A couple weeks ago, iResearch released the 2013 China DSP (demand-side platform) Market Trends Report. It proved that DSP is definitely the hottest digital marketing trend in China this year. The latest figures showed DSP display ad spending growing at 179 percent in 2013, and will continue to grow at a significant rate over the next 4 years.
Will PPB overtake RTB?
Growth aside, iResearch also made a very interesting prediction: PPB (programmatic premium buying) will become the primary buying method within DSP ad buying in China. Looking at the below data, currently PPB only takes 11 percent of all DSP buying, but iResearch predicts that in 2017, PPB will take a whopping 69 percent of all DSP buying.
Will this prophecy truly come to pass in China? I beg to differ! But before delving into the specifics, let’s first go over why iResearch made this prediction.
Big local publishers driving PPB
In my opinion, I think iResearch made the prediction largely based on how big media publishers tend to monopolize the local market. According to the above categorization, programmatic buying using a DSP can be separated into three different buying methods: PPB, RTB (real-time bidding), and non-RTB. From the media’s perspective, large publishers will try to control their inventory through PPB by selling it at a higher price. We have seen this with the launch of Sina’s Longyuan, and Tencent’s Tango. Only after direct sells and PPB, will media publishers release leftover inventory into private exchanges for RTB. From the advertiser’s perspective, brands can still leverage the reputation and traffic of big publishers while reaping the benefits of better targeting. So this is the exact reason why iResearch predicts that PPB will sell like hotcakes. But I have a very different take on the subject, as I see there are fundamental issues regarding the PPB model.
Core issues of big publisher PPB in China
1. The first issue I see with PPB is that publisher salespeople have no clue how to sell it! These channel sales are comfortable selling CPD (cost per day) and CPM (cost per impression) banner ads, but they are far from proficient in selling programmatic buying. In my experiences dealing with Sina, the sales team described its Longyuan offering as merely a cross channel frequency control product. While the Tencent sales team told me that they still haven’t figured out exactly what Tango is. Without the proper ad tech talent, how are these publishers going to even explain PPB to their clients?
2. The second issue I have seen firsthand is that clients fail to see the value of PPB entirely. Because they think they can get access to the same inventory through private exchanges, and cover significantly more publishers using RTB. From a media planning perspective, a single campaign will almost always select more than one media publisher. So why would brands want to contain the impressions strictly on Sina, when I can extend the reach to other publishers using RTB.
3. The third issue lies in the lack of usage in cross channel buying on the same publisher portal. The biggest sales pitch from Sina is that Longyuan allows advertisers to buy ads across all Sina channels (i.e. Sports, News, Fashion, etc.). But unless you’re a super mass product like Coca Cola that doesn’t have a very specific target, then there’s simply no use in this feature. For example, if I’m a cosmetics brand, my target will most likely be 20-35 year-old females. From a channel coverage perspective, I would only be interested in Sina fashion and maybe entertainment. I wouldn’t even consider channels like sports and news. But if I wanted to cover this target more effectively, then I can only buy ads on Sina Fashion and spread the rest of my budget on fashion verticals like Pclady and Rayli.
RTB vendors securing their accounts through DMP (data management platform)
Aside from these issues, local RTB vendors are also not just sitting idly by. Due to the lack of a third- party DMP, most RTB vendors all have their own DMP silos. In order to get more upstream into the client’s business, the RTB vendors have all expanded their offerings into first-party DMPs. Ad China claims that they established a DMP for Unilever as far back as 2008, while others like MediaV have all released their own DMP offerings for both brands and ATDs (Agency Trading Desks). Nevertheless, this offering is an apparent offensive towards PPB as well as other RTB vendors, because in the end whoever controls the data will control the budget.
iResearch’s prediction on the rise of PPB in China definitely have their basis. Most big publishers have only released their PPB offerings this year and it will certainly grow in the next few years. But I doubt the percentage of total DSP investment will skew that much in favor of PPB, especially if the big media publishers don’t face their fundamental issues.