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China marketers aim for transparency

News, 20 January 2016

BEIJING: Programmatic buying is growing in China, especially among digital players, but big brand advertisers remain wary of the technique and should demand greater transparency from their suppliers, an industry figure has said.

Speaking to ExchangeWire, Charlie Wang, COO of ad tech provider ReachMax, said there was a widespread misconception that "all programmatic is inherently non-transparent in both media quality and pricing".

He attributed this to the industry's recent history, with most DSPs in China evolving out of traditional ad networks.

"These DSPs+Ad Network (or what is commonly referred to as DSPANs) usually consist of low-tier media inventory bought in bulk under very low CPMs that are then sold to advertisers at a high markup price," he explained.

"Ultimately, this model is detrimental to both advertisers and publishers, with much of the margins eaten by the middlemen – the DSPs."

Resolving the issue, he suggested, would require advertisers to "demand absolute transparency and have audit features built into their trading desks".

The expectation of transparency – and greater control – is also leading to the development of the "trading desk platform layer".

These aggregate and control multiple DSPs and DMPs within a single platform, Wang clarified, a role usually played by the DSP in the West.

But, as DSPs in China are providing this at a markup, "brands are treating them like an ad network, and one that only aggregates publishers.

"This means frequency control, automated allocation of budget, and DMP data distribution are controlled at the trading desk platform layer."

Wang further noted that many advertisers appeared unaware of programmatic direct, and the option of having a direct relationship with a publisher

As well as brand advertisers' concerns around transparency in programmatic, ReachMax has previously observed that while targeting is seen as a benefit, share of voice remains their most important KPI.

So, as they seek to balance targeted ads and mass ads in order to maintain their share of voice metric, they have resisted investing uniquely in programmatic advertising.

Data sourced from ExchangeWire; additional content by Warc staff