An outsider’s guide to programmatic in China

By Ronen Mense, VP of Asia at AppsFlyer
First published on
The Drum

In China, programmatic is growing at an impressive pace. The country’s huge population seems to have an insatiable appetite for consumerism. This drives demand from advertisers to give consumers access to their products and services via digital advertising.

That said, programmatic advertising in China is not what you might be accustomed to. In the West, marketers have a pretty straightforward modus operandi. Based on the data marketers have about their clients’ audiences (or their own), they buy the best available and most appropriate inventory. They expect free market rules to apply to the programmatic space. Media buying is, in their experience, fair and equal: They select, they bid, they buy. They bring in a third party for analytics and analysis. They optimize based on what they’ve learned, with the understanding that their third party analytics partner has provided them with unbiased data.

Appsflyer_blog.jpgIn China, things operate differently. It’s common here for companies to span the entire value chain, combining data with buy and sell-side products and services. As a result, a DSP may connect to different sources of traffic, but prioritize users from their own SSP. Companies may also be incentivized to resell, repackage and arbitrage traffic. The increased reliance on automated optimization that is the big promise of programmatic (alongside simplified and more diverse buying processes) makes programmatic buying particularly vulnerable to fraud and bad traffic.

Given this environment, it’s not surprising that DMPs and analytics companies are often owned by larger industry players and offer data that is biased in favour of their parent company’s platform. Everyone seems to have skin in the game, so finding unbiased partners to provide analytics to optimize against is nearly impossible. That means that if campaigns are expected to perform well, the onus is on the media buying team alone.

However, in China, the inability to optimize is hardly a problem. The market is growing so rapidly that it’s easier to succeed than fail. But for Western companies hoping to break into China’s programmatic market, it may feel like you’re playing baseball in a game where the umpire is on your opponent’s payroll. The China way is not wrong-- nor is it right-- it’s just not what Western companies are accustomed to. It does represent a very different business culture, but there are ways to move forward successfully:

● For starters, work with a partner or even a friend who has experience with programmatic advertising in China if you can. It will help a lot to have a trusted advisor who knows the ropes. I can’t underscore enough how different this market it is, even if it appears the same outwardly – it’s not!

● Buy from market leaders, specifically the reputable platforms you already know. Google has inventory in China, so that’s certainly a safe jumping-off point. Most of the other players here are BAT-owned (Baidu, Alibaba, Tencent), so if you want to advertise on any of those massive platforms like WeChat, that’s where you’ll need to go.

● Make sure you get the transparency and visibility you need so you’ll know where your inventory is coming from. Don’t assume anything. You should know that a good deal of premium inventory here is pre-sold. If you want to get in on that top-tier media, you’ll need to book it directly with the larger platforms.

● Ensure the inventory you purchase is validated. Put a proper third-party platform in place to help you understand what you’re truly getting and the what your results are. Chinese advertisers are at a huge disadvantage right now because they don’t have this. Networks in China will always push for server-to-server integration, which bypasses the need for an unbiased third-party aggregator. Don’t do it. Line up your third-party validation so that you have the advantage of unbiased results against which you can optimize and improve.

● Have faith in the system that’s always worked for you outside of China, and help guide the way for Chinese advertisers. Be willing and able to work with your partners and with the platforms to help them achieve their goals. By tracking and optimizing your results and improving your ROI, you’re helping the platforms look better too. Share what you’re doing and how well it’s going.

By following this advice and helping to improve the rules of engagement abroad, you’re helping to build a healthier ecosystem. Ideally, this will aid in uncovering some of the budgets that are held back due to lack of transparency. The industry in China is already growing fast. This could help it grow even faster.

Periodically, we bring content that we believe is relevant to our blog audience. For more such articles in the future, please continue to visit our blog.


Topics: Industry News