A trip to Beijing provided a longtime new media exec with perspective on ad serving operations, here and there.
Recently, I went to Beijing for largely subversive reasons. On the surface I was simply a mild-mannered ad operations exec attending an ad:tech conference. But underneath, I was trying to fulfill a mission to learn and understand a culture I knew little about.
Beijing was like that, too. On the surface, it's a megalopolis of 17 million people that resembles Los Angeles more than anything else. Underneath, there's a society with an entirely different DNA, shaped by an historical legacy unlike anything we in the U.S. have ever experienced. This history shapes everything in China, even down to the most mundane aspects of life, like say, ad operations.
First, let's not make the same mistake in our own field that politicians seem to make in theirs. It's not "my way or the highway." You can't impose a method of operations from one country to another. That goes for both systems of government and of business. We can compare and contrast, but the best route of understanding is to observe and respect. If you can do that, your chances of coexistence in any endeavor are far better. That being said, let's look specifically at how this plays out in China.
The impact of history on culture in China has been marked by extremes. Centuries of rule by Emperor Dynasties gave way to the Cultural Revolution in which the State attempted to shape behavior. While today's China shows all the outward appearances of a rapid development spurred by free enterprise, historical nuances prevail. There is no media legacy shaped by hundreds of magazines and newspapers reflecting scores of topical and lifestyle viewpoints; no media model driven by the metric of the CPM, supported by third-party audited circulation numbers. In fact, even today, China's state-run television station, CCTV, sells broadcast spots on an auction basis, not by a rate card supported by audience numbers. Sure, in the U.S. we can (and do) question the claims and validity of audience numbers ranging from magazine, to prime time TV, to website traffic. But there are systems, however imperfect.
How does this shape ad operations in China?
Like the country itself, access to online media is growing at a tremendous rate and now stands at nearly 117 million. Most internet pricing is on a CPD (cost-per-day) basis: NOT CPM. This is driven by unaudited numbers that are supplied by online publishers themselves. This was discussed by numerous Chinese panelists and cited as one of the biggest challenges they face in attempting to turn this massive new audience into a business. In fact, it was stated that traffic numbers are as much a product of the need to gain advertisers and investors as they are the product of real data. Ad serving solutions, too, are more likely to be homegrown than supplied by a third-party vendor. This further clouds the numbers associated with ad delivery.
I asked "why" there is a relative absence of third-party measurement and standardized ad serving solutions. One of the panelists answered as follows: 1) pricing of services: if you can't effectively monetize traffic, it's likely that the costs of measurement, analytics and ad serving tools can actually exceed revenue; 2) value: if you routinely sell on a CPD basis, why do you need sophisticated measurement anyway?; 3) timing: it will happen eventually.
Finally, another reason was cited elsewhere, driven by some of the cultural history. No one in China is particularly excited about having a third party from another country expose and report on the traffic patterns of private or state-run websites.
Content, too, is driven in part by cultural history. China has a long standing policy of one child per family. Is it any wonder that the phenomenon of social networking sites has exploded? When you are the "only child of an only child," it's a way to virtually extend friends and "family." And nearly 70 percent of China's youth participate in the experience.
Even content-driven sites reflect this, including those devoted to sharing the experience of child development and rearing, like Babytree.com. Add to this mix the spectre of State intervention. I was in Beijing at the same time the Communist Party was holding its own conference, and during that time, bloggers critical of the government found themselves mysteriously unable to post online.
It was all about contrast in Beijing. I walked away with two comments made in two very public forums. "Yes, ad operations is going to be increasingly important here, and if you have any expertise in the subject you'd better get used to getting on a plane and flying to Beijing more often." On the other hand, in another forum "if you think you can impose your way of doing things on our business in China, you should turn around and go back."
Gee, how can I resist an offer like that? Let's see, how many billions of frequent flier miles do I need for a first class ticket to Beijing?
Doug Wintz is the founder and principal of DMW MediaWorks. Read full bio.