Adtech faces one step back in China

21 April 2014
NEW YORK/BEIJING: Foreign adtech companies attempting to gain a foothold in the Chinese market may need to need to take a step backwards if they are to take advantage of the opportunities available leading industry figures have said.

Peter and Cain Wang, ceo and coo respectively of AdsMOGO, a major Chinese ad exchange, were responding to a question posed by Ad Exchanger, asking what challenges foreign entrants to China faced.

They highlighted the "dramatically different ecosystem", with familiar Western businesses such as Google, Yahoo, Facebook and YouTube being either absent or insignificant players. Their advice was to "identify and establish reliable local media inventory and data partnerships even before you enter the market".

Another major issue was the level of market and technology development, with China's mobile advertising and marketing tending to lag several years behind the US. That could mean, the Wangs said, "you may need to make changes to your products and policies – sometimes even step backwards – to seize the opportunities in China".

Xiaofeng Wang, an analyst at Forrester Research, concurred with the need to understand the local market. "Consumer behaviour, the media landscape and the advertising ecosystem are all very unique here", he stated, adding that this also explained why so few foreign companies had succeeded in the Chinese digital market.

More detail was supplied by Tom Simpson, CEO of mediaQuark, a Singapore-based real time intelligence business. He noted that major Chinese publishers often controlled inventory by using proprietary ad tech platforms, which he argued would help the programmatic premium market, but not the wider ad tech ecosystem or foreign entrants.

He also saw a "significant opportunity" as regards data, which was still hard to acquire. "Driving better understanding and transparency is absolutely essential for clients, agencies and publishers in China to fully realise the benefits offered by ad tech," he declared.

But Andy Fisher, chief analytics officer at US CRM business Merkle, which also has offices in Shanghai and Nanjing, cautioned against an Occidental approach, noting that few Chinese advertisers were asking for things like viewability verification.

"As US- and foreign-based companies move into China, they need to support Chinese ad buying models as well," he argued. "For example if you can't support cost-per-time buys, you will have a limited audience for your product."

Data sourced from Ad Exchanger; additional content by Warc staff
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