At the beginning of the month, our CEO and co-founder Tim Koschella had the opportunity to sit down with Korean IT media company Microsoftware for a passionate talk on the history of mobile advertising, the idiosyncrasies of the Korean market, the rise of programmatic and the future of the industry. Here is a carefully translated version of the interview. If you would like to brush up on your Korean, head here.
The Past of Mobile Advertising
The early 2000s marked the beginnings of online advertising in Korea. Portal sites and search engines such as Naver, Daum, and Google started to sell banner ads and the traffic was monetized through CPC ads. Korea had the particularity of having one portal site owning almost 75% percent of search queries. The so-called ‘adtech’ or ‘online advertising technology’ was not really necessary in this context.
“Just run ads on Naver.” While Korean companies were abiding by this simplistic advertising scheme, the international ad industry was undergoing rapid changes. To better accommodate the needs of publishers and advertisers, platforms and costs were indeed being optimized for ad contents to effectively reach target audiences through RTB and programmatic advertising.
Since 2010, the mobile industry in Korea has been growing fast and many companies have rushed into this market with their own strategies. However, some of them have until now failed to understand that mobile advertising goes beyond just clicks. In a market where certain ad technologies are lagging behind those of other countries, how should we deal with this mobile trends? Tim Koschella, AppLift’s co-founder and CEO, has a few ideas about the present and future of digital marketing in Korea.
The Present of Mobile Advertising
RTB and programmatic advertising, which just started to get widespread attention in Korea, are already becoming standards overseas. Why is this the case? For Tim, there are mainly two elements needed in order to fulfill the needs of both media and advertisers.
“For desktop ads, it’s fair to say that CPC was a standard that could satisfy both advertisers and publishers. However, it is difficult to understand specific ad performance through CPC only. Advertisers prefer CPA (Cost-Per-Action) whereas publishers prefer CPM (Cost-Per-Mille or cost per 1,000 impressions). Advertisers want their target audience to purchase their products, while publishers want to easily monetize their traffic by displaying the ads; CPA and CPM puts the least risk on each side respectively. In this context, RTB and programmatic optimize each bid so as to make the CPM pricing model attractive for both sides. And unlike Korea, in the West had a great variety of channels and media for online advertisements.”
The international industry is also going through challenges different from those in Korea. In the peninsula, with the emergence of Facebook’s mobile ads, portal companies are having difficulties generating revenue from mobile ads. Internationally, ad technologies have been developed from a diversified online media environment, but are still in their early stages on mobile.
“To measure the performance of desktop ads, we can analyze the cookies of users; it is relatively simple. However, it’s another story on mobile, where we need to measure and analyze user activity across multiple angles and through a variety of factors, such as device ID, MAC address, cookies, etc. The two advertising areas have remained separate so far and desktop companies have not yet mastered mobile technologies.”
Tim saw the potential of mobile early on, which led him to co-found AppLift in August 2012. AppLift, headquartered in Berlin, is a DSP that connects advertisers with media sources. The company recently acquired Bidstalk, a DSP technology solution, and expanded offices to six Asian countries.
“We are focusing on optimizing mobile RTB. Bidstalk is famous for applying its RTB technology to DSPs. I believe that the synergy of both companies will bring great benefits to optimize the ad auction environment on mobile. Bidstalk has its headquarters in Singapore as well as an important R&D center in India. Their local presence will help us advance into the SEA and Indian markets.”
AppLift focuses on campaign optimization to maximize the ROI as well as the volume of installs, and allows advertisers to integrate their first party data into the advertising campaigns.
“To optimize a campaign, it is important to have an infrastructure that can analyze and run an important amount of data on a real-time basis. For instance, we use data centers in Asia, Europe, and the US and our internal systems were built on the open-source technology Spark.
The Future of Mobile Advertising
Mobile is big. Every year, research firms such as Nielsen or eMarketer adjust their predictions upwards for the mobile industry. In the most recent years, there has been a movement of mobile and desktop ads converging into one integrated solution. With new technologies emerging, it should also be possible to track online and offline as one platform. Tim explains that, in the future, we might be able to book and track offline inventories such as TV or Out-Of-Home advertising together with online and mobile ads through one unified system.
“Ten years from now, we might see the integration of online and offline ad inventories based on RTB. For TV advertisements, we can apply the RTB technology and show different, targeted ads to different households based on their user data. It might be also possible to analyze users in an offline environment through mobile data. Recently, PubNative launched its native ads on the Apple Watch to leverage this ‘connectivity’.”
What will the future of advertising market look like? A platform that can track ad performances across different channels such as mobile, TV, offline is likely to emerge. And analyzing data to find specific targets will be key to adtech.
This post was originally posted on Microsoftware and can be found here.