Ad Exchanges Due To Take-Off In Late 2009 and 2010 in Asia-Pacific Region Says CEO Robbie Hills of GroupM

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Robbie Hills of GroupMRobbie Hills is CEO of GroupM Search businesses across the Asia Pacific region. GroupM is the parent company to WPP media agencies including MAXUS, MediaCom, Mediaedge:cia and Mindshare.

AdExchanger.com: How would you characterize the state of the online media business in the Asia region currently? Any affects from the global economic slowdown? Any surprising strengths?

RH: In one word - Robust. Online advertising in Asia is at varying stages of maturity depending on the market. Japan, Australia and Korea are very advanced in both the types of online marketing that is being implemented and actual dollars being spent on media. These markets however are the three most affected by the global financial crisis. The large and emerging markets of China and India, while not as advanced as others, have been more resilient in the face of the global financial crisis. We are seeing increasing spends across the board in all markets but both China and India are showing really good growth.

Not really a surprising strength for those in Asia (but for maybe those who are not) mobile advertising and mobile search is very strong in India, Japan, Korea and increasingly China. This will continue to be the case.

You head Search in Asia for GroupM, but are you seeing traction with ad exchanges internationally?

Without a doubt. As there is an ever increasing amount of inventory available and becoming more available, exchanges provide a way for clients and agencies to effectively target and buy it. In APAC we are yet to see the various exchanges take off, however there is no doubt that they will in late 2009 and 2010.

How do you see SEO or SEM search campaigns and display ad exchanges working together? Do you think display can provide positive ROI lift to paid search campaigns when used simultaneously?

I do not see exchanges playing a role in the implementation, execution and optimization of Paid Search and especially SEO. I do, however believe that there is a very strong link between display advertising and search marketing effectiveness.

In fact, our agencies have conducted data analytic projects for various clients which shows the relationship between not only search and online display but the interrelationship between search and above the line or traditional media.

Are brand awareness dollars moving to Search? Or will it always be direct response?

I think there has been brand dollars in search for a while. The large CPG and Auto companies have been using search for years. Have they been investing correctly? Probably not. I don't think they are looking at search to drive reach and frequency necessarily but they are using search to drive engagement and awareness.

Unilever and P&G are two examples of companies in APAC (and globally) who are doing just that. They fundamentally realise that since they invest a great deal of dollars in the communication of their brands they need to be present in the one place where their customers are looking for them - Search.

Where are the challenges in the agency model as digital media evolves?

The main challenge we face in APAC is one that is faced globally in search: talent. Finding qualified search professionals that understand Search Marketing is a challenge, SEO most especially so. We have great teams in China, Japan, Korea, Australia, India, Hong Kong, Singapore and Taiwan but finding them has been a challenge. We look to train as many as we can from an entry level in paid search, but SEO is a skill you usually arrive at from another job such as web development or copy writing.

How difficult is it for western companies to leverage their specializations in China - whether media agencies, ad technology companies, ad networks or the like? Or do you need local expertise?

The China experience for many is littered with failed efforts, just ask Ebay, Doubleclick (prior to Google) and Yahoo. You absolutely need local expertise no matter what service you are selling/providing. China is also the one country where local companies are beating their more well known western equivalents.

Baidu is way ahead of Google in search for both query share and revenue (I am guessing here). Likewise Taobao is the dominant ecommerce/auction player.

Companies need to take the time to understand the China consumer as well as the way to conduct business. Thinking that what works in the US, UK, Australia, etc., will work in China is setting up for guaranteed failure. Do your research.

Any concern that Google effectively owns paid search? Do you feel handcufffed?

Not at all. Google is a great partner for GroupM in APAC and globally. We work with their teams across the region in a very collaborative manner.

APAC is also the one market where Google does not dominate. They are a distant second to Baidu in China, a closer second in Japan to YHOO, not even close to Naver in Korea and the same to Yahoo in Taiwan. They do have the market sewn up in Australia, India and Singapore however.

We utilize all the search engines across the region and are certainly looking forward to the growth of Bing from Microsoft over the rest of 2009 and beyond.

Are you using media trading platforms at GroupM for digital media buying similar to Havas' Adnetik, MDC's Varick Media or VivaKi's Nerve Center? Is it easier to build out internally or outsource?

We obviously don't use trading platforms for search. We do however use 24/7 Real Media's Search technology, Decide DNA to bid manage, optimize and report on the majority of our clients search campaigns. It is the best tool for us in APAC as it is double-byte enabled (can handle Asian languages) and has interfaces for Japanese, Simplified/Traditional Chinese and Korean

Any thoughts on who gets disintermediated down the road, if anyone - agencies or ad networks?

This question often gets asked with Google in mind. I believe that clients will always value an agency as they can provide a view that is not myopic in nature. We look at communication from all angles not just from a search view or an ad network view. So, I think agencies are here to stay.

Ad networks is an interesting one, though. Across the globe and certainly in APAC there has been an explosion of the number of ad networks repping inventory. Often the same inventory. I think there will be either consolidation of ad networks or disintermediation. I am not sure which. Both Google and Yahoo have their own exchanges and I am sure there are some that will emerge in China, Japan and India. Disintermediation is certainly possible for ad networks.

Follow Robbie Hills (@robbiehills), WPP (@WPPonline) and AdExchanger.com (@adexchanger) on Twitter.

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