OPINION: Real-time bidding has vast potential in China

I was in Beijing recently for the country's second Real-time bidding (RTB) Global Summit. Why ‘global’? Because when China talks about something as digitally advanced and innovative as RTB, everyone is interested. While it was an event very much tailored to educate the local market about RTB, there was no shortage of overseas partners and delegates (myself included), from RTB technology providers to demand-side platforms (DSP), trading desks, supply-side platforms (SSP), ad exchanges, global agencies and advertisers.

RTB is a hot topic in China. In fact, it has been a hot topic brewing from more than two years ago, with some local publishers already claiming that they were DSPs when they weren’t, and are still not. After all, these publishers sell online display ads, don't they? Not according to ipinyou, the organiser of the summit: RTB was misunderstood by its market, and with non-DSP publishers misleading the market in the early days, there is a massive education task ahead.

In fact, there was no true local DSP player in the market till ipinyou launched its own early this year. The company claims to be the one true local DSP in China, and is out to set the record straight and get the market on the right RTB path. From my conversations in Beijing last week, I’ve picked out a few perspectives:

#1 China will take under 2 years to get the market’s RTB to the same playing field as the US and UK.
I wouldn’t doubt this for a minute based on the enthusiasm for RTB shown last week. Especially with the volumes of inventory available, this situation is not a matter of if, but a matter of when. Publishers would do what they can to maximise their yield. Sure, they would always want to sell their inventory at a premium. However, as advertisers begin to look for more cost-efficient ways to invest their media dollars, they are looking into audience targeting, retargeting or behavioural advertising. As demand grows, RTB becomes a no-brainer, and there is certainly no shortage of inventory in this market for even the major portals to get onto RTB-enabled exchanges. My guess is that we will begin to see this happening within this year.

#2 Clients and technology are ready, but publishers are not.
This perspective was expressed more as a concern than a prediction. The only way RTB or DSPs can work is when the supply meets demand. I had a similar experience when I was a client working at Zuji (Travelocity’s brand in Asia Pacific). More than a decade ago, Zuji launched in Asia, and was the very first true real-time ‘search, compare and book’ online travel agency. We had a consumer proposition that was unmatched by any other players in the markets where we operated. To top it off, we were backed by Travelocity’s leading travel technology. We had the technology and consumers loved the fact that they could compare prices in real-time, cutting out the middleman. Our biggest challenge then was content; i.e. getting airlines, hoteliers, car hire etc. on board. Without content, Zuji is just a technology platform. Similarly in the world of DSPs and ad exchanges, without inventory, they are just clever pieces of technology. I am not too concerned with this. As history has shown, where there is demand, supply will grow. And to my earlier point, China is not short of inventory, so I do see publishers getting on board soon. Perhaps more interesting to me would be the terms of engagement when the major portals get on board.

#3 Major local portals could get together to form their own private ad network.
No other country today has as many major portals, commanding impression volumes the way they do on an almost even playing field, as China. This scenario is absolutely possible, if the major players get their act together. Again, of interest to me would be the terms of engagement should this happen. Being the optimist that I am, even if this does happen, I have faith in the market dynamics at play that could shape and evolve the way this private ad network would operate in this space. Ultimately, any ad network has to offer value back to advertisers or advertisers will go elsewhere.  

The RTB Summit ended on a positive note, with a call for more education about RTB, DSP, Ad Exchanges, Ad Networks and SSP. Most importantly, echoing the sentiments from DSP providers and agencies, Grace Huang, CEO of ipinyou, puts it best: RTB is not about price (buying cheap), but about achieving value. Advertisers may end up paying more CPM, CPC or CPA, but via RTB and targeting technologies, they would be reaching the right audience, reducing wastage and achieving their desired outcomes.

Yean Cheong is head of digital at IPG Mediabrands Asia