What I learned entering the Chinese adtech market

Photo credit: Pixabay.

China represents a new level of sophistication when it comes to technical guidance, which can surprise even veterans in the digital advertising world. There was never any doubt that mainland China, often thought of as a walled territory, holds never-before-seen advertising inventory and insights into how millennials in the People’s Republic consume and perform in the mobile ad space.

The main players

Not too long ago, the decision to enter the Chinese market was marred by endless fights and discussions on where one needed to begin in order to extend tech in the mainland. As the legal framework was finally established, it allowed for proper advertising operations in China. This change showed that the programmatic space was mainly occupied by the big players in the Chinese market: Baidu, Tencent, Alimama, and Sina.

These new insights revealed a market skewed with desktop legacy, mobile WAP, and new sizes far away from IAB (Interactive Advertising Bureau) guidelines in the ad exchange sector. Some problems include location-based marketing, which suffers from data inconsistencies and mobile web ad sizes that can reach up to 30 different variations.

I remember engaging with the first RTB (real-time bidding) exchange in China—the technical support was far behind compared to Western global exchanges. But after two years, I can now say that some of the Chinese exchanges are better than some of the global ones.

Publishers and advertisers

China’s advertising evolution redefined the types of ads the average Chinese person is familiar with today, especially where business and tech align. Back in 2010, when advertising on smartphones and tablets emerged, the business models we saw on the west side of the globe were not prevalent in China. Then and now, publishers and advertisers in the country see CPM (cost per thousand impressions) as the main business angle.

But in reality, performance advertising is better suited for hundreds of app stores. These app stores represent the CPI (consumer price index) model, where the advertiser pays for every installed app, with some adjustments on affiliations. The big advertisers in China are not different from the global ones. They know how to measure their KPIs and LTV, but the big difference lies in the data sharing from the advertiser and the attributes of data from the bid that makes a positive ROI for the advertiser.

Guidelines and government

In the Chinese programmatic space, settling the platform infrastructure is one of the main obstacles in the first stages of successful advertising. Getting a real-time bidder, with all the supportive elements such as big data, exchange frameworks, ad serving, and many others, is intense work.

Strict guidelines on creative policy due to the government’s heavy involvement mean that an additional safety net is required to ensure proper operation. If you are opening a WFOE (wholly foreign-owned enterprise), it needs to include every kind of business you are going to to do. So, if you want to include R&D in your operation after a year, you will need to change your WFOE.

To establish an adtech business in China, you need to understand that getting government approval for WFOE, internet content provider, infrastructure, and big data takes more than a year. Only after getting approved can you apply for a bank account and start business development. If you know your goals for the next three years in China, you will know how, when, and what to ask from the government.

Translations and R&D

Working on some of these exchange APIs can outstretch R&D capabilities. APIs first need to properly decipher and translate technical Chinese language and then bridge the technical side to accommodate mobile marketing business needs.

Developers brainstorm with product and dev ops teams to better understand what is needed and how to go about it. Some exchanges do not provide bid rate by QPS (query per second) but by day and week instead. And bid pricing currency is only RMB.

5 tips that will help you in China

My first trip to China happened just after I turned 30. I went there to expand my adtech business, which offers an AI-powered programmatic advertising technology for mobile. The Chinese market is the highest goal of any entrepreneur due to the sheer number of potential customers and the amazing businesses present in the region.

Looking back today, I realize that the challenges I faced then were immense. The cultural differences I encountered in China permeate every aspect of doing business: greeting new contacts, negotiating, and even just talking about business. Even the technology is different because Google, Facebook, and other Western tech staples aren’t available.