In the risk-averse market of Pakistan, incumbents need to see a significant player take risks on an idea, wait till it bears fruit and then attempt to replicate it with 1% of the same budget.

Netizens across Pakistan witnessed how the success of Coke Studio led to the short-lived, poorly thought-out, copy-cat of the same concept by indirect and direct competitors in the youth-focused segment.

According to several leading executives in the $2 billion advertising ecosystem of Pakistan, we can expect to see a series of attempts by large advertisers in creating various solutions within the advertising technology (AdTech) stack.

These will include a supply side platform (SSP) that gathers media inventory of digital publishers, a demand side platform (DSP) that automates media buying, an advertising exchange that facilitates buying & selling on both sides, and an ad server that places ads on various online touchpoints and connected devices.

But why is this sudden obsession with AdTech left advertisers scrambling for talent?

The first-party data play

With COVID-19 ushering in a new wave of online commerce boost, retailers and quick service restaurants (QSR) players across the country witnessed exploitative deals at the behest of online marketplaces.

Given that buyer data is not shared with listed merchants and said data could provide insight into buyer psychographics, this prompted leading players in fashion and QSR to leave marketplaces and create their own online stores from scratch.

The data from these first-party data-gathering online stores has become a key basis for setting up brick & mortar locations in areas stereotypically assumed to have residents with weak purchasing power.

For the fashion industry these locations doubled as components of the omnichannel play. Meanwhile for the QSR industry, these locations doubled as cloud kitchens to also meet serve the operational side of eCommerce and a touchpoint to capture audiences that like to dine out.

The aforementioned owned media strategy is why KFC dominates Google Trends data across the country's fried and fast food ecosystems. For companies looking to speed along the process of setting up online stores, white-label eCommerce apps are available such as Eat Mubarak and Chikoo, with the former being used by Nandos for its online ordering site, per inspect element.

The discussions around an owned advertising technology ecosystem really began in mid-2020 after Profit by Pakistan Today reported that Unilever had secured a white-label solution by VentureDive to create a quick commerce solution called Munchies. This was to capture first-party data of its end-user base, which no online marketplace was willing to share.

Months later, Profit by Pakistan Today reported that Unilever partnered with Leopards Courier to launch SuperSauda, a replica of Pandamart, albeit with only products created by Unilever. There were a few exceptions in categories outside their scope, such as carbonated soft drinks.

These moves prompted multiple CPG and QSR players to create their apps, which require sophisticated customer acquisition and retention tools, most of which are based outside Pakistan and lack customization by design.

Winning media reviews

Sensing the opportunity of capturing first-party data and owning oversight over the media supply chain, both two leading telecom operators have begun to initiate conversations and recruitment efforts around hiring product managers with experience with the AdTech stack.

The intent here is to create the AdTech stack from scratch and offer an ad exchange. This exchange will consist of a DSP and SSP. This will also include data verification system.

In order to do this, the telecom operators would need to undertake the painstaking effort of approaching advertisers through various media agencies and approach all manner of digital and platform publishers with digital ad sales deals. Given the amount of AdTech consolidation worldwide, it is more likely that they partner with an existing media agency to do this for them.

Given that both telco operators are in the middle of media reviews, advertising agency groups are eager to demonstrate their proficiency in the AdTech space, promising to partner or co-create a solution much more in line with their existing clientel.

In the interest of meeting this demand and in capturing more sections of advertising expenditure across the digital media supply chain, executive headhunters have confirmed that large advertising agencies have initiated the search for CTOs that will build AdTech stacks for them.

The rise of advertising fraud

While investments in DTC business units bore fruit, they also exposed advertisers to the unspoken market reality of advertising fraud in the form of domain spoofing, ad blocking, invalid traffic, non-viewable ads, off-target campaigns, and many more issues. Led by white-collar criminals, ad fraud burns advertising expenditure (AdEx) that chases vanity metrics.

Per a report from Profit by Pakistan Today, this was one of the reasons various locally produced influence marketing and creator economy start-ups and platforms were launched including Amplifyd, Bradri, INCA, Linkstar, Social Champ, and Walee. These platforms can track which influencers have fake followers, rank creators by their engagement, and attach a quality score to their user generator content and following.

As COVID-19 created a recession and forced marketers to utilise insufficient funds for affiliate marketing, the chase of vanity metrics led them to pick influencers with seemingly high reach but low engagement.

With influencers working with sham PR agencies that inflated social media followings with fake or bot accounts, advertisers that sought these creators saw little return on advertising spend (ROAS).

They will also fooled by those ignorant enough to think influencer marketing is a subset or a function of PR - which is an entirely earned part of the sentiment development mix - whereas influencer marketing is entirely paid hence is classified as advertising.

Emergence for retail media networks

With GroupM being named the media agency for Daraz and Brainchild the media agency for Foodpanda, proposals have floated in the market suggesting that the concept of a retail media network (RMN) has reached Pakistan.

Amid the ongoing recession, technology companies are seeking new avenues of monetisation and the intent based quality traffic on commercial apps is just the kind of cheap first-party data advertisers are eager to redirect their way.

By doing this, commercial apps are turning their cost center - customer acquisition efforts - into a profit center. Generally priced below traffic acquisition costs, these deals are being sold via large media agencies as exclusive resellers.

With Krave Mart securing Ekaterra on it’s advertising platform, the chatter has begun for a private marketplace (PMP) for a retail media networks comprised of the media inventory of apps such as Daraz, Krave Mart, Foodpanda, Super Meal, Carrefour, Chikoo, and others. Operating on razor thin commission margins and slow repayment cycles, advertising groups are eyeing AdTech as a means of capturing more of the AdEx they funnel through these RMNs.

In the hopes of capturing 10% of AdEx with agency commissions, 5% as the DSP and SSP, and 2.5% as the data verification service, advertising agency groups are scrambling to create the AdTech upon which the PMP for retail media networks will be built. Industry reports such that Equativ is eyeing the Pakistani market and looking for partners with a strong CPG portfolio.

Had it not been for its second-party marketplace, Brainchild may have been a strong fit for the French AdTech company, amid it beating Mindshare after winning the entire PepsiCo media account and its win of the digital media account of Reckitt, while conventional media is parked at Blitz, one of many Z2C-owned companies.

Timely actions by SBP

Amid the SBP measures to block forex outflows, resellers for platforms such as TikTok, Meta, and YouTube have begun to earn from the float as well, prompting the registration of liaison offices (LO).

While unable to conduct commercial activities, these LOs will be able to lobby for changes in the SBP policy and smoothen out the pending payments. In the interest of pursuing a transparent media supply chain, advertisers are looking to work with a local advertising network to flow funds to publishers and content creators.

Seeking more profound efficiency in digital media spending, marketing executives at digital-first companies are keeping a close eye on PMPs in the AdTech space.

Is the market ready yet?

“PMPs are ecosystems that allow advertisers to target audiences on various platforms through their targeting parameters at an agreed price point between the agency/advertiser and the publisher,” said Ali Rehman, a founding team member at Hefazat Technologies, an InsurTech start-up backed by Kash Rehman. “This helps publisher increase their monetization and brands improve efficiency.”

He said that if Habib Bank Limited (HBL) wants to target people looking for a new car, the data population is done with OLX and PakWheels, which enters HBL’s data management platform. HBL can then target these users outside of PakWheels and OLX in all spaces, wherever they’re found on Hamariweb, Cricinfo, Cribuzz, or any other site in the marketplace.

“While normal AdTech allows you to target audiences through an auction, there is a low chance of being able to target as the audience size gets smaller, which increases the chances of losing said auction,” said Sundus Shahid Bari, associate director of strategy at Blitz Advertising, the sports marketing agency known for launching the Pakistan Super League. “This is perhaps the most important reason to have a PMP where the competition is limited & restricted by design, and the chance of winning is higher at an agreed price.”

According to independent studies by the Association of National Advertisers and the Incorporated Society of British Advertisers, PMPs are one of four types of programmatic advertising deals, with the others being rife with fraud. The studies show that open auctions, preferred deals, and automated guarantees have nontransparent media supply chains.

“PMPs are the right way to use programmatic, utilizing both your first-party data and buying muscle,” said Ghulam Jilani Kothari, the former head of Xaxis at GroupM and the new head of partnerships at Alliancez. “Using your overall advertising to increase the effectiveness of advertising expenditure being made daily. With a PMP, you can retarget audiences on premium publishers at a locked price without paying any premium.”

As of this writing, industry sources shared that in light of SBPs measures to restrict the flow of money outside of Pakistan, agency executives have started using programmatic guarantees locally by inventory on a guaranteed mechanism using Google’s DV360 and making payments locally to publishers in the market. This, too, has sparked an interest in developing or co-create an advertising technology tool for the local market, akin to Consolidata.

“With PMPs, advertisers gain premium inventory, programmatic efficiency, brand safety, and transparency,” said Mehwish Aslam, the chief business officer at bSecure, a one-click checkout solution. “They also get the publishers valuable first party data and the right to first refusal over impressions. Both the advertiser and publisher win.”

The way forward

It remains to be seen how these systems are executed and whether media auditors of Pakistan will be able to learn from lessons of the West in order to prevent digital ad fraud to thrive with the rise of AdTech.

In the absence of an effective regulator around the advertising industry, it is recommend that trade bodies such as the Pakistan Advertisers Society, the Marketing Association of Pakistan, and the Pakistan Advertisers Association band together to create the guidelines that allow advertisers and platform developers to be on the same page.

“All contracts across the programmatic and media supply chain must have standardised terms & conditions that are endorsed by industry bodies and digital native marketers,” said Sameer Ahmed Khan, the co-founder of Social Champ, a Techstar backed social media management tool. “Data taxonomies, definitions, retention, seats and seat IDs, etc should be consistent for all supply chain participants.”

He said that by doing so, the advertising industry can urgently mature and facilitate the data sharing that is a key step towards a more transparent supply chain.

“Advertiers, agencies, adtech, digital publishers, and trade bodies must band together to ensure that the highest reasonable proportion of advertiser spend reaches publishers,” said Khan. “There should be no unattributable costs nor instances of unauthorised reselling. These measures will optimise ad spend to reduce CAC and uplift the CLTV in the long-run.”