In-app advertising is growing in popularity in Japan, but concerns remain over media quality, according to a new report by PubMatic.

The report found that concerns over inventory quality are key reasons that prevent media buyers from transacting on in-app inventory programmatically, defined as those purchased via demand-side platforms (DSPs), with 51% citing brand safety concerns and 48% citing ad fraud.

Despite high investment in the format, with 28% of overall Japanese ad budgets going to in-app environments in 2019, only 16% of media buyers buy these ads programmatically. This is versus the 50% who buy ads directly from walled gardens.

When asked why they do not buy in-app ads programmatically, 31% of media buyers stated that do not understand the benefits of programmatic advertising, suggesting a need for continued education on programmatic buying in Japan.

The findings also highlight the differing attitudes and approaches to in-app advertising of brand advertisers and agencies. While advertisers primarily view in-app advertising as a branding channel, agencies use in-app to drive app installation.

This trend informs the app verticals chosen and the key metrics for campaigns – with gaming inventory and metrics like cost per install being more than twice as popular with agencies than advertisers (52% vs. 23.5% and 44% vs. 20% respectively).

Michiteru Hirose, PubMatic's country manager Japan, said the fact that in-app accounts for a significant share of digital ad budgets suggests that mobile in-app will lead the path for programmatic media buying in Japan.

“However, we also see that programmatic in-app buying is still in its infancy in Japan - investment in programmatic in-app is far higher globally, according to our earlier global study 68% of media buyers transact in-app ads programmatically,” he added. “In order to move forward and realise the advantages the format has to offer, the digital ad industry in Japan needs to work together to inspire buyer confidence in in-app.”

Key findings from the research include:

  • Excluding walled garden apps such as Facebook and LINE, the most popular app verticals among media buyers are News (71.4%), Health/Lifestyle (50%) and Gaming (40.5%).
  • The primary purpose of in-app advertising differs according to buyer type – with branding being the primary objective for brand advertisers vs. app installation for agencies.
  • While 50% of media buyers say that they buy in-app ads on Facebook, Twitter, LINE and Google APP Campaigns, only 16% use a DSP to buy in-app ads programmatically.

The study was conducted by Digital InFact and surveyed 100 media buyers (brand advertisers and advertising agencies, including trading desks) in the market, who purchase in-app advertisements.

Sourced from PubMatic