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Adtech firms want to open up Asia’s advertising black box

Mobile RTB landscape in China by AppFlood

As Chinese companies and brands aggressively seek higher retention and traffic volume from overseas, purchasing highly-targeted ad space quickly is becoming more and more of a necessity to maintain their rapid growth. AppFlood’s real-time bidding exchange and demand-side platform claims to be the first for mobile in China, with big clients like search engine Baidu and software maker Kingsoft. And it’s not just a one-way street; AppFlood allows foreign companies to break into the Chinese mobile market as well, focusing on all companies who want to bridge the East and the West.

“Based on our experience, the trend of Chinese firms trying to reach international audiences is rather new,” says Si Shen, CEO of AppFlood’s parent company PapayaMobile. “Going global is unprecedented and sudden considering that Chinese companies have traditionally been risk-averse.”

In addition to AppFlood in China, Singapore’s Vserv.mobi also launched a real-time bidding platform today. This one aims to give emerging countries, especially in Southeast Asia, access to the global mobile advertising market. So what is real-time bidding, and why are these services suddenly popping up?

By now we’ve all realized that internet advertising is growing increasingly targeted. Depending on where we live, what devices we use, which websites we visit, and what products we purchase online, the advertisements we see change accordingly.

But as the internet grows larger both in terms of users and digital real estate, so does the disconnect between the people buying ad space (brands, networks, and agencies) and the people selling it (app publishers, SDK publishers, and websites). In such a massive landscape, how do the two parties find the best match for what ads are displayed when, where, and how at the right price? Daunting as the task may seem, it’s also increasingly important to buy ideal ad space fast.

One solution that’s more and more popular these days is real-time bidding (RTB). It’s a sort of near-instant automated auction house where those with ad space sell it to companies who want to reach users. RTB first appeared about four years ago and has been a fast growing method led by OpenX, Google, and Yahoo in the west, but the technology has lagged behind on mobile. Shen explains major players like Sina, Baidu, and Tencent have yet to offer RTB on mobile because they are very protective of the types of ads shown and their placement in apps.

RTB on the web has been around in China since 2011. By 2012, RTB accounted for just 0.3 percent of China’s total display advertising business, but the popularity of RTB is undoubtedly growing. In 2013, RTB was between one percent and 1.5 percent of China’s total display advertising business in 2013.

A first in China, AppFlood has partnered with a major western RTB exchange OpenX. AppFlood’s current mobile ad network serves more than 145 million monthly active users and 9,000 Android developers.

Precise matching in under a second

appflood rtb

On the demand side, brands – or the agencies and networks they work with – set the criteria for the type of user they want to reach, and how much they are willing to pay to reach him or her. For instance, I’m a male in my 20s who uses an Android smartphone and recently bought a plane ticket to a resort city in southern China. That info might put me in the target audience for a Samsung ad, but I’d bet a local travel booking company like Ctrip is willing to pay even more to show me an ad. Ctrip can submit a high bid of $3, while Samsung might just bid $0.50 since my traffic isn’t as valuable to it.

(See: In Singapore’s shadow economy, your private data is being sold without your permission – at once cent apiece)

On the supply side, the app or website requesting an ad collects that personal information and sends it to the ad exchange. The user info is paired up to the companies with matching criteria, which then automatically bid on it to decide which company’s ad ultimately reaches the user. This marketplace approach results in the best possible value for money on the demand side and gives the supply side a broader reach with as little human input as necessary on either end.

The amazing part? This all happens in about one-tenth of a second every time a user opens an app or navigates to a web page.

“China, where the market is 1.5 to two years behind the West – albeit catching up quickly – in terms of mobile ad tech, targeting is a major roadblock for many mobile RTB providers,” Shen says, “particularly when one of the major advantages of mobile RTB is its unique targeting capability.”

Editing by Josh Horwitz

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