China’s unique ecosystem means that international brands can’t adopt a ‘business as usual’ approach to reach its tantalizingly large population.
Dr. Sara Ye, president of Chinese ad tech titan iPinYou’s international business, explains how to crack the People’s Republic with programmatic buying.
Dr. Ye will be speaking at the forthcoming ad:tech conference in New York on 2-3 November.
How would you sum up the challenges faced by international brands trying to break into China?
Many international companies find it a very difficult market to enter.
Even if they have broken into the market they find it very hard to maintain a leader position like they do in the US market – as we have seen with companies like Google, Amazon and Uber.
Why is this?
The market is mainly dominated by local players. This is because the culture and the way people do business is different.
Trust is usually based on very long term relationships, and the language barrier makes it hard to build new relationships. Also, the media environment is very large and complicated.
There are around 800m smartphone users in China – just think of that number compared to the total population of the US [320m]!
How is the programmatic landscape different?
If you look at the big players in the US – DoubleClick, Trade Desk, App Nexus – you don’t see them playing active roles in China.
Also the publisher landscape is different, with many private exchanges.
Each of the major media owners will have their own exchanges including Alibaba, Tencent and Baidu.
Then there is a lack of standardization of ad sizes. There is so much fragmentation and each media company can offer any size ad they want so there are as many as 1,000 different formats.
What are the implications for international brands?
If they want to crack the Chinese market they need to find a reliable local partner. Look at their client portfolio to try and find out whether they can handle the volume and traffic on a daily basis.
Meet with the team and get to know whether they seem credible enough.
What are some of the key trends in media consumption?
We are seeing rapid development in terms of mobile traffic. Two years ago the mobile traffic on our platform was about 20% but this year it’s already 60%.
That’s a huge revolutionary kind of a change. People don’t necessarily have a computer but almost all of them have internet access on their mobile phone.
Also WeChat is very special. It’s such a popular social network in China, and [parent company] Tencent has its own ad exchange called Guangdiantong.
At iPinYou we have already integrated with that ad exchange.
How much of a problem is ad fraud?
It’s a worldwide problem and there are professional organizations trying to make profits out of it.
It can be pretty hard to detect and I don’t think any country in the world has a very effective way to stop it. That’s the reality.
We are working really hard to ensure our clients’ budgets are protected by working with world-class partners like Integral Ad Science (IAS).
We are also actively advocating in the China market, working with WPP’s Xaxis and a couple of other companies to educate clients and develop anti-ad fraud software.
What’s the biggest misconception advertisers have about the Chinese market?
It really depends on the type and experience level of the advertiser.
Some say it’s too difficult to tap into the market and, because of uncertainty and fear, they are unwilling to give it a try.
But actually the market has been developing rapidly and the industry is much more sophisticated than some international advertisers believe.
Others think it’s so sophisticated that they need to go with the strongest international partner, although they aren’t always achieving the same kind of success as they do in Europe and the US due to the unique characteristics of the Chinese market.
What are some of the common pitfalls of brands entering China?
Many international advertisers who haven’t worked with a DSP in China before want to be very cautious with their budgets, not giving enough to get good performance results.
We worked with Uber before and they started with a small budget, but realised the awareness wasn’t strong enough.
So they were very smart and invested a lot more on a daily basis and the performance hugely improved. Later on the daily spending was over 2m RMB ($300,000).
Some of our performance marketing advertisers, such as ecommerce brands, decide on a precise target market they want to reach before they get their brand name out there.
Without brand awareness, the targets are not realistic.
What is the biggest challenge facing the programmatic industry?
I think it’s the trust.
Programmatic buying helps clients achieve efficiency, but there are so many organizations in this ecosystem and the budget is being passed from one hand to another and different players have different ways of doing business, with some withholding a percentage of the clients’ budget.
Every player in this ecosystem needs to be more transparent and have the integrity to ensure the trust is there.
How do you help build that trust?
Clients working with us can check everything on our platform.
They can use their own tracking tools to monitor performance and see the real ROI from the budget.
What does the future of programmatic look like?
It still has a lot of potential. We have all these online media – PC, video, social, mobile – all converging into the programmatic buying field.
Soon we’ll start seeing TV and outdoor in the mix. Right now the infrastructure is not ready.
As we see it it’s highly possible that the future of advertising will see all media going into programmatic buying.
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