Recently I attended the iPinyou Global RTB Conference in Beijing, where many ad tech companies gathered to discuss industry challenges. While various publishers, agencies, and ad exchanges shared their optimism of RTB in China, there still exist many challenges in the country. I'd like to reflect and summarize the challenge of RTB/DSP in China in this column.
1. "One-stop shops" create lack of transparency in third-party data and DSP inventory
The first unique and ironic challenge lies in the lack of transparency within the DMP (demand management platform) data and DSP (demand side platform) inventory. It's ironic because DSP and ad exchange inventory is supposed to be more transparent due to different companies controlling only bits of the display ad tech landscape. But in China, many DSPs are a "one-stop shop" with their own DMP, SSP, as well as ad serving. Consider the following Lumascape in China:
There are only a few companies operating in the DMP space, and worst of all is that most DSPs use their own cookie data instead of the DMPs. Hence in China, we run into a situation of DMP data silos with DSP companies that gather data from their own ad network (AdChina), third-party ad serving (AdSame), or existing software (Tencent QQ).
Another transparency problem lies in the DSP inventory as many DSPs in China evolved out of traditional ad networks. For example, if you refer to the above Lumascape, you'll see that companies like AdChina, HDT, and Yoyi all have both ad network and DSP services. Hence, their DSP connects both to the ad exchanges as well as their own ad network inventory. So you'll never really know whether the inventory you've bought is from the exchange or ad network.
2. Big publishers release leftover inventory to ad exchanges, while building their own private exchanges
While many ad exchanges in China all claim that they have premium inventory from big publishers, the truth is that the majority of the inventory released are unsold leftovers. The premium inventory is sold directly to advertisers, or released into a self-controlled private exchange. Private exchanges such as Sina and Tencent contain only inventory from their own portals, and Tencent even built its own DSP on top of its exchange. Now this phenomenon causes issues for both advertisers and publishers.
From an advertiser's perspective, buying inventory from a private exchange is hardly justified. First, due to more "premium" inventory promised by the publishers, the pricing on private exchanges will be far higher than public exchanges. Second, with RTB (real-time bidding) many advertisers may have to pay even higher for access. In turn this model proves to be less cost effective and assuring than buying direct or through an ad network.
From a publisher's perspective, releasing inventory is a chicken and egg problem. The whole point of an exchange and RTB is to raise inventory value through bidding and buying audience behavior, instead of merely labeling an inventory "premium." Therefore, by releasing only leftover inventory into the public exchanges, not many advertisers will bid on it, so these resources will still remain low value. And if publishers don't see the value of public exchanges, then they will continue to wall themselves up in private exchanges and direct sells. In the end, this publisher behavior results in lower profit potentials from exchanges in general.
3. Marketers' lack of understanding DSP technology limits growth
This challenge is unique to China where many marketers still buy media based on "feel good" metrics like publisher reputation and gut feel affinity. The core issue here is the brand teams cannot go to a set publisher to see their own ad. The whole concept of audience buy causes apprehension to the brand teams because they have no clue where their ads are being shown. From my experience, demand generation and B2B marketers are more receptive to DSP/RTB than their branding counterparts. Because demand generation campaigns usually have a more well-defined goal such as sales lead or registration. Hence, DSP could become another media channel to measure this by. But from a branding perspective, campaigns sometimes do not have a clear action for consumers to take. Hence, without the back-end metrics such as conversion, it's hard to justify the "black box" buying method of DSPs.
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Currently digital director for Mindshare Beijing, Charlie has over five years of experience covering both IT consulting and ad agency industries. He was previously technical director at Tribal DDB Hong Kong, where he led the implementation of analytics and technical innovation across digital campaigns. His previous experiences include data analytics director at Bizcom Consulting in Beijing, and business intelligence analyst at Deloitte Consulting in the U.S. Charlie's project portfolio includes digital analytics, digital campaign production, marketing data integration, as well as large scale data warehouse implementations. He has worked on numerous digital accounts including: McDonald's, Manulife, Wrigley's, Smart Communications, Financial Times, and Friso.
March 19, 2014