5 charts on the growth of programmatic advertising in China
Programmatic ad buying is growing in China, if a series of recent ad tech deals from Chinese buyers is any indication.
This “will be the first year in which programmatic ad spending represents over half of digital display ad investment in China,” analyst Andria Cheng wrote in a recent eMarketer report. “By 2018, it will grow to more than three-fifths of such spending.”
Mobile programmatic and video programmatic ad spending in China will more than double this year, respectively. Here’s what else you need to know about programmatic growth in China.
The Chinese market is growing faster than the U.S.
Programmatic ad spending in China is expected to shoot up 71 percent from last year to $11.1 billion this year, representing 51 percent of the country’s overall digital display ad spending. In comparison, U.S. programmatic ad spending will increase at a slower rate, 44 percent, to $25.2 billion in 2016, representing 73 percent of the digital display ad spending in the U.S..
China’s growing programmatic market is dominated by Baidu, Alibaba and Tencent. EMarketer estimates that the trio may take as much as 90 percent of China’s 2016 programmatic ad revenue, while Google, Facebook and Twitter combined is expected to garner roughly 58 percent of the U.S. programmatic market.
Programmatic will account for more than half of China’s mobile display ad spending
Mobile programmatic is projected to double in 2016 to $9 billion, accounting for 81 percent of programmatic spending in China. This will be the first time programmatic represents more than half of China’s mobile ad spending. The share of mobile programmatic will be smaller in the West this year, with 70 percent in the U.S., 75 percent in the UK and 54 percent in Canada.
Programmatic direct is becoming the major transaction approach
Programmatic in China is transitioning from real-time bidding to non-auction-based programmatic direct, because lots of media buying in China is “very much relationship-driven,” according to Charlie Wang, chief operating officer of programmatic video provider ReachMax.
Direct deals will nearly double to reach $6.6 billion this year, representing 60 percent of programmatic digital display ad spending in China. And it is estimated to increase to 64 percent in 2018.
But RTB reigns in mobile programmatic mobile
When it comes to mobile programmatic buying though, RTB is more popular than programmatic direct. Stats from iResearch in eMarketer’s report show that RTB will drive around 70 percent of China’s mobile programmatic ad spending this year.
But programmatic direct is likely to grow as WeChat, Taobao and other popular mobile apps have opened their inventory to programmatic and made more top-tier ad inventory available to brands. By 2018, RTB will account for around 65 percent of China’s mobile programmatic ad spending, according to iResearch.
Programmatic video is gaining popularity
EMarketer estimates programmatic video in China will more than double to $1.2 billion this year, representing 11 percent of the country’s overall programmatic spending. And over the next two years, programmatic video’s growth will continue to outpace that of e-commerce ads, banners and rich media.
In spite of the rapid growth, programmatic video will just consist of a mere 20 percent of China’s digital video ad spending in 2016, and 26 percent of video ads will be served programmatically in 2018.
As fast growing as it is, China’s programmatic ad landscape is facing many challenges, including ad fraud, missing standards and a lack of third-party verification, the report adds.
EMarketer aside, a Chinese version of the LUMAscape by online ad tech publication RTBChina illustrates conflicts of interest in China’s programmatic market, as many players appear in several categories. For instance, companies like Domob, SmartMAX and Criteo pull double-duty of a demand-side platform and an ad network. So they risk giving their own inventory preference as opposed to inventory owned by other exchanges.
Charts are based on eMarketer stats. Numbers are in billions.
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