Since 2015, there’s been talk about an advertising boom in China, with digital advertising expected to grow nearly three times by 2020. TV’s ad spending is dropping, and increased internet, and a mobile-first audience indicate it’s full steam ahead for China. Even more international companies have shown a strong interest in joining the market and addressing the needs of APAC advertisers and publishers, but there are some significant differences these companies need to understand when they start investing in building their interests in Asia in general, and China specifically. Here are some to consider:
A Market Without the Typical Players
Google and Facebook may be vital advertising platforms for the global advertising world, but they have little to no impact in China. In their place, China has numerous advertising giants: Tencent, Baidu, Xiaomi – to name a few. With different leaders, there are different rules, and while it may seem more open because two of the world’s largest players are out of the game, it’s also more closed to newcomers, who have yet to develop essential partnerships to thrive on a domestic level. However, the one advantage international companies have is that many Chinese developers still struggle to reach Western users and demand, and this is where an international company can find its place.
Shift to Programmatic CPM Model
In 2016 we saw a shift towards an online API and CPM model, opening the door for more programmatic monetization and mediation. Programmatic is still slow to catch on compared to other markets, but programmatic ad spend is expected to surge by more than 70% this year, reaching $11.05 billion. What’s behind this surge in programmatic? Video. It’s no surprise that the demand for video has increased in China along with the rest of the world, but this does mean that local publishers need to make necessary adjustments to support video – and programmatic is the key to doing it.
In 2016, we saw a lot of companies, search engines, platforms…talking about becoming mobile-first. But emerging markets are the real mobile-first leaders, and China’s at the top, reaching 688 million active smartphone users last year.The international community is effectively playing catch up to a market where mobile is not just the future, but the present.
As markets converge, standard practices, guidelines, and formats will eventually be adopted across the board. Advertisers in the West adhere to IAB (Interactive Advertising Bureau) ad formats and sizes. And while Chinese developers may be able to work with accepted sizes and formats more flexibly in China, if they want to engage Western audiences, they must also comply to the global standard. This is another area in which international companies can assist their Chinese partners.
And before you even think about opening up your Beijing office…
Local Language & Culture
It takes more than proficiency in Mandarin to navigate China’s app market. As an international company, this is one of the biggest challenges when establishing a position in APAC. And this is why it’s essential to open a branch operated by local advertising experts, who have experience working in the market, have existing connections, and who can bridge the gap between the company’s offering and the market’s needs.
China is no fledgling market. It’s flooded with innovative utility apps and interactive casual games that are ripe for domestic and global users’ phones alike. Any company planning on being a part of the market, must understand it, what drives it, and how their presence can improve it.