China
AdTech: Longtail hits China’s Internet
Long dominated by a handful of giant sites, China’s Internet is now entering a longtail zone where users diversify their web experience, panelists here at AdTech said.
Alvin Chiang, vice-president of the Alibaba Group, highlighted the trend:
China’s Internet ad spending remains highly concentrated…
About half the online advertising money is currently spent by 20 companies on half a dozen websites.
…but users are branching out…
If you compare web traffic to the top 20 websites now, with two years ago, the user generated websites are significantly moving up in rank, diluting the strength of the portals. On their side, the portals are running out of pages to sell inventory. “The longtail is really happening in China right now.”
…to a range of mid-sized sites…
They include community and vertical sites. Big growth will likely come in such sectors as automobile, consumer finance and consumer packaged goods.
…that are struggling to find business models.
For Chiang, these sites need to figure out: How big is my reach? What is my level of user engagement? How do I monetize it?
Advertisers are, however, starting to explore these new sites…
Advertising campaigns need to be comprehensive, with banner ads, interactivity and all in a highly contextual and relevant place that leverage user behavior.
…which leaves a role for smart ad agencies.
Agencies are needed for the traditional role, but also to help navigate in this increasingly fragmented media environment, both in terms of new media platforms and understanding how to measure results.
Micah Truman, CEO of Wanmo Performance Advertising, agreed:
Agencies can help advertisers understand a fast-growing site they don’t yet know or trust…
Even if a site has grown quickly, there is no reason for Coke to take a risk and move onto that site quickly.
…but agencies are ill-suited for the task.
The core asset of agencies is to be able to buy and sell large amounts of property, not innovate. This likely means the very large agencies will buy the best of the breed.
Finally, Alvin highlighted Two China Search Trends:
First, brand advertisers are spending more on search.
Second, SME advertisers are looking into how to place banner advertising.
There are research findings that placement, search and banner render a higher conversion rate compared to search alone.
The Braun example
Braun shavers - not readily available in China - made their brand entry entirely online, selling to individuals through several different platforms. They got sales equivalent to distribution in 4 to 5 shopping malls. The Braun online store was opened in the Taobao auction site (owned by Alvin’s company, Alibaba) to monetize users in the shopping mode. Braun’s Taobao store is also advertised in other vertical websites as well as from search.
Technorati Tags: AdTech, AdTech Beijing, Alibaba, Alvin Chiang, Beijing, China, Micah Truman, Wanmo
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Hi Tom,
Thanks again for your response to my other comment. This is a great article and it certainly highlights something that has come up repeatedly in my business, which is a lack of a Chinese internet middle class. I think the situation is probably similar to what was happening in the US in the mid 90’s: people were talking about the potential of the internet in business while griping about the lack of profitability. As people spend more money and time online, the idea of web ads became more palatable to a broad swath of advertisers.
An article suggestion for you:
In the West there is a pretty well established path for taking a small site into business, and then getting it funded. In China it seems to me that it is very hard to work out the legal conversion from small to medium to large scale efforts. As a result, the internet is top-heavy with cruddy, well-connected projects. End users suffer. How can small players with high traffic get funding to expand their efforts?
-AR