As a significant market, China is a resourceful market for international brands to enter. At the initial stage of market entry, outbound marketing, such as advertising, could be a good choice. For those who have already established brand awareness in China, advertising remains essential for market penetration. This article will explain how Chinese ad ecosystem works.
01 Ad Category: Programmatic Ad is the mainstream with more complexity
According to Emarketer, 4 years ago, programmatic ads account for a significant 44% share of China’s digital ad market. Additionally, with more stakeholders engaged in the context of programmatic advertising, we believe that the introduction of programmatic ad ecosystem in China will help you better understand Chinese ad environment.
02 Composition of Programmatic Ad Ecosystem in China
An outline of the stakeholders in Chinese programmatic ad ecosystem could make it easier to get the whole picture. Brands, companies, or even individuals who wish to pay for advertisements aimed at attracting target audience are advertisers. In that course, DSP/ADN and Trading Desk are tools in the demand side; while ADX/SSP are platforms on the supply side, which serve media or publishers who have the final say over traffic and ad inventory. Data platforms such as DMP will collect and provide data for the publish of ads as well as connect the audience and advertiser someway.
The programmatic ad ecosystem in China works like a tree. Advertisors are the root because of their products and services hidding behind the ads are the fundamental factor of purchasing. And advertisors will make the final decision of what messages shall be communicated in their ads, by what means, in what places. Other stakeholders or tools such as ad agencies, DSP/TD, AdX/SSP, ADN, are functioning as the trunk that brings the “nutrition” ads all the way up to the branches “media owner” or “publisher”, so that the audience as the leaves will be reached and feel the commitment and value of the advertisors’ brands.
03 Key Players of Programmatic Ad Ecosystem
In China, the basic logic of advertisement is the same. Within the ecosystem, we got three key players as advertiser, publisher and the audience. The advertiser would like to convey message to their target audience via the impressions on publisher. And that’s what advertisement will achieve.
As the bridge to connect advertiser and the audience, media/publisher controls the ending ad inventory, which could be the most important resource in advertisement. In China, the leading comprehensive publisher includes: ByteDance, Alibaba, Tencent, Baidu, Kuaishou, Meituan, Jingdong, Pinduoduo (Temu), Xiaomi, Weibo, etc.
With the booming of publisher’s quantity and categories, Ad Network (ADN) came up to the ad ecosystem, which purchases ad inventories from different publisher and sell to advertisers or ad agencies.
Some advertisers, especially those leading enterprises would like to invite another role in during advertising: advertising agencies. Some of the most popular and influential advertising agencies in China include: Ogilvy, WPP, Omnicom Group, Publicis Groupe, BBDO, BlueFocus, etc. You might be quite familiar with some of them.
04 Platforms to Collect and Communicate Ad Demands
Demand-Side Platform (DSP)
For both the advertiser and ad agency, DSP (Demand-Side Platform) is a must in conducting programmatic ad. DSP provides real-time bidding services and algorithm & AI capabilities to enable automated buying and selling of ad inventory, so that advertisers and agencies could efficiently manage their advertising campaigns, such as audience targeting, budget management, bidding management, creative management, etc. The AI and algorithm embedding in DSPs will make all those actions above more agile, precise and accurate.
The more inventories a DSP covers, the more powerful and efficient it is. YOYI Tech, which has focused on AdTech in China for over 10 years, has developed a DSP that integrates 80% publisher inventories across Chinese internet, with full coverage of mainstream CTV inventories as well as rich Ad formats within different media touchpoints, will accelerate market penetration in China and precisely reach your target audience at a lower cost, as well as enhance your advertising strategy with data-driven insights.
Trading Desk (TD)
A trading desk integrates different DSPs and can manage advertising in a comprehensive manner, .which often handle more complex budget management and bidding frequency control, etc.
Here is a list of the different types of trading desks operating in China:
Agency Trading Desk (ATD): A trading desk within a 4A advertising agency serving multiple brand advertisers. Examples include Xaxis, Accuen, AOD, and Charm (昌荣）, etc.;
Independent Trading Desk (ITD): Similar to ATD, but ITDs can serve multiple advertising agencies or brands. Examples include YOYI Onedesk, Marketin, Chinapex, and Fugetech, etc.;
Brand Trading Desk (BTD): Typically, this is an in-house trading desk built by the advertiser themselves or with the help of a technology provider, such as Yili Trading Desk, etc.
05 Platforms to recieve demands and release ad inventory
Both supply-side platform (SSP) and Ad exchange (AdX) are essential to process ad demands from DSP and trigger ad impression.
A supply-side platform allows ad publishers to sell their inventory within an appropriate price range after the evaluation of advertisers, bidding prices, TA requirements, etc., so as to meet both publishers’ and advertisers’ needs.
Therotically, an AdX will connect DSP and SSP. However, nowadays the differences between SSP and AdX are so slight to take into account. Hence we would like to introduce you some representative platforms of SSP/ADX running in China:
The third-party SSP/AdX collects and reallocates traffic of all kinds (premium traffic, medium traffic, long-tail traffic, etc.) from media owners or publishers. Some examples can be: BES from Baidu, Tanx from Alibaba, Tencent AdX, 360 MAX, etc.
The examples of private AdX/SSP owned by media giant who has their own natural traffic are YOUKU AdX, AIQIYI AdX, Netease AdX, Sina AdX, etc.
06 Supportive Platform towards Agility of Advertising
Data Management Platform (DMP) generates tags for different audience segements and build user profiles and portraits based on user data, which would enhance the precision and efficiency of advertisement.
YOYI Tech creates a DMP that collects first-party user data from advisor-owned channels such as websites, apps, social medias, as well as second-party data from our own DSP and third-party data from our partners such as ecommerce giants, media, and agencies, etc. Moreover, YOYI DMP is open and ready to accept any other data sources and with our powerful ID mapping capability, our DMP will match household IDs with individual IDs and calculate user tags for various scenarios.
Source of featured image: Photo by Johann Siemens on Unsplash