collectibles business. Blockchain is just the technology you’re building your business on, in the same way that the internet is the technology that Uber or Amazon build their business on. But we don’t – for the most part – talk about that any more. Every business built on the blockchain right now is called a blockchain business, and this is just about the early stage nature of the space really. What other projects do you feel are good enough to transcend blockchain, and become real businesses?

Benny: The whole blockchain gaming and collectibles category is going to be huge this year. In regards to ICOs, there are a few products I find interesting. They’re more related to AI blockchain, and the convergence of the two. But I don’t actively get involved with many ICOs because the space is almost too hot right now. I would rather hang around the people who are developers or product people, who focus on the end view. There is so much work to do on protocols, all these different things. If we want more businesses to transcend blockchain, we need better and more secure blockchain platforms.

Digital in Asia: Okay. On that, are there any ways in which Ethereum limits you?

Benny: Limitations? We really support the Ethereum ecosystem. We have a team of six that are focused on long term scaling of Ethereum, talking to other chains, working with side chains, trying to find the right solutions. Introducing Casper, or at least the MVP of Casper, will be a big milestone for Ethereum this year. If they pull it off without doing a super hard fork, and the community comes to a consensus, they’re going to be way ahead of other people. Because again, they really have the masses, they just need to move the masses to the next level.

Digital in Asia: Do you think there is a danger that they won’t successfully deliver, or build consensus around, sharding or proof-of-stake? We don’t want Ethereum Classic 2.

Benny: No, No, No. Nobody wants that. Ethereum is below 600 dollars right now, which is low compared to a few months back. When CryptoKitties started it was at 400 dollars. So it’s back to a level of normality for us. It’s good for everybody to calm down, and come together around common goals, because we need to think long term. We all know the market was bound for a correction, and while that’s sad because I own Ethereum, it’s good as it lowers costs to build and operate on the blockchain.

Digital in Asia: What plans do you have around mobile? Any sort of AR functionality? People think it would be cool to see your kitties.

Benny: We have launched a mobile version of CryptoKitties in Asia. There are Chinese focused collectibles, and we’re looking at Singapore, Taiwan, and Hong Kong. China feels a bit difficult to get into, but we’ll see.

Considering new features like AR as a blockchain gaming company who really believes in the philosophy of decentralisation is tricky. If you walk your cat, should that be on a blockchain? When you have a kitty for a thousand years, we think that entire history – including any AR excursions – should be logged. But that’s not easy, and we can’t handle all of the transactions yet. But we are brainstorming a bunch of these new gaming features because that will help keep the experience interesting.

Digital in Asia: Thanks for your time Benny. This has been an interesting conversation. Any final words of advice?

Benny: Blockchain is only just getting started. Thanks again.