Programmatic is the buzzword of the moment. But in China, which is poised to become one of the largest advertising markets in the world, programmatic ad buying holds its own unique set of challenges. This brief guide will give readers a primer on what the programmatic landscape in China is like, who its key players are, and the unique challenges that advertisers face.
The Chinese digital advertising market is incredibly fragmented. Compared to the highly specialised and relatively efficient structure seen in more developed markets, Real Time Bidding in China is complicated by multiple participating enterprises with differing roles and duties. Tier 1 publishers like Sina, Taobao and Youku seal off their own inventory by creating Private Marketplaces (PMPs). PMPs allow advertisers to choose websites with quality content but still adopt a programmatic approach to purchasing ads. They also allow advertisers to set frequency caps that ensure ad messages won’t oversupply the same user. However, the prevalence of PMPs means that third party Data Management Platforms rely on advertising inventory from the long tail, leading to lower quality ad placements.
Currently, most display advertising budgets are channeled to ad exchanges. However, other advertising demand management entities have sprung up to improve the digital advertising funnel. Demand Side Platforms work well with Advertising Networks, which is why China has developed a unique DSPAN model – Demand Side Platforms and Ad Networks merge. This happened as a result of the Chinese ad market’s transition from traditional, manual media buying to programmatic. The big advantage to advertisers is that this allows them to test-run programmatic buying instead of switching to programmatic all at a go.
- TANX: Owned by Taobao, TANX is one of the earliest players in the Chinese RTB market. It offers an Ad Exchange, DSP, SSP and original DMP. Taobao monetizes its audience on sites like Taobao.com.
- DoubleClick: Owned by Google, Doubleclick serves clients from over 26 countries but just started in China in April 2012, with the third party media resources, like Sina.com, Sohu.com, CNTV, ifeng.com and even TANX. DoubleClick has access to a relatively high-end audience in China.
- Tencent: Tencent launched a DSP named Tango in May 2013. Tango perfectly integrates with Tencent’s real-time AdExchange to connect with its rich user data obtained from QQ.com, V.QQ.com, Discuz!alliance and the Tencent mobile alliance. As most Tencent products are connected with or supported by a QQ login, the database of user attributes and social networking are fairly complete and valuable.
- Baidu: Baidu’s Exchange Services is the latest AdExchange platform to launch in China. It has a high standard of resource protection and data analysis capability. Baidu’s search engine covers 95% of China’s domestic search engine market, and also brings together the resources of 600,000 partner sites in its alliance.
Challenges of Programmatic in China
Despite all the benefits RTB can bring in precisely targeting the right users, advertisers in China are not all running to adopt it right away. Advertisers in China have gotten used to the old way of media placement where they can specify an ad position at a fixed price and schedule the ad to launch at a fixed timing. On the contrary, with RTB, advertisers are not even able to see where the ad is displayed.
RTB is still in its infancy in China. Effective RTB relies on a large quantity of high quality data, but both are a challenge. Not many publishers have moved their inventory to the RTB ecosystem. Many publishers don’t provide full transparency and access to data, making it hard for marketers to deploy algorithm optimization strategies. In turn, advertisers raise concerns about the quality of media resources. This problem is particularly common amongst brand advertisers who are more concerned about the safety of their brand.
Further, each major ad exchange has its own unique characteristics that mean marketers have to work hard to select the correct one. For instance, Taobao’s TANX aggregates inventory from its eCommerce websites, therefore making it suitable for direct response advertisers who are targeting online users with high purchase intent. On the other hand, Baidu’s ad exchange covers numerous websites under its affiliate network, making it preferable to advertisers who seek extensive exposure.
There are close to 600M online users in China scattered in a sea of websites engaging in different online activities. This has made precise targeting more important than in any other markets in the world. To run effective campaigns across numerous media platforms in China, marketers should adopt a cross-channel marketing strategy that embraces search, display, mobile, social and even video. Even though the players are different, good audience data across channels will guide and lead brands to effective audience buying decisions.
The writer is Sammy Hsieh, CEO of iClick.