Newspaper and magazine publishers finding it hard to resist pressure on online ad rates today should brace themselves: it could get a lot tougher tomorrow.

Increasingly sophisticated trading technology, created to harness the profusion of digital inventory and media fragmentation, is making it easier for advertisers to locate the people they want without going to specific sites.

This segregation of audience and inventory has sounded an alarm for publishers however, threatening to commoditize the ad space they are selling while a middleman adds to the indignity by taking a cut at the same time.

Unsurprisingly, many publishers are wary, though standing on the sidelines may prove to be fatal.

With 50% of digital ad budgets spent on managing the process of placing and monitoring ads, compared with just 2% for TV, this new ecosystem is emerging to address a genuine marketing need – ironing out inefficiencies in the system.

Publishers who engage – even cautiously – with advertising technology are more likely to remain relevant in the digital world, while developing a better idea of the value they can offer.

A diverse mix

Advertising technology covers a diverse area in addition to targeting and data management software, spanning content management and distribution, workflow and billing systems, and analytics and yield optimization tools.

It’s a fluid and unstable place, largely propped up with venture capital investment rather than profitable cashflow at the moment.

Frameworks and standards are also evolving, creating plenty of room for new entrants to find a niche.

Developments have tended to favor advertisers so far, helping them scale ad buys, but systems to help publishers are becoming more prominent too.

“You need to match the offer with the demand,” said Stephane Pere, New York-based head of Ideas People Media, an ad network built and run by The Economist Group.

“There have been more and more initiatives to help the publishers structure the supply," Pere continued, speaking in a webinar organized by The Society of Publishers in Asia (Sopa).

"That’s where you see companies such as Rubicon which try to develop supply-side platforms.

"It’s great to automatize the demand but you also need to aggregate and make the workflow connect with the supply.”

The Rubicon Project, a former ad network sitting between publishers and advertisers, started focusing on publisher needs after buying News Corp’s ad network, Fox Audience Network, just over two years ago.

At the end of last year, Rubicon struck a deal with News Corp’s newspaper division in Australia to develop proprietary marketplaces called private exchanges.

These enable some of the benefits advertisers look for, such as bidding for inventory in real time, while giving publishers more control than they would have in a more open market.

Early adoption in Japan

Within Asia, programmatic trading – the blanket term for media buying that can be automated – is most prominent in Japan, where real-time bidding (RTB) and private exchanges are already gaining traction.

Adoption however is hampered by the reluctance of sites to accept ads delivered by separate companies. Called third-party ad servers, these play a key role in online ad exchanges as a common communications hub for multiple publishers and advertisers.

It was only in the second half of last year that Yahoo Japan, the country’s biggest online publisher, started accepted third party ad serving, pointed out Hiroko Hoshino, chief representative for the Financial Times in Japan, starting to slowly feed inventory into automated marketplaces that rely on large volumes to work well.

“For international players like ourselves, the other issue is connectivity," added Hoshino, who also serves as the business paper's digital commercial director in Asia-Pacific.

"The real-time bidding market in Japan is for domestic players. International supply-side platforms and demand-side platforms are not here yet.

"We’re running tests, but international platforms are not connected well to Japanese platforms at the moment.”

Elsewhere in Asia, it’s the markets that promise scale, such as China and India, where ad technologies are likely to take off, rather than smaller markets with a higher proportion of online spend such as Taiwan or Hong Kong.

Even in large ad markets such as Japan however, there is significantly less digital inventory traded than in the US, where programmatic buying doubled in size last year, accounting for almost 15% of online display advertising.

“There is a lot of interest in our part of the world,” remarked Yean Cheong, Asia-Pacific digital head for media agency network, IPG Mediabrands.

“Part of the frustration some of our clients have, is that they’re aware of these technologies being prevalent and doing well for some of their counterparts overseas.

"They’re keen to engage but it’s not going to work well if we don’t have enough inventory.”

Sopa’s webinar, The Rise of the Machines, can be replayed here.