Translating RTB for China

Yi Shi, CEO and founder of  Avazu, a 2-year-old German DSP with new offices in China, believes that despite the relative youth of the Chinese market, the potential for growth outweighs the challenges.

What have been some historical challenges in developing the ad ecosystem, specifically the RTB and behavioral targeting, in the Chinese market?
We started entering the Chinese markets five months ago. The ad ecosystem in China is now evolving at an impressive pace. In the past the most popular pricing models were pay-by-month or pay-by-year for publishers and advertisers, meaning that advertisers or agencies bought specific publisher placements for one month or one year instead of working on revenue share or CPM/CPC basis like in the U.S. We have been noticing dramatic changes in thinking about the efficiency of display ads lately; advertisers are now shifting more budget to more efficient ways of media buying including audience targeting, retargeting or behavioral advertising.
European and American brands interested in making inroads in the Chinese market are salivating at the opportunity to break in to this huge market, but what should marketers be aware of when looking at audience segmentation and targeting in China specifically?
China is a closed and still immature market in terms of online advertising. The media landscape is divided into three tiers: first-tier top portal sites like Sina, Tencent, second-tier video sites like tudou, Youku, Ku6 and third-tier long-tail websites. For marketers it is important to find a competent local partner for the simple reason that only a few of the Chinese media people speak English and understand the Western mentality. Marketers should also be aware of the Chinese “GuanXi,” which is the relationship with different publishers.
How are publishers reacting to the move in China towards RTB- and do you see private exchanges developing in China?
RTB is coming to China; however, in order to let RTB become successful in China, we need the entire ecosystem of ad exchanges or SSPs. This can only be evolved when the demand side is willing to leverage new technologies. As a DSP in China, we are currently building up relationships with the largest local and international agencies based in China and getting direct clients as well. When we, as a DSP, have more demand, the entire ecosystem will evolve.
How is the Chinese market managing the difficulties of “big data” as social media and the idea of targeting become more accepted in the country?
First of all, we don’t see any strict restrictions in terms of user privacy compared to the E.U. China’s largest social networks are Renren and Kaixin. Both of them are already developing or have developed their own advertising platforms similar to Facebook Ads. There are also more and more ad networks and players coming into the market, bringing new behavioral advertising technologies and helping those kinds of publishers monetize their traffic more effectively.
How is the Chinese market viewing attribution — are they looking at analytics as a “click” issue, or has it already evolved beyond other KPIs?
In terms of attribution, different advertisers have different KPIs. This lets them separate them into two categories: branding-focused advertisers and direct-response marketers. Branding advertisers are usually big CG brands who don’t necessarily have ecommerce stores. In those cases the KPIs we look at are impressions, clicks, CTR; but we are also trying to measure the effect of brand awareness through second-click rate, bounce rate and amount of navigational searches in search engines. In terms of direct-response marketers, we usually have server-to-server conversion tracking integrations with advertisers, meaning that advertisers can define their own attribution logics; however, the most common logic is still last-click counts.

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