How Global Brands Can Succeed With Programmatic In China

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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 Alex Deats, EVP, China at MiQ.

In today’s world, it’s almost impossible for global brands to craft an effective development strategy without China. The Chinese digital advertising market is undoubtedly different and perhaps daunting to those unfamiliar with it, but the opportunity is unprecedented. 

This year, digital display ad spend will reach almost $50 billion in China, 78% of which will be bought and sold programmatically. In fact, programmatic is increasingly becoming the mechanism for global businesses to reach consumers in China. It’s now the second largest programmatic ad market in the world. It’s not surprising that many global marketers, who are already spending there, intend to increase their programmatic budget. 

With that in mind, advertising in China requires a different approach than anywhere else in the world. To thrive, global brands must understand the local nuances of the market. Here’s what they need to know.

The post-pandemic consumer

China continues to feel the effects of the global pandemic. However, the region has remained resilient, with consumers at the heart of its recovery. Retail sales in China grew 12.5% in 2021, the highest growth since 2017. Chinese consumers’ desire to shop, travel and use streaming services for entertainment remains unchanged. However, the nature in which they do has.

Today, 55% of Chinese consumers make retail purchases online, which is significantly higher than the worldwide average of 40%. Much of this activity stems from the one billion people now connected to the internet, a record high. 

Though Chinese shoppers spend heavily online, they are far from reckless. 42% conduct thorough research prior to purchasing goods, compared to less than 30% of consumers in Western markets like the U.S. Most will consult at least 16 different sources of information on brands and their pricing over the course of three to five hours in a week period. Purchases are well considered. In fact, 31% of Chinese respondents admitted to reducing their impulse buying within the last two years.

It’s also important to note that consumers in China are motivated differently by shopping events than global shoppers. Alibaba’s Singles Day (11.11) sales grew to $85 billion last year, much larger in scale compared to events such as Black Friday or Cyber Monday in Western markets. These events do not have the same profound impact on Western consumers as they do in China. Moreover, it’s predicted 42% of consumers in China will increase their Singles Day spend this year.

But this is only the beginning. Accelerated by the pandemic, online shopping is poised to grow, furthering China’s digital transformation.   

A localized approach to mobile targeting  

Once global brands have a grasp on Chinese consumers’ preferences and propensity for research, the next step is to determine how best to reach them. Chinese consumers spend more than four and a half hours a day on their smartphones. That’s an hour more than consumers in the U.S.

Still, reaching Chinese consumers across mobile is easier said than done. It’s not plug and play. Programmatic technology from Google, Amazon, Facebook and others is not prominent in China. Their tools are instead substituted by local players that build solutions to meet the needs of Chinese consumers.

To succeed with programmatic in China – and for unfiltered access to mainstream inventory, data, ad verification and measurement solutions – global brands need to ensure they have local Chinese partnerships at the heart of their programmatic activations. Procuring content and sourcing data from the likes of Baidu, Alibaba, Tencent, ByteDance and others – accessible via Chinese demand-side platforms (DSPs) – is a must for success in China.

DSPs and programmatic can be managed remotely outside of China, alongside wider global campaign initiatives. Yet local Chinese partnerships must form part of a global brand’s programmatic technology stack. This way, they’ll retain their global principles and efficiencies, while adapting to local differences.

Unmissable opportunity 

Reaching the new Chinese consumer offers brands a once-in-a-lifetime opportunity for growth. Whether looking to grow in China with programmatic for the first time or seeking a fresh approach in the market, brands need partners that can expedite their growth – those that not only understand the nuances of the new Chinese consumer, but can act on them.

Follow MiQ (@wearemiq) and AdExchanger (@adexchanger) on Twitter.



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