06 July 18 The Business Times by SAMIR SHERGILL
AS CONSUMPTION of media continues shifting from traditional mediums like newspapers and television to digital, a duopoly has emerged. In 2017 alone, Facebook and Google accounted for an astonishing 61 per cent of global digital advertising spending, a 30 per cent increase from 2012. This represents a significant challenge for traditional publishers as the duopoly disintermediates content producers from their audiences.
Recognising the need for a more vibrant digital advertising marketplace, the Singapore Media Exchange (SMX) was conceptualised in 2017. One year later, SMX has officially launched in partnership with two of Singapore's leading media owners, Singapore Press Holdings and Mediacorp, to deliver the nation's first premium advertising marketplace. The value propositions of this publisher coalition are simple: unique, premium inventory; differentiation; and scale; all in brand-safe environments.
SMALL NATION, BIG AMBITIONS
Before the advent of the Internet, the purchase of advertising was very much a manual process. Now, however, traditional manual processes are insufficiently efficient to power advertising, including in Singapore, where an Internet penetration rate of 84 per cent translates into a significant number of digital impressions across digital platforms. Having to deliver billions of ads against billions of impression in real time is no mean feat, and the success of coalitions depends on many factors.
Firstly, coalitions of media owners are typically formed around an organising principle, so that the multiple parties are looking to achieve a common goal. In certain cases, traditional rivals, sometimes on a spectrum of ideologies, need to come together in order to compete for digital advertising market share and form unique relationships with advertisers. By setting clear goals for the partnership, they will be able to functionally align themselves against a larger adversary.
Secondly, with Singapore's small market size, and a corresponding number of media owners, is having a coalition the wisest move for the country's ecosystem? The straightforward answer is yes. We've found that in markets where there is a high density of small but premium media owners, coalitions are a recipe for success. Together, a group of media companies can outsource work and divide operations, so they are able to deliver at-scale comparable to the duopoly.
Comparatively, in larger markets, media fragmentation can lead to short-term strategy in the publisher roadmaps. As well, when coalitions get too big, governments are inclined to step in and regulate in the interests of competition.
Additionally, when competitors come together, there can be friction, as sales teams are naturally inclined to compete against each other. It is crucial to establish from the beginning that the consortium is a standalone entity with separate inventory to the individual publishers, so they are not in competition for revenue and consumer attention. They could also monetise a specific type of inventory or format - as is the case with Skyline and Pangaea in Europe.
A final and critical factor is the advertising technology infrastructure on which the coalitions are built. If you're a local player and you don't have enough scale, publishers have to play by the incumbents', that is the duopoly's, rules. If they are building upon a consolidated platform, as KPEX did in New Zealand, coalitions are well positioned to reduce friction, spur ignition, and create a local marketplace. The platform must be versatile enough to cater to specific needs of different media companies and agile enough to do so quickly. With all the necessary ad serving technology in one spot, it can offer transparency, unified data sources and approaches to regulations, and the resources and expertise to scale.
MAKING IT WORK
Singapore is well positioned for a thriving publisher coalition. With just two media owners currently anchoring the SMX, there is still space at the table to accommodate even more like-minded organisations. However, for both the publisher and its audience to reap the intended benefits of the coalition, it cannot become so big that it creates a centre of gravity around a single publisher. While a coalition can be several publishers large, limiting participation to a maximum of four publishers enables the structure to operate at an optimal level - allowing advertisers to enjoy quality audiences at scale within a brand-safe and trusted environment.
One other notable benefit of a coalition is ensuring brand safety, especially in an age where hate speech and fake news are increasingly common. With a coalition, the partners can work together to pull the plug on the money supply to incendiary publishers. The idea of a platform such as SMX is essentially like an online marketplace, like Lazada or Amazon, providing the technology expertise to digitise these merchants and then regulate what their merchants on the platform are allowed to sell or not.
With digital marketing in the region experiencing strong growth, a lot more needs to be done. In 2017, digital advertising revenue in APAC increased by US$1.23 billion year on year and almost 92 per cent of it went to Facebook and Google. This leaves less than US$100 million to be shared across other APAC publishers. However, in an encouraging sign, other South-east Asian markets and publishers are taking on similar conversations on future-proofing their businesses. By taking on a more macro view, the establishment of more publisher coalitions can help protect the health of the open Internet from the duopolies.
- The writer is vice-president of global markets at AppNexus, a ky technology partner of Singapore Media Exchange