There are approximately 500 million smartphone users in China. Last year those users downloaded close to 185 billion apps, which is about seven times more per user than in the US. Smartphone penetration is currently at 2.3 billion users globally, with China representing approximately 22% and climbing fast.
It’s no secret that putting ads in apps for China is a big business. Earlier this year internet giant Alibaba announced it had bought a majority stake in the country’s largest independent digital ad platform, AdChina, pairing it with marketing unit Alimama and their cloud computing sector Aliyun. At the same time other local players like Avazu Mobile and Mobvista are looking to consolidate in China as well as abroad.
But how do foreign ad exchange platforms go about entering a market which is already seeing huge local growth? The secret may lie in targeting the country’s huge companies, not their consumers.
While the internal market might be getting tougher, CEO of German-founded Smaato, Ragnar Kruse, believes it’s a good time to be working with Chinese brands that are expanding outward. As one of the world’s leading real-time bidding and supply side platforms (SSP) for mobile advertising, Smaato has recently turned its sights to companies exiting China who struggle to break into surrounding markets.
“We have already been doing business with big brands who want to go outside the country,” Ragnar told Technode. “When you rely on advertising for monetization, you need to figure out how to get those ads into your apps. Selling directly to an advertiser doesn’t exactly work, since [Chinese publishers] don’t have those partnerships abroad.”
Smaato already works with several Chinese companies including Chinese mobile internet company Cheetah Mobile. They’ve also begun working with around 20 demand-side platforms (DSPs) and ad networks within the country.
Cross-border mobile advertising is becoming easier with the growth of the programmatic ad buying, which allows software to automate the buying and selling process of mobile ads on a large scale. Ragnar believes this could also help app developers and publishers overcome barriers in their home markets.
“The nice thing about this whole app ecosystem is that it has become a massive global market… in Europe you always find a certain resentment against some things, and the consumers are a bit picky. But because it’s a global market you can easily find a different market where there are customers. So naturally many companies are moving into China.”
Smaato has an existing Asia presence in Singapore and Jakarta, along with operations in San francisco and New York. The 10-year-old company launched a new platform in January, merging together several services to create a single dynamic demand service that is designed to increase efficiency and give publishers more control. The company claims to have 5000 users already using their new platform, including a series of Chinese companies that are in the process of trialling it.
The company hasn’t given indication on who they may be partnering with for their official entry into China, though according to Ragnar they hope to open a local base within the next few months. “We will now make an effort to set up shop here in China. We already have hundreds of apps we are working with here in China and helping them monetize outside of the country.”
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