Programmatic buying and RTB in China is a unique market — with publishers controlling a lot of the space — but iPinYou, a local DSP, has had success, even introducing video and mobile DSPs over the past year.
Grace Huang, its CEO and co-founder, said about 70% of the company’s clients are Fortune 500 companies. Huang spoke to AdExchanger about the programmatic market in China and where she sees growth.
AdExchanger: Tell us about iPinYou and what you offer in the programmatic and RTB space.
GRACE HUANG: We started in 2008, the same time as Rocket Fuel and those other companies. We are a very dedicated ad-tech company and now we’re positioning ourselves as a DSP. In China, we are a “super DSP,” in that we do much more than a DSP in the US. We provide a full-service offering, including ad serving and real-time bidding. We do dynamic creative with our own data. We do audience targeting. We are dedicated in that we only do DSP, we don’t offer an exchange or other business.
It’s a relatively new market. The whole RTB model took off only early last year, so our closest competitors are Brandscreen or more foreign players who are similar to us. We are competing with Invite Media [DoubleClick Bid Manager] a lot, because we work with all the trading desks, such as Cadreon, Vivaki, Accuen. Invite Media has its own global contracts with some of the global players.
In China, there are two buckets of competitors: the traditional ad networks and the traditional agencies. The ad networks compete with us with their ad-network business, and now they are trying to shift to the DSP arena. The fall-back for them is that they haven’t really invested in the technology as much, so they are catching up on the technology, product and audience data side.
There are several traditional media agencies that want to, instead of using third-party DSP technology, develop their own. They will have their own technology teams and provide in-house DSP services. In that regard, they are competing with us as well. But their DSPs are mainly for their own clients, not serving other advertisers out there.
What is the programmatic and RTB market like in China right now? How mature is the market?
In our definition, 2012 was ground zero; it was the first year when RTB started to take shape. The exchanges—TaoBao, Google—started their business in 2012. iPinYou started our DSP. Trading desks like Cadreon started to do test campaigns in 2012. This year is the youth — like if you’re a person, teenage years.
We are seeing some significant growth in the business. Some big brands like Unilever and Intel and other international brands have started to put major budgets into RTB. At the same time, it is still immature. A lot of companies throw up these concepts like DMPs, SSPs, data exchange, but the market isn’t mature enough yet for all of that.
There are no common standards and, of course, there is a significant lack of talent. We have our own optimization team and we have to train each person. And now that we have this self-service business, we launched a training program, what we call a DSP Optimizer Certification Program. We want to certify people who can use our system properly and do the optimization on their own, on the advertiser and client side.
How much of online advertising in China goes through RTB and programmatic channels? Is there data on this?
There’s no real public information on that. My best estimate is that this year, the advertising spending should be $500 million to $600 million. And growth is significant. It already represents 10x growth compared to last year. Next year will be another 5x growth.
Where is that growth coming from, the buy side or the sell side?
Both sides are doing something. But the major force is on the buying side. The trading desks and international trading desks have played a significant role in driving the first wave of growth, but then it was the buyers. Companies like us are doing the training and the seminars. Advertisers in general are starting to accept and get interested in this concept.
At the same time, the public exchanges like Google and TaoBao are doing a lot to convince other publishers to sign up their inventories. In China, the main big portals are very dominating, so there are more private exchanges in China than in other markets. Tencent, Sina, Yoku, these big publishers are struggling but are forced to open up their inventories.
What about the future? Will China see growth in RTB for mobile, social and video?
We launched a mobile DSP at the end of last year. There are a lot of mobile ad networks in China, but mobile DSPs are still very early stages. The mobile ad market is not as sophisticated as the online market. There is a gap. We are investing in a mobile DSP and I hope next year will be a good time.
Video inventory is pretty scarce. Video sites aren’t big participants in the RTB market yet, but the demand on the advertiser side is huge. This year, we launched our video DSP and it is very widely welcomed by the advertisers, but the inventory available is nothing compared to the display side. On the display side, we have 4 billion impressions on a daily basis; video is like one-tenth of that.
