Charlie Wang | January 25, 2013
It’s the start of the year, and everyone has brought out their crystal balls. So let me also look into mine and see what it says about the digital media buying trends in China for 2013.
1. Slow adoption of DSP/Ad Exchange inventory buying
DSP (Demand side platform)/RTB (Real time bidding) is a fast growing buying method in Western markets during 2012, and China has also followed up on the trend with both foreign (DoubleClick AdX) and local players (Taobao AdX, Tencent AdX). However, this form of media buying has NOT gained as much adoption as the West. The main barriers to adoption are primarily cultural, as most advertisers will still want to deal directly with influential portals and verticals for relationship and PR bargaining power. For more analysis on DSP hurdles in China, checkout MEC’s head of Interaction Karen Ho’s great analysis here.
2. Uncertainty for cookie based targeting as the Do-Not-Track (DNT) initiative emerges
Do-Not-Track is a HTTP header field sent by the user’s browser to request certain web sites to disable ANY tracking for that user. Now IE10 and several other browsers (Firefox, 360) have already followed this initiative by setting this option as default for users. However, this initiative is not very well understood in China and media industry bodies have not implemented ANY sort of standards or regulations yet. So right now, media can still ignore the DNT signal as they please. But IF any government regulation is to come through supporting do-not-track, then it will be an absolute killer to any form of cookie based targeting such as: ad serving based on user browsing history, ad frequency capping, as well as re-targeting.
3. Online TV channels moving beyond pre-roll and gets into content production
2012 was a phenomenal year for online TV growth. According to iResearch, online TV industry in China as a whole has nearly doubled their revenue and is projected to reach 17.9 billion RMB in 2013. Pre-rolls will still be the most popular form of media buy on these sites. But online TV channels are moving more and more into becoming original content creators as opposed to purely relying on user-generated content. Starting as early as 2011, Youku have made numerous popular original mini-movies and series from their own production teams, namely “Old Boy”, “Father”, “Miss Puff”. And brands such as Yili and Nestle have also co-operated with Youku to create their own brand sponsored original mini-movies. As we move in 2013, overall online TV consumer consumption is growing even faster. So it will certainly be another strong year for the online TV industry, and advertisers should look for more innovations and content collaboration/co-creation opportunities with them.
4. The “search war” begins as 360 goes head to head with Baidu
Let the search war begin! 360 launched so.360.cn late 2012, and from the latest Experian Hitwise data, it’s reported to have as much as 10 percent search market share. Now Baidu still dominates at a whopping 60 percent market share, followed by 360 and other stagnant local players like Sohu, Soguo, and Tencent Soso. 360 has gained stable market share in an astounding fast pace due to its popular anti-virus software and browser. And it’s moving fast to commercialize their SEM offerings with a Google partnership as well as copying Baidu branding SEM products like the Brandzone. (Portrayed below) So the search industry in 2013 will certainly be a battlefield with Baidu and 360 duking it out through various means.
5. Social ad effectiveness in question causing a move from display to KOL (Key opinion leaders) based media buying on SNS (Social networking site) channels
This shouldn’t come as a surprise to anyone as Facebook in the West also came under scrutiny for the lacking performance of its social ads. Sina Weibo have been under tremendous pressure to monetize the platform since 2011, and it became one of the top channels for advertisers in 2012 with display ad banners having to book 2 months in advance due to brand competitiveness. But numerous campaign benchmarks have shown that Sina Weibo display ads have absolute abysmal CTR rates, averaging less than 0.5 percent. And the buying methods are NOT based on CPM or CPC, but bulk by month. Hence advertisers are quickly realizing a more cost effective way for media buy on the social channel, which is through KOLs. Popular KOL based media buy channels like weiboyi.com are entirely performance based and can fulfill CPC or even CPT type of buying that eCommerce channels often use.
6. Mobile media buying on the rise, but would need to integrate with other digital channels
No one can deny the prominence of the mobile channel in 2013, but from a media buying perspective this channel has always been a loner within the media plan. This is largely due to the limited media buying methods on the mobile channel, as display banners and app content placement are the only choices. Often, the mobile campaign consists of primarily a HTML5 page with in-app banner ads to drive traffic. The problem with this format is that it’s totally disjointed with the other online channel’s engagement activities and brands are far from ready to make mobile as the center of the campaign. We have seen some great usage of mobile marketing in the app collaboration space during 2012, especially with some Wechat based campaigns like Nike. As a whole, the mobile ad market is still in its infancy in China, and 2013 would surely see many innovations.