Time For China's Web Advertising Industry To Grow Up?

Ad dollars are pouring into China this year, courtesy of the Beijing Olympics. Yet even though the nation boasts more Web users than any other, only 4% of the country’s ad dollars ($1.4 billion) are spent online, compared to 17% in the US.

And while advanced ad-targeting technologies from companies like Tacoda and Blue Lithium are de rigeur in the U.S., and a key component in the strategies of AOL (TWX) and Yahoo (YHOO), it doesn’t exist in China.

That may soon change. Kaiser Kuo, editor of Ogilvy Digital Watch, interviewed Grace Huang, an ex-McKinsey consultant who launched PinYou, which is building a behavioural targeting ad network in China. Until now, she says, advertisers are still relatively unsophisticated in China, and aren’t yet demanding more precision. So no one’s really trying to tackle behavioural targeting yet.

But she thinks behavioural targeting will take hold for two reasons: “(1) we have the demonstrated success from the US, and (2) the Chinese have proven to be quicker to adopt now advertising techniques, as was evidenced with search marketing.”

Not surprisingly, the  Chinese don’t really obsess over their online privacy in the way Americans and their elected representatives do. But Huang says her company will take the issue seriously, and says PinYou is “thinking of various ways for consumers to opt-in and opt-out.”

The bigger hurdle in front of behavioural targeting is the same one in front of all Chinese advertising: the lack of reliable third-party measurement. Much online advertising in China is still sold on a “cost-per-time” basis, rather than a CPM, or cost per thousand impressions. Why? Because buyers don’t reliably know how many impressions they’re getting, or paying for.

As Victor Koo, founder of video-sharing site YouKu points out, comScore and Shanghai-based iResearch don’t yet measure Internet cafes, where 30% to 40% of China’s 250 million Internet users log on. Getting those kinds of problems solved will do a lot more for China’s online ad business than sharper targeting will accomplish.

See Also:
China Ad Market Growth Slowing, Still Expected to Become The World’s Second-Largest Ad Market Next Year
Want Ad Growth? Try Beijing.
Want To Run A Chinese YouTube? Better Hire Your Own Censors

China Grants licence To Would-Be YouTube, YouKu


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