And for more on this topic, read our post on how to crack China with programmatic ad buying.
1. The market is big (as you’d expect)
Forrester research estimates display ad spending in China will reach $14bn in 2016.
Programmatic is thought to take up around half of this spend.
2. ‘BAT’ rules the space
Baidu, Alibaba and Tencent (BAT) control around 90% of the programmatic market in China.
Tencent Guangdiantong, for example, is Tencent’s social ad platform that sits on top of WeChat and QZone.
These three big players are so influential not just because of their control of valuable inventory, but because of the consumer data they can bring to bear in a market with very few third-party data management platforms (DMPs).
3. Demand-side platforms (DSP) are mostly local companies
Pick a big international DSP such as AppNexus and the likelihood is that it isn’t active in China, particularly when it comes to programmatic direct.
Some Western DSP providers in China use Google’s ad exchange for real-time bidding (RTB), as Google covers a large majority of this type of Chinese inventory.
However, most programmatic ad inventory is sold direct, not in an auction.
Aside from BAT, DSPs are run by companies such as BiddingX, iPinYou and AdChina.
4. DSPs have their idiosyncracies
The programmatic tech landscape is complicated in any market, and in China there are a few notable quirks.
Many big publishers in China own their own DSP and don’t offer their private marketplace inventory anywhere else, leading to a fragmented marketplace.
DSPANs (DSP ad networks) also exist. These ad networks that have developed their own DSPs can be difficult to distinguish and have achieved various levels of maturity.
The wisdom of using a DSP to buy inventory from a network owned by that same company is worthy of debate.
5. DMPs are scarce compared to the West
Culturally, ‘data’ is not something the Chinese expect to pay for and DMPs are scarce.
BAT are also careful about sharing their valuable data with external companies (such as DMPs).
The lack of DMPs in the market means that DSPs often have access to first-party data, something which could be said to be a concern for advertisers, as they have less control.
Some publishers offer inventory, second-party data (effectively a DMP), as well as their own DSP.
6. Ad fraud is obviously a problem
A report by R3 in 2015 has estimated between 15-20% of China’s 10bn daily ad-exchange impressions are by bots.
7. Brand display is slowly building
Most programmatic spend in China has been direct response (adverts that invite action, e.g. retargeting in retail), with brands slower to get involved with straight brand ads than in the West.
In part, this focus on direct response has meant viewability and brand safety have taken a back seat, as advertisers prioritise clickthrough and conversion.