"Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Welby Chen, chief business officer at Inneractive.
Despite reports of a slowing economy, digital ad spend in China is predicted by eMarketer to double from $40.42 billion last year to more than $80 billion in 2020.
The ad format of choice for Chinese advertisers is native ads, based on their stellar results on the world’s largest social platforms, including Facebook, Twitter, Instagram and Tumblr.
However, native ads in China are not performing as well as their international counterparts. The reasons are fairly simple and straightforward: Many of the basic components and best practices for native advertising haven’t been adopted yet in China.
Native Ads With A Different Flavor
Sometimes the difficulty is caused by something as simple as a native ad not meeting the internationally accepted definition of what a “native ad” is.
Native ads should adopt the visual design of the environment they live within, look and feel like natural content and behave consistently with the native user experience. However, in many cases in China, an ad that is called native is simply an attractive ad that does not have the other characteristics that increase engagement for its Western counterpart.
In-feed environments are typically the most successful format for native ads. However, unlike global publishers, such as Time, Forbes, The Wall Street Journal and The New York Times, where native ads match both the form and function of their editorial feeds, most Chinese native ads are not in-feed, thus minimizing their native effect.
Results can also be dampened by the fact that in an effort to boost traffic volumes to reach certain key performance indicators for ad campaigns, Chinese native ads often appear on sites with inappropriate content, such as pornography and violence. When anti-fraud systems are used to weed out inappropriate sites, they are often unsuccessful due to cultural differences.
For example, a site that would be considered inappropriate from a Chinese perspective may include anti-Japanese sentiment, but it would not necessarily be detected and flagged as such by Western anti-fraud software. This means that native ads pop up on inappropriate sites, making them less appealing for advertisers.
Another limitation is insufficient data for programmatic targeting. Programmatic advertising is based on the idea of the free flow of information. Yet in China, the three major players, Baidu, Alibaba and Tencent (the BATs), have a walled-garden approach and are not very open about making their data available outside of their ecosystems. As a result, parameters like gender, age, GPS location and interests, which are needed to create the most relevant and effective native ads, are generally not sent to the ad platform servers with the requests.
This a growing problem as programmatic trading is becoming an increasingly larger share of ad traffic. The Chinese programmatic purchase market is predicted to reach $7.75 billion in 2018, according to iResearch.
In some cases, adoption of the native ad format in China is limited by demand for native ads and ad tech companies’ ability to meet the technical challenges of scaling up for programmatic trading.
Hybrid Native Strategy
I believe that rather than fully replacing native ads, publishers should supplement them.
In other words, a publisher in China should allow an ad slot to display both native and non-native creative so that the publisher can leverage good native ads, but backfill with good non-native ads when no good native is available. This gradual approach will allow for a smoother transition into native over time, while still providing the best ROI in the interim.
Meanwhile, native will take up a higher percentage of overall ad spend as native ads increasingly take on the look and feel of the sites where they appear, they are placed in-feed and advertisers are able to take advantage of available demographics data to increase ad relevance.
Native advertising can result in more engagement, but using native ads without stringent requirements won’t have the desired effect and will dilute their impact. Before relying only on native ads, it’s best to wait until all the best practices and conditions are in place so the expected results can be realized.