Introduction
As international companies seek to tap into the vast Chinese market, understanding the most effective advertising tools and platforms is crucial. One tool that has gained popularity is demand-side platforms (DSP). However, the digital landscape in China is vastly different from that in international markets, requiring brands to adapt their strategies to local nuances.
DSPs are widely used in global markets for programmatic advertising, allowing advertisers to automate the buying of ad space across various platforms. While this technology exists in China, there are significant differences in how it operates compared to Western counterparts, making it important for foreign brands to carefully assess how to use DSPs in the Chinese market.
This article explores which industries benefit most from DSP advertising in China, identifies key differences between Chinese and international DSP ecosystems, and provides insights on how brands can strategically and practically harness the power of DSPs to drive successful advertising campaigns in China.
Understanding the Chinese DSP Ecosystem
1. Key Differences Between Global and Chinese DSP Markets
Foreign brands accustomed to DSPs like The Trade Desk or Google Display & Video 360 in international markets will quickly discover that China operates with its own unique set of DSPs. Due to China’s regulatory environment and unique internet ecosystem (largely dominated by domestic giants such as Alibaba, Tencent, and Baidu), foreign DSP providers have limited market penetration.
Local DSP Players: China’s DSP market is controlled by local giants like Tencent’s Ad Network, Baidu DSP, Alibaba’s TANX (Taobao Advertising Network Exchange), and ByteDance’s Ocean Engine. These platforms are often integrated with larger ecosystems and touchpoints, such as e-commerce, social media, and mobile apps, allowing for extensive user data aggregation.
Audience Data and Privacy: In contrast to Western markets, where third-party cookies are widely used for tracking, China relies heavily on first-party data, with large tech companies like Tencent and Alibaba accumulating vast amounts of user information from within their closed ecosystems. This creates a highly targeted advertising environment but also requires advertisers to navigate data privacy regulations such as China’s Personal Information Protection Law (PIPL).
Programmatic Landscape: Chinese DSPs also often emphasize full-service offerings, integrating with social platforms (like WeChat), video platforms (like Douyin), and e-commerce ecosystems (like Taobao). This makes DSPs in China highly versatile, but foreign brands need to ensure their content is adapted to these platforms’ unique formats and user behaviors.
2. When Does DSP Make Sense in China?
Not all industries benefit equally from using DSPs in China. The effectiveness of DSP advertising is closely tied to the nature of the product or service, the target audience, and the goals of the brand’s advertising campaigns. Below are the industries best suited for DSP-driven strategies in China:
Industries That Benefit from DSP Advertising in China
1. Luxury and Fashion
China is one of the largest luxury goods markets in the world, with a fast-growing middle and upper class that has a strong appetite for luxury brands. In the fashion and luxury industry, precision targeting and personalized messaging are crucial for reaching affluent consumers. DSPs enable luxury brands to leverage first-party data from platforms like Tmall, WeChat, and Douyin, ensuring that their ads are shown to the right audience segments—whether that’s high-net-worth individuals or trend-following millennials.
Why DSP Works:
- Access to premium audiences via closed ecosystems (WeChat, JD.com).
- Data-driven targeting that matches affluent consumer profiles.
- Ability to integrate with e-commerce touchpoints like live-streaming and direct purchasing.
Example: Dior used a combination of WeChat Ads and programmatic buying through local DSPs to drive sales during key shopping festivals like Singles’ Day. The brand used highly targeted campaigns to reach its core customer base in China’s first-tier cities, achieving significant returns.
2. E-Commerce and Retail
E-commerce dominates China’s online shopping landscape, with platforms like Tmall, Taobao, JD.com, and Pinduoduo playing key roles. DSPs are particularly effective for international brands in the retail and e-commerce space looking to gain visibility on these massive platforms.
Why DSP Works:
- Direct integration with major Chinese e-commerce platforms.
- Real-time optimization of ads based on sales data.
- Ability to retarget customers with personalized offers based on browsing and purchasing behavior.
Example: Nike China leveraged Alibaba’s DSP to promote new product lines during major shopping events. By using data-driven targeting, Nike was able to segment its audience based on browsing and purchasing history, leading to a significant uplift in sales during campaigns.
3. Automotive Industry
The automotive industry has seen exponential growth in China, especially in the electric vehicle (EV) sector. DSPs provide car brands with the ability to target potential customers based on their online behavior, whether they are researching vehicles, watching automotive-related content on Douyin, or engaging with car enthusiast communities on WeChat.
Why DSP Works:
- Ability to reach consumers across multiple platforms, from video to social to search.
- Geo-targeting capabilities to focus on consumers in cities with high car ownership rates.
- Integration with video platforms to showcase ads in premium automotive content.
Example: Tesla used Baidu’s DSP to run programmatic campaigns that targeted high-income urban dwellers interested in sustainable vehicles. By leveraging Baidu’s search data, Tesla was able to reach consumers who were actively researching electric vehicles and drive them to the company’s local stores.
4. Tourism and Travel
China’s growing middle class and increasing disposable income have fueled a booming domestic and outbound tourism market. For foreign brands in the travel and hospitality industry, DSP advertising is a powerful tool to capture Chinese travelers looking for international experiences.
Why DSP Works:
- Ability to target specific consumer segments, such as affluent travelers, adventure seekers, or family vacation planners.
- Geo-targeting to promote international destinations to Chinese travelers.
- Dynamic ad formats that can display personalized offers based on the user’s previous travel searches or bookings.
Example: Marriott International used programmatic buying through Tencent’s DSP to target Chinese tourists planning vacations abroad. The campaign included personalized recommendations based on users’ travel preferences and previous searches, significantly increasing hotel bookings from Chinese travelers.
5. Tech and Electronics
The technology and electronics industry thrives on innovation and early adoption, making it essential for brands to reach tech-savvy consumers in China. DSPs allow these companies to showcase their latest products to a young, digital-native audience that frequently interacts with tech-related content across multiple platforms.
Why DSP Works:
- High-level targeting capabilities to reach digital natives interested in the latest technology trends.
- Retargeting potential customers who have engaged with product ads or visited e-commerce stores.
- Integration with video platforms to showcase product demos and reviews.
Example: Huawei used ByteDance’s Ocean Engine DSP to promote its new line of smartphones to younger audiences. The campaign included video ads on Douyin, interactive product demos, and personalized offers, leading to a significant boost in sales.
Key Strategies for Foreign Brands Using DSP in China
1. Adapt Content to Local Platforms
While DSPs automate the process of buying ad space, foreign brands must tailor their content to align with the unique user experience of Chinese platforms. For example, video content on Douyin (China’s TikTok) requires shorter, more dynamic storytelling, while WeChat’s feed ads benefit from a more interactive approach.
2. Leverage Data from Closed Ecosystems
The closed nature of platforms like Tencent and Alibaba provides a wealth of first-party data. Brands should collaborate with local DSPs to tap into these data streams and target consumers based on precise behavioral and transactional data. This will help foreign companies avoid the pitfalls of cookie-based tracking that is more common in international DSP markets.
3. Maximize Mobile-First Advertising
China’s digital environment is mobile-first, with over 98% of internet users accessing content via smartphones. DSP campaigns must prioritize mobile ad formats, such as interactive video and in-feed ads that are optimized for mobile consumption.
4. Align with Local Shopping Festivals
To drive conversions, foreign brands should align their DSP campaigns with China’s major shopping festivals, such as Singles’ Day (11.11), 618, and Chinese New Year. By strategically timing DSP campaigns around these high-traffic periods, brands can maximize reach and engagement.
Conclusion
The advertising landscape in China presents unique opportunities and challenges for foreign brands. DSP advertising, while effective, requires a localized approach that takes into account the differences between the Chinese and global digital ecosystems. Industries such as luxury, retail, automotive, tourism, and tech are particularly well-suited to DSP-driven strategies, but success hinges on adapting content, leveraging first-party data, and focusing on mobile-first, localized tactics.
By following the strategies outlined above, foreign companies can effectively navigate China’s digital advertising space, driving greater engagement, conversions, and brand growth.
