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Overview of China’s Programmatic Advertising Ecosystem

As globalization continues to deepen, international brands are increasingly turning their attention to the vast Chinese market. With the largest number of internet users in the world and a digital advertising market size that ranks at the forefront globally, programmatic advertising, as an essential means of digital marketing, is gaining increasing attention. This article will delve into the development history of China’s programmatic advertising ecosystem, analyze its main players and functions, compare it with the foreign ecosystem, and finally provide strategic recommendations for foreign advertisers entering the Chinese market.

As globalization continues to deepen, international brands are increasingly turning their attention to the vast Chinese market. With the largest number of internet users in the world and a digital advertising market size that ranks at the forefront globally, programmatic advertising, as an essential means of digital marketing, is gaining increasing attention. This article will delve into the development history of China’s programmatic advertising ecosystem, analyze its main players and functions, compare it with the foreign ecosystem, and finally provide strategic recommendations for foreign advertisers entering the Chinese market.

Development History of China’s Programmatic Advertising

Since being hailed as the “Year of Programmatic” in 2012, China’s programmatic advertising has experienced a period of enthusiastic capital pursuit, an outbreak period, and an adjustment period that has attracted industry-wide attention. With advertisers focusing on issues such as traffic fraud and advertising transparency, the industry has gone through a period of calm reflection during the adjustment period to the current refined transformation. The Chinese programmatic advertising market has undergone rapid development and transformation.

Embryonic Stage (2008-2011)

During this period, programmatic advertising began to sprout in China, with many companies starting to try this emerging marketing method. In 2011, Alimama launched the advertising trading platform Tanx, marking the preliminary exploration of China’s programmatic advertising.

Rapid Development Period (2012-2013)

The year 2012 is regarded as the inaugural year for programmatic advertising in China, with a plethora of companies launching DSP products. Google’s advertising trading platform also officially went live in China that year. In the following year, giants such as Tencent, Sina, and Baidu joined the programmatic advertising market, propelling the industry’s rapid development.

Eruption Period (2014-2016)

Driven by capital, the programmatic buying market entered an explosive period. Statistics show that during this time, more than a hundred programmatic buying platforms emerged. However, the market also faced issues like fake traffic, brand safety, and opacity, which gradually attracted industry introspection.

Shuffling Adjustment Period (2017 to Present)

As the market matures and advertisers demand higher transparency, the programmatic advertising market has entered a period of shuffling and adjustment. Companies with outstanding technology, resources, and reputation have begun to stand out, while other platforms face the pressure of being eliminated. Advertisers have started to focus more on the quality of advertising delivery rather than the quantity, with a preference for precise delivery that brings verifiable value.

Main Changes and Trends in China’s Programmatic Advertising Ecosystem

As market demands evolve, advertisers increasingly prefer precise delivery and performance measurement, driving the development of programmatic buying technologies, such as Real-Time Bidding (RTB) and Direct Programmatic Buying. In addition, China’s unique market environment and policy orientation are also shaping the unique development path of the programmatic advertising ecosystem, with the following trends emerging:

  • Increased demand for vertical platform advertising delivery: Advertisers are paying more and more attention to the quality of advertising delivery, with a preference for precise delivery that brings verifiable value.

  • The rise of Connected TV (CTV): With the increase of CTV users, programmatic TV advertising has become a new growth driver in the industry.

  • Improvement of KOL programmatic advertising delivery: Programmatic technology helps advertisers more accurately select KOLs for promotion, achieving systematic and programmatic KOL management.

  • Cross-platform and cross-device advertising delivery: With the advent of the all-screen era, brands have higher requirements for the scenario of digital marketing, and cross-device programmatic advertising delivery will receive more attention.

  • Enhancement of transparency and industry standards: Advertisers are increasingly concerned about industry transparency, and industry norms and standards are being strengthened, with third-party monitoring agencies and high-standard industry norms playing an important role.

  • Focus on brand safety and advertising effectiveness: Advertisers’ focus has shifted from  extensive “quantity” to refined “quality,” with brand safety and advertising effectiveness becoming key topics.

  • Integration of advertising transaction data: To improve the conversion rate of advertising and consumer experience, the integration of data generated in advertising transactions, more efficiently positioning the right target audience and the right delivery opportunity, has become the focus of the next wave of digital transformation.

Main Players in China’s Programmatic Advertising and Brief Introduction

China’s programmatic advertising ecosystem is a diversified and highly integrated system, including Demand-Side Platforms (DSPs), Supply-Side Platforms (SSPs), Advertising Exchanges, Data Management Platforms (DMPs), Programmatic Creative Platforms, Monitoring and Analytics Tools, Programmatic TV, and Programmatic Digital Out-of-Home (pDOOH), among other roles. These platforms and tools, through efficient technical means, have achieved automated purchasing, precise delivery, and data recovery of advertising resources, providing advertisers with one-stop services from strategy formulation to performance evaluation, promoting the digital transformation of the entire advertising industry.

  • DSP (Demand-Side Platform): A platform that helps advertisers or ad agencies to automatically lock in target traffic, purchase advertising space, control budgets, and optimize strategies. YOYI Tech’s Plus platform, covering high-quality advertising resources from mainstream Chinese media, can help advertisers achieve their advertising goals efficiently and economically.

  • Ad Exchange & SSP: Advertising trading platforms and supply-side platforms are responsible for the buying and selling of advertising inventory. For example, HUAWEI Ads, as a newly included platform, covers more than 730 million monthly active users.

  • Trading Desk: A procurement trading platform and technology, providing one-stop automated advertising platform services. YOYI Tech’s OneDesk is a representative TD that integrates various high-quality media and advertising resources.

  • Data Supplier & Data Management: Data provision and management platforms support advertisers in more accurately targeting their audience.

  • Programmatic TV: Programmatic television advertising provides opportunities for the programmatic purchase of television and outdoor advertising.

  • Measurement & Analytics: Monitoring and analytical tools help advertisers evaluate the effectiveness of their advertising.

  • pDOOH: Programmatic outdoor advertising, which leverages technology to automate the placement of outdoor advertising. For example, Asiaray (Ya Shi Wei) and DiDi are newly included platforms.

Differences and Similarities between China’s and Foreign Programmatic Advertising Ecosystems

Compared to foreign ecosystems, China’s programmatic advertising ecosystem also faces challenges in data privacy protection and user choice rights. With the implementation of “privacy protection” mechanisms, the space freely available for the audience identification mechanisms that programmatic advertising relies on to operate is increasingly narrowing. There are some significant differences between China’s programmatic advertising ecosystem and that of foreign countries, as follows:

  • Market Size and Maturity: Although China’s programmatic advertising market is large, it is still in a stage of continuous development and adjustment compared to the more mature markets of Europe and the United States.

  • Technology and Platform Development: China’s programmatic advertising technology ecosystem map shows that the market is adapting to changes in privacy protection mechanisms and audience identification mechanisms, such as OAID replacing IMEI, and IDFA facing more refined authorization for use.

  • Influence of Super Platforms: In China’s programmatic advertising ecosystem, large technology companies like HUAWEI Ads occupy an important position through their closed-loop ecosystem products, which is different from the situation abroad where giants like Facebook and Google dominate and work with many small and medium-sized platforms.

  • Advertising Forms and Innovation: China’s programmatic advertising is exploring new forms such as Programmatic TV and pDOOH, while the development of these fields in foreign markets may be more mature.

Considerations for Foreign Advertisers Entering the Chinese Advertising Market

  • Understand the Market Environment: China’s advertising market has a unique cultural and regulatory environment. Foreign advertisers need to deeply understand these characteristics. An in-depth understanding of Chinese market characteristics and consumer behavior is key to success. For example, Chinese consumers’ dependence on mobile devices is much higher than in other countries, which has an important impact on advertising delivery strategies.

  • Data Compliance: With the strengthening of data privacy protection, advertisers must ensure that their data collection and use comply with Chinese laws and regulations. Strictly comply with Chinese laws and regulations, especially in terms of data protection and privacy. For example, understand and comply with the relevant requirements of the “Cybersecurity Law” and the “Personal Information Protection Law.”

  • Choice of Partners: Choosing experienced and resourceful local partners can help foreign advertisers adapt to the market environment more quickly and achieve effective market penetration.

  • Technical Adaptability: Utilize local Chinese technology platforms and services, such as DSPs and Ad Exchanges, to achieve more precise advertising delivery.

  • Cultural Sensitivity and Localization Strategy: Advertising content needs to consider the sensitivity of Chinese culture to avoid cultural conflicts or misunderstandings. Develop advertising content and marketing strategies that conform to Chinese cultural and social values. For example, respecting Chinese traditional festivals and customs can improve the acceptance and effectiveness of advertising.

The development of China’s programmatic advertising has been diverse and dynamically changing, from initial exploration to current refined operations, with the market continuously maturing and improving. The Chinese programmatic advertising market offers great opportunities for foreign advertisers but also comes with challenges. By deeply understanding the market environment, complying with laws and regulations, formulating localization strategies, and choosing the right partners and technology platforms, foreign advertisers can succeed in this vibrant market.

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