Japanese Advertising Technology Landscape 2013 (Search) & SEM Industry Trends: Interview with iRep President Kanno
The fifth edition of our Advertising Technology Landscape focuses on paid search. Consumers increasingly use multiple devices such as smartphones and tablets, and complexity in operations grows as it merges with display ads in the form of operations advertising.
We discussed paid search industry trends with iRep president Shinsuke Kanno.
(Interview by ExchangeWire JP Editor in Chief Shinobu Oyama, written by Nobuo Tsuruta)
The 3 Market Trends in Paid Search are Smartphone Compatibility, Attribution, and Audience Data Utilization
Agencies involved in paid search are diversifying as digital advertising technologies and operations become increasingly complex. Tell us about the positioning and relationships among traditional advertising agencies, Internet advertising agencies, SEM agencies, and SEO firms in the Japanese marketplace.
Konno: There are several ways break down paid search. First, paid search comprises two domains mainly: ads and solutions. The former is general advertising that is deployed on platforms like Google and Yahoo!. The latter is more or less SEO. Agencies are thus said to be strong on ads or they are focused on SEO solutions. Some firms of course provide both services.
The second aspect is whether an agency specializes in ad operations. Basically, this has to do with whether an agency has an in-house operations unit. Those that do run ad operations for traditional advertising agencies rather than working directly for the client. You could call these firms operations reps or trading desks.
In a narrow sense, trading desk can refer to DSP operations as well. The original meaning of a trading desk is a company that manages all advertising and solution dashboards from media relocation to advertising investment allocation. In reality, however, there are currently no operations firms that can optimize advertising and solutions completely.
The third aspect is whether an agency has accounts with Google and Yahoo!. While Google currently does not release explicit information on authorized partners, Yahoo! does, grading authorized partners by its star system. Since no major agencies specialize in Yahoo! alone, it’s safe to say that a Yahoo! authorized partner is also a Google authorized partner. We are the only agency that has been certified with a five-star grade. Although it’s not as straightforward as that, as Hakuhodo and other traditional general ad agencies cannot be authorized agencies because they do not have accounts with Yahoo!.
What kinds of trends are you seeing in terms of technology and operations or customer needs?
Konno: Three trends stand out to me. One is a smartphone delivery through Google’s Enhanced Campaigns and Yahoo!’s Unified Campaigns. How to provide smartphone delivery in a single source advertising format for both PCs and smartphones has become recognized as an important challenge.
The second is shift in emphasis in operations from last-conversion to attribution. There is a demand to fulfill the trading desk role I mentioned before.
The third is finding ways to achieve operations efficiency in the advertisement effect of pure advertising as more complex effects are measured than before. I think the need to manage all audience data using a variety of tools will continue to grow.
So you’re saying the trend is moving toward optimizing ads or solutions rather than individual advertisements overall?
Konno: Right. Actually, there has been support behind this from the beginning, but operations had to be run in a way that achieved the best point of contact for customers with finite budgets. Finally, we are now at the stage where operations tools can be used to address these customer needs. Still, full automation is at least another ten years down the road, and even then I think it will require some human judgment.
Another way to say it is that the role of people in operations will evolve over time. I remember when I visited your company about ten years ago that I was shocked to see staff glued to screens like forex traders, bidding on listings manually. Now bidding is automated through tools.
Konno: Exactly. The days of simple competitive bidding for Yahoo! ad listings were miserable. It was terrible because there were no tools, and since you could see competing bid prices, people were stuck on their computers from late Friday night manually running operations by copying and pasting over again.
Creative Talent That Expands Brand Marketing Will Be Essential in Competition
You mentioned Google’s Enhanced Campaigns earlier. On a recent trip to the US I heard many negative comments about the program. Many people said they would no longer use Google’s platform for mobile advertising, or that they would switch to Facebook.
Konno: There are smartphone-focused businesses in Japan as well, like DeNA and Gree. Regardless, Enhanced Campaigns does not provide the same level of detail for smartphone settings as before. What’s more, key bidding settings are more apt for PCs. Having said that, although you may not like it, Google is the world’s largest SSP, so there is no other option than to use Google to reach users. Of course, Google is taking these issues into account and will continue making minor changes to support smartphone-focused businesses. One unmistakable fact is that as advertising becomes more sophisticated, operations will grow more complex.
Display ad operations are recently growing complex through RTB. In this kind of environment, what do you think is necessary to optimize advertising performance overall?
Konno: First, it is no longer possible to continue policies by leveraging data without machines. This goes for our company as well. That means deploying operations tools and ad technologies is a minimum requirement. In addition, it is essential that operations units have a shared understanding of marketing, as not everything can be automated. Last, creative talent is a key element. If you do not have all three, you cannot survive the competition in this environment.
There are a variety of operations tools, with Marin making progress now. What expectations do you have for the role these tools play?
Konno: Maintenance features are the foundation of these tools. In other words, they must provide proper management over the content displayed, budget, and duration of advertisements. And from the point of view of operations, management that ensures automatically turning bids and displays on and off is necessary.
The third is an extension of features. A steady rollout of useful features such as reporting and alerts and simple operations based on visualized is behind what makes Marin popular.
Big data is a hot topic today, but what customers are demanding is not looking at ten billion records. Rather, they want to extract only the necessary data from those ten billion records and tie that into their policies. That extraction process is exactly where you want a machine over a data technician. What matters is dropping this extracted data into your policies and implementing them. Marin has established itself as a tool that ad operators can easily use to set processes that improve performance even at the lowest settings, without concerning themselves with the complicated statistical logic at the backend.
If there is no requirement to use a certain tool, however, I think it comes down to which one you’re familiar with. We use complex tools in addition to Marin in conjunction with the Marketia platform we developed.
Discuss the future direction of your company.
Konno: Going back to trading desks, there is a need to integrate management for attracting customers. We are maximizing the effect by integrating all digital policies, including SEO, for attracting customers to operations. We will parlay listing platforms to optimize display ads and affiliates in order to implement pure advertising operations and media allocation while managing audience data. No other company in Japan runs operations in all areas of media including social media, much less one that also handles allocation.
Search is your strongest area. What points do you want to enhance in the future?
Konno: The creative side. There are two halves to the creative side, one focused on how to increase click rates and conversion rates in mass delivery systems, such as DSP banner ads. Tools can be used to automate changes in color or arrangement. When you need people to make adjustments, this can be done by outsourcing to South Asia or crowdsourcing.
The second is creative brand marketing. This is difficult to do systematically, so human judgment is critical. In fact, we still have some weaknesses in this regard. We are working with one of our group companies that is strong in this area while we move forward. Our current task is strategically enhancing our creative side at the hiring stage in order to run creative in-house.
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