Expediting media change in China

Mobile internet represents around 40% of total ad spending – one of the highest in the world. Search and display media on eCommerce sites represents almost a fifth of the total ad spend market. Few media markets can claim to be so unique and advanced. But despite the pace, client-side marketers remain in the dark on a number of key issues. Third party verification, although possible, is far from standard and commonplace. Transparency with partners is painfully difficult to achieve. To this extent, China is very much a paradoxical media market. 

Our Media Transformation workshop in Shanghai last month (a follow-up from a similar session in Toronto as part of Global Marketer Week), set out to help clients identify opportunities and solutions in order to expedite media change in the North Asia region.



Here’s a selection of what we learned, and the recommendations to clients:

• The China programmatic market is known as one where ad tech players don’t necessarily respect boundaries, and “scope creep” can be ferocious. This often results in significant conflicts of interest. It’s recommended to reduce a vendor’s service scope to just a single area of the ‘stack’.

• Agency Trading Desks (ATDs) have until recently only focused on opt-in (non-disclosed) contracts, limiting transparency significantly. This is changing but brands may prefer to work with independents in this market, where suppliers may be more receptive to client terms. Ultimately, clients will need to operate a separate programmatic stack in China (vs ROW).

• The infamous Chinese media owners are building their programmatic stacks through leveraging their substantial data resources. This creates an opportunity, but as with other parts of the world where there is a concentration of power into few media owners, this is also a threat. Practically speaking, clients recognize that ‘BAT’ are a fundamental characteristic of the market, and the reality is that “to get shit done here you have to have really great relationships with Tencent”.

• Many Chinese publishers reject third party ad serving and third party verification (especially JavaScript). This makes viewability tracking virtually impossible. The market is gradually opening up, in part thanks to the relaxation of advertising laws, and some clients have been successful in obtaining some level of verification. Continued and sustained pressure from the buy-side is necessary to convince publishers to adopt third party verification.

• Programmatic Direct Buying (PDB) has become a popular buying route in China (there are no private auctions). Clients need to think about how they can use PDB alongside RTB to access the inventory they need to achieve their marketing goals. It’s argued by some that RTB may be more subject to arbitrage and middleman mark-ups (than PDB deals which are direct), so supply-chain and contractual transparency is critically important here.

• “Right to audit” is critical. Yes, with your agency (of record) but also with holding companies and even media owners. Be explicit about whom you are auditing, how and where. Whatever approach you take, consider applying penalty clauses for non-compliance.

• When you do audit, don’t just focus on media but go beyond this with financial audits. Consider a focus on production as a huge area where transparency often falls well short of expectations.

• But “transparency is a two-way street”. You should consider developing a code of business conduct with your agency. This involves getting to know each other’s businesses in more detail. Yes you will need to train your agency, but your agency will also need to train you in the day-to-day running of their business.