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The Death of Audience Buy in China?

  |  March 20, 2013   |  Comments   |  

CCTV, China's government-backed media, addresses the issue of Internet consumer privacy. What will be the implications for audience buy companies?

It's certainly ironic that this column came right after my last article on the tremendous growth and potential of audience buy in China. And it's even more amazing that I'm writing this column a mere two months after an earlier article on my predictions for 2013 China digital media buying trends.

So what in the world happened?... 315!

For those who don't know what 315 represents, it stands for March 15, which is "International Consumer Rights Protection Day." Now every year on March 15, CCTV airs a two-hour long special, which exposes companies that violate consumer rights. The program covers various issues across multiple industries, such as McDonald's food safety in last year's program. But this year, the knife turned to the digital marketing industry.

It all began when the handsome CCTV host said, "There's this group of people that you do not know, but they know everything about you including: where you went, what you bought, how many people in your family, your income, what you visit when you go online, what you searched for, etc. "

For a second, I thought CCTV somehow got hold of my pitch on audience buy :) But my heart sank as I realized the gravity of the situation. CCTV, the biggest government-backed media is addressing the issue of Internet consumer privacy. Is the government going to further regulate this industry like I had predicted in my 2013 media buying trends column? The program goes on to talk about the business model of prominent audience buy companies in China, i.e., Ad China, Yoyi, iPinyou, many of which were covered in my previous article. The biggest blow to audience buy was when CCTV stressed these companies made no attempt to let consumers know that their browsing behavior was being tracked. And if the consumer wants to opt out, then the only thing that they can do at the moment is to delete or not accept any cookies in their browser. The entire video can be seen below: (http://v.pps.tv/play_35D6Y1.html)

Immediate ripples throughout the digital media industry

Right after the "expose," many audience buy companies such as AdChina posted official responses on their company weibo addressing how they deal with consumer privacy issues. Even major online portal companies such as 163.com released statements on how they gather and use consumer information. On social media, various tech KOLs (key online leader) such as Lee Kaifu (former head of Google China) have also addressed the need for an opt-in by consumers for tracking. From a consumer perspective, I pulled together some data on Baidu Index:

If you look at the data, the search terms used were "cookies" and "can cookies be deleted." Now you can definitely see the spike in search volumes right after March 15, jumping to over 7,000 on that day. This certainly proves that consumers do see this as an issue of concern and they are taking actions themselves to prevent tracking.

Some potential implications

So what are the post-exposure implications to us China marketers? I see that this can go one of two ways:

  1. The positive outlook, in addressing this issue will let more people know about audience buy and cookie-based targeting, thus understanding its value to both consumers (personalized content) and advertisers (accurate targeting). In essence, CCTV gave us primetime ads for free!
  2. The whole thing goes down south and the government imposes new regulatory policies to limit third-party tracking as well as cookie collection.

Now if it does go down south, there will be some major implications to the China digital media industry and audience buy companies. Specifically if the policy limits cookie collections or requires consumer opt-in, then say "farewell" to the following:

Bye bye!

  1. Web analytics
  2. Ad frequency capping
  3. Re-targeting
  4. Media performance tracking (impressions, clicks)
  5. DSP, SSP, DMP
  6. Taobao/Baidu Union
  7. AdChina, iPinyou, Yoyi, etc.

The death of audience buy?

In the end, back to the issue this column is set out to address. Is 315 the death of audience buy? Well, there hasn't been any immediate reaction by the government yet. And seeing how McDonald's is still happily in business after last year's 315, I'd say we're safe. But since my crystal ball has decided to malfunction on this question. I do not know for sure what's going to happen in the months to come. But whatever it is, it'll certainly be a major boost to the China digital marketing industry... or a day that an entire industry comes crashing down.

Disclosure: This article represents solely the views of the author himself. It does not represent the views of the organization which he's employed under.

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ABOUT THE AUTHOR

Charlie Wang

Currently the digital partner for Mindshare, looking after the digital and search team in Beijing. Charlie is an experienced digital marketing professional with strong IT consulting background and a passion in data-driven marketing. He has more than seven years of digital marketing and consulting experience across U.S., Hong Kong, and China. His areas of expertise focus on direct response, lead generation, e-commerce, CRM, and programmatic media. An active advocate of data-driven marketing in the China market with various speaking engagements and publications on digital analytics and programmatic media. His client portfolio spans across IT, B2B, and FMCG.

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