PPTV takes aim at larger slice of China's mobile video advertising market

Steven Shan, vice-president and general manager of PPTV's multiplatform video business unit, claimed that PPTV has 300 million monthly unique visitors, with mobile-based visits to PPTV accounting for 40 million. This compares to Youku Tudou's combined total of 400 million viewers on a monthly basis, according to market research firm iResearch in September 2012.

Looking past the numbers, Shan said the crux of the matter is that mobile-based visitors are surpassing PC-based ones, especially for PPTV. "Desktop internet usage has reached a plateau in 2012, we are now moving to mobile internet, especially for video viewership," he added. "Tablets, like iPads in particular, are prevalent in first-tier cities."

CNNIC data also states that mobile internet users have already surpassed desktop users, which Chris Maier, director of media and digital solutions, Millward Brown Greater China, calls the emergence of "newer new media".

Even in lower-tier cites, mobile internet penetration is only 4.8 per cent lower than in the upper-tier cities, according to Eve Lo, chief knowledge officer of GroupM China.

Wendy Tso, managing director of McCann SGM Works, said that in fact, traditional TV has become a supplementary media channel, as mobile video is highly personal and facilitates immediate calls-to-action.

Tablets are playing a role in the upward trajectory of video consumption on mobile devices, which advertisers can certainly leverage, said Shan. At present, PPTV apps have been installed in over 100 million iOS and Android devices, with penetration among iPad users reaching 77 per cent.

"Tablet users are much more active compared to smartphone users, simply because of the touchscreen abilities," he said. "And because of that, participation levels in ad campaigns are higher. Click-through rates for tablet-based interactive campaigns on PPTV go as high as 34 per cent—a result that is almost impossible to achieve for PC campaigns.

According to Shan, the vast majority (90 per cent) of mobile-video viewing now takes place over Wi-Fi networks, a result of various factors including the wider adoption of tablets and people shifting video-watching from wireless networks to Wi-Fi to avoid incurring heavy data charges. "When 3G costs in China go down, that's another push factor for mobile video," he said.

Shan said PPTV started out as a PC-based service, with its mobile app download ranking in the top 50 in Apple iTunes Store and Google Play. Youku Tudou is believed to be the first Chinese online video company to launch mobile apps, but PPTV maintains that it has held the top position in the video app category for two consecutive years.

PPTV makes its money by selling ad space and charging fees to drive traffic to advertisers' websites. This year, PPTV's revenue from mobile advertising is a percentage in the single-digit range, but Shan aims to double that next year.

Shan says PPTV's content strategy—mainly Korean, Taiwanese, Hong Kong and local dramas, sports programmes and variety shows—will be advantageous in attracting advertisers.

To position itself for the mobile advertising wave, Youku Tudou cites its competitive advantage as being the only online video operator to collaborate with the three major telecom operators, China Mobile, China Telecom and China Unicom, for video content. Apple's iPhone5 also has in-built Youku Tudou video services for Chinese users.

"The Chinese market is tougher than elsewhere because barriers to entry are low," Shan said. "With such an enormous internet population in China, it's fairly easy to get some traction and, of course, revenue. But it's much more difficult to get a sustainable and scalable competitive advantage unless you keep innovating and pushing out new tricks."

When it comes to advertising, virtually all campaigns running with PPTV include pre-roll commercials before video clips or in-between full drama episodes, rich-media custom buttons that pop up mini-sites, or in-stream graphical overlay ads that are contextually targeted at video content.

On the other hand, Victor Koo, chairman of competitor Youku Tudou, recently disclosed that Tudou has removed background ads in order to improve user experience and the advertising environment, reducing average video-load time on the site by 8 per cent.

Youku Tudou said more than 20 major advertisers, including Yum Foods, General Mills, Shanghai GM Buick, and TMall, have made adjustments to their ad budget allocations to take advantage of its dual-platform ad reach since Youku and Tudou merged in August 2012.

Meanwhile, PPTV boasts Chanel, GAC-Honda, Samsung, Haier, L'oreal and Lee Kum Kee as its largest clients this year.

Zhu Wei, CEO of Miaozhen, expects 60 per cent ​​of advertisers will begin to transfer media budgets to mobile adspend next year. The percentage of advertising budgets allocated to mobile video will increase from 5 to 10 per cent next year to up to one-third of total adpsend in 2014, Shan added.

The vocal advocate of mobile-video said advertisers should hurry before mobile video rate inflation hits, revealing that one FMCG advertiser has already committed more than 10 million yuan (US$1.6 million) on PPTV. Shan said he has already raised PPTV ad rates twice in 2012 to take advantage of advertiser demand, and does not rule out more hikes in 2013.

"2013 will be the first year of the mobile-video's successful commercialisation and monetisation," said Youku Tudou company president Liu Dele, who revealed that mobile-based visits account for more than 20 per cent of traffic.

The lack of standard metrics in mobile advertising used to make measuring return on investment difficult, causing advertisers to be hesitant in investing in mobile ads.

A confidence boost for advertisers is Monday's launch of a new mobile ad measurement metric by the Mobile Marketing Association (MMA) in China. It is an API (application programming interface) that can monitor in-app advertisements on both tablets and smartphones.

Involving parties such as adSage, iResearch, Adwo, Domob, Google, Inmobi, AdMaster, Miaozhen Systems, Renren, AdChina, Madhouse, and Vpon, the new industry-recognised standard now enables the transmission of ad data from mobile applications directly to advertisers and third-party monitoring companies.

These data include mobile ad impressions and clicks from specific sources—the exact platforms advertised on. Even so, the main thing preventing mobile-video advertising from achieving the same success as it has online is still the lack of measurable data. Research providers like iResearch have not yet made public detailed figures of the mobile advertising market, due to insufficient sample sizes.

That said, Shan expresses full confidence that the mobile-video advertising market will reach its peak in 2014, as international brands in the luxury, automotive, IT, digital, FMCG categories pump in more advertising funds.