AdStudio: Ushering in new era of digital marketing innovation through programmatic advertising

 Jayomi Lokuliyana

In 2018, the global programmatic  advertising spending market was valued at a staggering $ 70.3 billion, and the market anticipates that it will grow at a steady rate of more than 21% over the next five to seven years to reach $ 322 billion. And, the statistics never lie; last year, 80% of digital display marketing in the United States was done via programmatic advertising.  What is so unique about programmatic advertising? To put it simply, it helps organisations to automate the  decision-making process of media  buying by targeting specific audiences and demographics. Using artificial  intelligence (AI) and real-time bidding (RTB) powered by machine learning, programmatic advertisements are placed for social media advertising, mobile and video campaigns as well as online displays. The novel way of advertising has been designed to replace human negotiations with the help of emerging technologies to increase efficiency and transparency to both the advertiser and the publisher.  Last August, Sri Lanka saw its first programmatic advertising platform – AdStudio – being launched to bring innovation to digital marketing through real-time bidding, data and technology. With its perceptive data and classy yet straightforward programmatic technology, focuses on the controls with the uppermost capitulate has productively influenced technology to create an ecosystem where ad space buyers and sellers have more control over how they advertise and who sees their advertisements. AdStudio currently operates with advertisers as well as publishers, making it the first programmatic platform to be in operation within the country.  Daily FT sat with Jayomi Lokuliyana, co-founder and CEO of zMessenger and Director of Digital X, the company behind AdStudio (a subsidiary of zMessenger), to chat about how the ecosystem works and the impact programmatic advertising brings to the industry to change the face of digital advertising in Sri Lanka. 

Below are the excerpts of her interview:

By Hiyal Biyagamage 

Q: Can you take me through the thought process of introducing AdStudio to the local market?

The whole idea of AdStudio came about three or four years ago. zMessenger has been a pioneer in introducing mobile marketing to Sri Lanka, and we were experimenting and brainstorming about the next wave of advertising. The idea of mobile marketing was one-to-one communication, delivering the right message to the right person at the right time. However, since the start of zMessenger, technology around digital marketing evolved rapidly. With 16 years of experience in the industry, we figured that we were sitting on a massive data mine.

A few years ago, we were trying so hard to crack this massive data pool and make sense out of this data. We partnered with a few software companies to figure a way, but we still could not get much out of the data. It was not sensible. Then we got ourselves exposed to artificial intelligence and machine learning where those technologies proved to be the panacea for the solution we were trying to build. But it was challenging to find developers locally who could support the initiative which leads to several visits to the United States. In cities like New York and California, we met with several experts on programmatic advertising. They gave us real insights into how this is being done. We further went a step ahead and consulted an expert from Poland. Those steps helped us to learn how this entire idea of programmatic advertising works. 

Q: How does AdStudio work?

 In basic terms, how AdStudio works is when a user clicks on the publisher’s web page, they are prone to see the digital ad space available for auction. The system carries out the auction among all those interested in specific ad space, and the highest bid wins. Apart from that, AdStudio brings in the option of targeting the required audience when an ad is published, which limits the display audience concerning one’s privacy and preference.

The intelligent data management platform and AI integrated into the ecosystem allow ad buyers to channel their marketing campaigns to targeted audiences for exceptional results while the seamless technology enables ad sellers to generate the maximum out of each ad space. AdStudio is also significantly cost-effective as the only payments that consumers will need to do are for targeted impressions. Additionally, AdStudio stands out as the only programmatic advertising eco-system that boasts Sinhala ad spaces, allowing consumers to digitally allocate space for everything from Sinhala content websites.

The programmatic engine works based on two elements which are supply and demand. Demand-side is basically where advertisers would connect, and the supply side is where the publishers would connect. Real-time biding as a feature has been there for a long time, but the element of segmented profile-based targeting is something new for this market. Imagine you have two advertisers and they bid for space and place the advertisement where you cannot take away that media planner’s role in the digital machine; the machine decides the placement and who gets the bid and so on. If you visit the advertisement on Daily FT, right now what happens is that the site sells space and you monetise your media by selling the space. 

The idea behind programmatic, data-driven advertising will be based on your audience – like your social media profile so that the top banner you would see on Daily FT is not the top banner I would see. To enable this, you need to have what we call a data engine that provides customer profiles; it is called a customer data platform (CDP). AdStudio, in that sense, is a comprehensive ecosystem that would bring a new wave of digital advertising innovations for Sri Lanka. 

Q: In terms of the movement of digital ad spending, where does Sri Lanka currently sit at?

 Right now, looking at the Asian context, Sri Lanka is very much behind. Close to 30% of India’s online advertising has happened through programmatic advertising, and their digital spending has gone about 20%. Last year, we had a joint venture with an Indonesian company, and their usage of programmatic buying comes close to 40% in Jakarta; the maturity is very high. So their outlook towards digital doesn’t have to prove anything to them. They want to do it more scientifically to manage a bit more return on investment (ROI) from their ad campaigns.

In our context, we are still contemplating digital relevancy and how much money to put on digital advertising. Sri Lanka is not making the full potential out of digital media which is a question to ponder. Many organisations have budget issues, and when it comes to deploying a customer data platform, companies hesitate to put a decent investment since they do not understand the potential of programmatic advertising. As a brand or a company having a customer data platform in place, you could identify customer profiles, different segments who are online and the brand could even tell the system to look for similar audiences across different demographics who are online right now. So, greater targeting capability plus the ability to monitor what your current media spending will help you to cut down unnecessary ad expenditure. A customer data platform will help a brand to cut down their ad wastage.

However, to cut down ad wastage and see a better ROI from your campaign, you should be someone who is spending at least over $ 5000 or 10,000 on digital advertising for a month. At the moment, a handful of companies in Sri Lanka would commit to a digital advertising budget like that. This needs to be improved gradually because digital gives you insights; insights into behavioural patterns, trends and so forth. But having said that, I am also kind of don’t like the idea that Sri Lanka’s money going out to multinational programmatic buying platforms like Google and Facebook. 

That is why we came up with AdStudio because it is quite alarming to see how a massive percentage of digital spending now goes out of the country. AdStudio paves a new way for the market where a whole lot of capital could be retained in the country. 

Q: Do you believe Sri Lanka’s digital market sphere is robust enough to welcome such a programmatic ad ecosystem like AdStudio?

 There are certain challenges in the industry; a great example would be several people do not understand the proper meaning of digital marketing. For most of us, digital marketing means only Facebook advertising. Exploring the possibilities of digital marketing and on top of it, driving data-driven digital marketing campaigns is the way to go.

For people to be data-driven, you are referring to a specific analysis component as well as a technology component. Today, we refer to modern-day marketers as ‘marketing technicians’ or ‘marketing technologists’ because, in today’s day and age, you should have an awareness of technology to launch a digital campaign. So without having access to data in a unified platform or seeing the consumer journey in one unified way, you are lost in a way in this whole journey even though you invest money on a campaign and get the number of likes you would prefer. 

One of the most significant issues I hear from my clients is that most agencies come and tell them they would get you the reach, but the client wants to increase the sales of his or her online store. They are willing to invest about 15% of their budgets to enable their online store and drive sales, but many of our clients do not see a considerable return. In that sense, the closing of the consumer journey is still not happening so I am not sure that digital marketing in Sri Lanka is maturing at a rapid pace. 

Q: What are the limitations and challenges that you see holding the progress of the digital marketing industry?

 The lack of data protection policies and other data privacy laws is a huge issue. There has to be a proper framework so that both the interest of the consumer as well as the advertiser is going to be protected. Our online buying, or the use of digital money or the payments, is still very low. We are talking about 1% or 3% of online purchasing. If you cannot close the consumer journey digitally, it is going to be another challenge. So that could be another reason why brands are quite hesitant on investing in digital advertising since they look at how much sales they get on their store, the footfall and the conversion rates. 

Q: What are the opportunities for the marketing and advertising fraternity in Sri Lanka with the launch of AdStudio?

 The most significant opportunity I would say is the availability of an entire eco-system, not bits and pieces. The platform gives the power back to the brand owner rather than only relying on an agency or some other third party platforms like Google to decide where your ad should be displayed. I see this as an excellent advantage for Sri Lankan companies. And this gives so much insight to you as a marketer on the performance. You have an entire dashboard of data on how your brand is being performed, what is the audience it has reached and so forth. 

And similarly for publishers, for the very first time in Sri Lanka, they can analyse different profiles of their readers. This understanding will help them to optimise their content, to know what is required by different audience types, and to cater appropriately to that. AdStudio will also help to drive more effective advertising that helps the conversion in the consumer journey and to close the consumer journey properly.