For Chinese technology companies that want to get more involved with programmatic advertising, the overseas market is much less competitive than the local market. Because of this, many are acquiring ad tech startups abroad – especially in the U.S. – to go beyond the Great Wall.
In recent weeks, Beijing-based Spearhead Integrated Marketing Communication Group acquired U.S. mobile ad exchange Smaato for $148 million last week, and Chinese mobile ad platform Mobvista purchased app monetization firm NativeX for around $25 million in February. During the same month, Chinese mobile game company Kunlun and security software provider Qihoo360 bid $1.2 billion in cash to buy browser maker Opera.
It’s likely not the end of Chinese ad tech acquisitions. Take PapayaMobile, a mobile tech company headquartered in Beijing with a valuation of 2.2 billion yuan (around $333.5 million). It plans to acquire two programmatic firms by the end of this year, at least one of which is based in the U.S., said Si Shen, CEO of PapayaMobile.
Those Chinese companies are aggressively acquiring ad tech firms in the U.S. because most ad traffic in China — especially mobile traffic — is shared by technology juggernauts: Baidu, Alibaba and Tencent (known as the BATs) as well as Qihoo360. Unlike Google and Facebook, those domestic companies haven’t yet opened their APIs so advertisers cannot run programmatic deals via third-party platforms, according to Shen.
“It’s really hard for independent firms to survive in the local market,” Shen said. “Domob, for example, was expected to be big in the mobile programmatic space. But it got acquired [by BlueFocus Communication Group] last year, and now it’s running more like an agency business. The international market is less competitive.”
Another reason is that U.S. tech companies are not expensive, added Shen, at least not with the recent turbulence in the ad tech market.
“From Chinese investors’ point of view, tech companies in the U.S. are undervalued because it’s hard for them to exit,” she said. “Those firms can get much more funding from private equities in the Chinese capital market, so the [purchase] price is very reasonable.”
Victor Wong, CEO for U.S.-based programmatic creative management platform Thunder, believes that American ad technology is “a generation ahead of Asian ad tech,” so it’s no surprise that Chinese companies are aggressively buying U.S. firms and their technology to yield greater revenue from advertisers who want both scale and targeting.
Mergers and acquisitions aside, some Chinese demand-side platforms also serve as resellers on behalf of Google, Facebook and Twitter to access ad traffic in other countries. Those technology giants have all set up their own ad networks — Google Display Network, Facebook Audience Network and Twitter Audience Platform — that can help Chinese app and mobile web publishers connect with global advertisers who want to serve ads outside of properties owned and operated by Google, Facebook or Twitter.
“Although Facebook is blocked in China, it has a big ad business here because so many Chinese companies want the ad traffic overseas,” said a Chinese ad tech executive. “Facebook has a team in Singapore and Hong Kong, respectively. The company gives us lots of benefits like rebates when we sell ads for it and offers us much API support. Google is in a similar situation.”
Media Briefing: What Axios’ sale says about the valuation of digital media companies
In this week’s Media Briefing, senior media reporter Sara Guaglione looks at what Axios's sale to Cox Enterprises signals about the current investment market for media companies.
Amid gloomy forecasts can ad tech weather the storm?
The recent Q2 results suggest there is more resilience and runway in the ad tech sector. But how long before push comes to shove?
Member ExclusiveDigiday+ Research deep dive: Twitter’s strength holds among publishers
There is perhaps no social media platform that is more appropriate for publishers than Twitter. In this Digiday+ Research deep dive, we look at why this is.
SponsoredWhat gaming habits reveal about media consumption
Jordan Shlacter, head of research, Activision Blizzard Media Entertainment choices have never been more abundant, and gaming has emerged as one of the biggest winners in the battle for audiences’ attention. While gaming’s exponential growth has been well documented — there are currently nearly 3 billion gamers worldwide spanning a diverse set of demographics, interests […]
La razón por la que Google y Samsung se asociaron con la personalidad de TikTok Addison Rae para una campaña nostálgica de los años 90
Este verano, Google y Samsung han lanzado su último esfuerzo de marketing conjunto, en el que los gigantes de la tecnología y el hardware aprovechan la nostalgia de principios de los años 90 y utilizan a la TikToker Addison Rae como musa de la generación Z. En su nueva campaña publicitaria con Rae, Google cuenta […]
Las publicaciones invierten en más reporteros especializados en criptomonedas
La semana en que el mercado de las criptomonedas se desplomó a mediados de junio, Fortune envió a Jeff Roberts una oferta para convertirse en su editor de criptografía y supervisar la creación de un equipo de periodistas. Estas circunstancias llevaron a la redactora jefe de Fortune, Alyson Shontell, a hacer una pausa y a […]