Rokt and Dentsu Inc. Discuss the Cutting Edge of Post-Cookie and Retail Media

When it comes to the most frequently heard keywords in the ad tech industry today, "post-cookie" and "retail media" are undoubtedly at the top of the list. Operating at the forefront of both these areas is Rokt, an e-commerce tech company with operations in 15 countries worldwide, including Japan. We sat down with R&D personnel from Dentsu Inc., which has a business partnership with Rokt, to discuss the market challenges facing Japan and the world.

※This article is reprinted and edited from an ExchangeWire article.
 

An ad network that aggregates sites with e-commerce functionality

──Please introduce yourselves.

Watanabe: My name is Ryota Watanabe from Dentsu's Data & Technology Center. My primary role involves collaborating with Dentsu Innovation Initiative, the group's R&D organization, observing global market trends, identifying which new technologies are necessary for Dentsu Group's business portfolio, and then developing new business initiatives. Dentsu Inc. and Rokt have been in a business partnership since 2019, with Dentsu Inc. supporting the planning and execution of Rokt's go-to-market strategy in Japan. We actively propose and support Rokt's solutions, aiming to expand the domestic retail media market.

Mishima: I'm Ken Mishima, Head of Business Development for Asia at Rokt. After roles in market expansion and business development for online businesses like eBay, Expedia, and JTB, as well as advertising sales at Google, I assumed my current position in January this year. Since launching its Japan operations, Rokt has received tremendous support from the Dentsu Group, particularly in expanding our relationships with advertisers.

──Could you outline Rokt's services?

Mishima: We provide marketing solutions focused on the "moment of purchase" in e-commerce to improve the profitability of e-commerce businesses. Simply put, you can think of it as our unique ad network that aggregates sites with e-commerce functionality (publishers). It displays highly relevant ads the instant a user completes an online purchase. At this moment, it can show the publisher's own notifications aimed at increasing LTV, or it can display ads from third-party advertisers.

Particularly for the latter, publishers—such as ticket sellers or fashion-focused manufacturer-retailers (SPAs)—utilize our service to generate advertising revenue alongside their core business.
From the advertiser's perspective, we provide services that enable them to identify and reach users with high purchase intent—specifically those who have recently bought a product—using AI/machine learning to find individuals highly compatible with their own products.

──What data do you reference to deliver highly relevant ads?

Mishima: We infer highly relevant ads based on machine learning, using the demographic information and purchased product/service data held by the media company. Furthermore, we also reference each user's past reactions to Rokt ads (which ads they showed interest in and which they did not). In all cases, all user data is processed after irreversible hashing.

As a result, it has become a leading example of retail media.

──Is an ad network centered around sites with e-commerce functionality considered a type of retail media?

Mishima: In the Japanese market, there is a tendency to refer to systems that deliver ads to digital signage installed in stores as retail media. However, based on the original definition of "a media business that conducts marketing activities utilizing the user base or membership base owned by a retail business," I believe it is accurate to say Rokt is a type of retail media.

However, Rokt was not necessarily founded with the explicit goal of becoming a retail media company. Our development has always been driven by the aim to "build a win-win-win ecosystem for users, e-commerce businesses, and advertisers by displaying highly relevant notifications and ads to each individual user at the optimal time."

While third-party cookies have long been used to deliver relevant ads, Rokt's solution centers on first-party data held by publishers, not third-party cookies. We maximize the value of the immediate post-purchase moment. By leveraging information users themselves have registered, such as demographic details and purchased products, we use AI and machine learning to derive relevance based on a broader range of highly reliable information compared to third-party cookies. We believe this characteristic of utilizing first-party data has increased opportunities for us to be featured in contexts like cookie-less advertising and retail media.

Watanabe: As Mr. Mishima mentioned, unlike advertising delivery models based on third-party cookies, Rokt's system—which suggests "How about this product?" to customers who visit an e-commerce site and make a purchase—is highly advanced in terms of obtaining user consent and understanding.

In addition to the market environment where restrictions on third-party cookie usage are intensifying, I sense growing interest from society and client companies in solutions that promise stronger purchasing intent. For the Dentsu Group, this collaboration with Rokt stems from our desire to further strengthen the decision-making area at the bottom of the funnel.


──Does this put you in competition with major e-commerce platforms?

Mishima: While there are commonalities in maximizing audience data utilization, Rokt's uniqueness lies in its machine learning of each user's past ad exposure and response patterns. Furthermore, while typical retail media platforms display sponsored ads "before checkout," Rokt uniquely delivers third-party brand ads at the "immediate post-purchase" moment.

──What advantages does this offer advertisers?

Mishima: The key benefits are reaching highly engaged, real users who just made a purchase, and the extremely high-quality nature of the checkout screen as an ad placement. Not only can you reach users who are focused on shopping and highly satisfied, but we also provide a high-quality audience with extremely low risk of ad fraud.
Because ads are displayed on this highly curated transaction—the purchase completion screen—viewability reaches 97%. Rokt optimizes the ads shown based on expected conversion value. While the model is fundamentally a click-based ad, it also functions as a viewable impression.

Watanabe: I highly value the ability to maximize machine learning based on purchase data. According to an automotive retailer advertising with Rokt, ads displayed on pizza delivery sites performed exceptionally well. Since pizza orders are often placed by families, it seems to have been a good match for family cars. This kind of insight is something an advertising agency representative could rarely come up with no matter how hard they thought; it's precisely the kind of insight only machine learning could provide.

──If ads only appear on purchase completion pages, wouldn't ad inventory become quite limited?

Watanabe: In the first year after launching our Japan operations, we did experience lower-than-expected budget consumption. However, with the expansion of publishers adopting Rokt domestically, we now have sufficient ad inventory.

We've even seen cases where the CPM reached ¥20,000.

──What kind of publishers do you think are a good fit for Rokt?

Mishima: Publishers with high transaction volume, meaning high conversion numbers, are generally well-suited. Businesses that sell many products at lower prices tend to see more ad impressions and can more easily contribute to improving profit margins, making them a good fit for Rokt. Ticket sites, e-commerce malls, and travel sites are particularly excellent matches.

──How many monthly conversions are needed to generate a certain level of advertising revenue?

Mishima: Advertising revenue varies significantly not only by CV volume but also by how much user data the publisher shares. Even if the exact same product is purchased, the relevance of delivered ads changes drastically depending on whether Rokt receives "Purchased Company A's sneakers" or just "Purchased shoes." Furthermore, adding details like "Purchased by a 33-year-old male user residing in Tokyo" makes a huge difference.

As an average figure, click-through rates are around 7-9%. Calculating from there, the performance tends to be 10-20 times that of display ads. We even have major SPAs achieving CPMs of ¥20,000.


──I imagine that when an e-commerce site originally established to sell its own products starts displaying external ads, new challenges arise, starting with competitor exclusion.

Mishima: To address these challenges, Rokt offers various features.

For instance, when a major retailer expressed concern that "we might not be able to handle customer complaints or inquiries if we display ads," we set up a trial period where ads were shown on only 10% of total transactions. However, that concern never materialized, and they quickly expanded to displaying ads on all transactions.

Regarding competition concerns, for instance, a food delivery business can control exclusions with a single click. This prevents ads from not only other food delivery services but also meal kit providers and supermarket chains from appearing.

Watanabe: For many publishers with e-commerce capabilities, launching an advertising business is a secondary revenue stream, so ensuring it doesn't negatively impact existing operations is fundamental.

However, Rokt ads appear on the post-purchase page—typically the point where customer communication ends. Even when conducting A/B testing, this mechanism generates new revenue on the post-purchase page, which was not originally a monetization point. This makes it an easy product for the Dentsu Group to recommend to various businesses.

──Could you tell us about future business developments?

Watanabe: As mentioned in my introduction, I oversee research into cutting-edge technologies and business development. Frankly, the more advanced a technology is, the harder it often is for advertisers to immediately grasp its benefits. Within this context, we concluded that Rokt is a rare advertising product that is both advanced and offers advertisers immediate advantages, leading us to establish this partnership.

Moving forward, we plan to accelerate collaboration with various Dentsu Group companies. This will allow us to not only continue focusing on acquiring new advertisers, but also to partner with a wider range of media companies.

Mishima: Rokt's market share is still primarily centered in the US, and detailed adaptation for the Japanese market is just beginning. Together with our excellent partner, Dentsu Inc., we intend to continue working diligently to contribute to solving the various challenges faced by Japanese companies.

*For inquiries regarding Rokt, please contact us here.