OPINION: Is China ready for real-time bidding?

I see opportunities and tremendous growth potential in China whenever I visit. And we're talking about changes that can take place within months.

I was in Beijing recently for the country's second RTB (real-time bidding) Global Summit. Why "Global"? Because when China talks about something as digitally advanced and innovative as RTB, everyone is interested. While the event was very much tailored to educate the local market about RTB, the attendee list featured no shortage of overseas partners and delegates (myself included) from RTB technology providers, DSPs (demand-side platforms), trading desks, SSPs (supply-side platforms), ad exchanges, global agencies and, of course, advertisers.

RTB is a hot topic in China. In fact, it has been brewing in China since more than two years ago, when some local publishers started claiming that they were DSPs. After all, those publishers were selling online display ads, right? As the organiser of the RTB Global Summit, ipinyou, would state firmly, that is not enough. Those were not DSPs, and still aren't. Misguided by such publishers in the early days, the market misunderstood RTB initially. Today, a massive education task remains ahead.

In fact, the local market had no true DSP until ipinyou launched its service early this year. Now ipinyou is out to set the record straight and is getting the market on the right RTB path.

From my conversations in Beijing last week, I’ve picked out a few perspectives:

1. China will take less than two years to get the market’s RTB to the same playing field as the US and UK.

I don't doubt this for a minute, if the enthusiasm and interest from last week was a good indication of things to come for RTB in China. Especially with the volume of inventory available, this situation is not a matter of 'if', but a matter of 'when'. Publishers will do what they can to maximise their yield. Sure, they always prefer to sell their inventory at a premium. However, as advertisers begin to look for more cost-efficient ways to invest their media dollars, they are looking into audience targeting, retargeting and behavioural advertising. RTB becomes a no-brainer. As demand grows, publishers realise that it is inevitable, and they need to get on the RTB train.

In any case, there is certainly no shortage of inventory in this market for even the major portals to get onto RTB-enabled exchanges. My guess is that we will begin to see this happening as soon as within this year.

2 Clients and technology are ready, but publishers are not.

This perspective was expressed more as a concern rather than a prediction. The only way RTB or DSPs can work is where the supply meets the demand. I had a similar experience when I was a client working at Zuji, Travelocity’s brand in Asia-Pacific. More than a decade ago, Zuji launched in Asia as the first true real-time “search, compare and book” online travel agency. We had a consumer proposition that was unmatched by any other players in the markets where we operated. To top it off, we were backed by Travelocity’s leading travel technology. Our biggest challenge then, was none other than content—airlines, hoteliers, car hire companies and other operators getting on board. Without content, Zuji is just a technology platform.

Similarly in the world of DSPs, ad exchanges without inventory are just really clever pieces of technology. I am not too concerned with this. As history has shown, where there is demand, supply will grow. And to my earlier, point, China is not short of inventory. So I do see publishers getting involved soon. 

#3 Major local portals could get together to form their own private ad network.

No other country today has as many major portals, commanding impression volumes the way they do, as China, and on an almost even playing field. A joint ad network is absolutely possible, if the majors get their act together. Again, of most interest to me would be the terms of engagement should this happen. Being the optimist that I am, even if this does happen, I have faith in the market dynamics at play, which could shape and evolve the way this private ad network would operate in this space. Ultimately, any ad network has to offer value back to advertisers, or advertisers will go elsewhere.  

The RTB Summit ended on a positive note, with a call for more education about RTB, DSP, ad exchanges, ad networks and SSP. Echoing the sentiments of DSP providers and agencies, Grace Huang, ipinyou's CEO, put it best: RTB is not about price (buying cheap), but about achieving value. Advertisers may end up paying more CPM, CPC or CPA, but via RTB and targeting technologies, they would be reaching the right audience, reducing wastage and achieving their desired outcomes.