Everyone wants a piece of China's online ad market

Reported in the Wall Street Journal, Interpublic's Magna Global states internet ads in China are expected to generate US$2.5 billion this year, claiming 12 per cent of the lucrative US$ 21 billion ad market. Online ad revenue is also expected to grow 25 per cent from last year.

The news comes as Publicis Groupe, WPP and Interpublic announced their intentions to launch digital ad-buying units in the mainland.

Despite the growth and increasing international interest, it remains to be seen whether China's online market can actually support and sustain "transparency on digital media ROI", says Colin Rattigan, vice president of e-marketing for Greater China at Nurun.

Rattigan explains that although China is slowly coming to grips with the benefits of an ad exchange system, the problem lies in how receptive portals are to tracking requirements and audience information data.

Managing director at Aktiv Digital Singapore Matt Sutton (pictured), adds that the Chinese market still largely depends on tenancy based buying models which does not work in ad exchange systems.

According to Sutton cost-per-impression (CPM) buying is not an alien concept in the Chinese market, but it is still in the minority. Mass volume is especially crucial to an ad exchange based marketplace.

Both Rattigan and Sutton foresee the Chinese market will eventually reach a saturation point due to the mass influx. Sutton says China still has a long way to go because at the moment "it's still at ground zero."

Rattigan suggests that agencies divert from acquisitions and partnerships with local businesses and instead focus on establishing an online tracking system. "What is required is not every agency developing monitoring tools but the creation of independent companies that offer the monitoring service to agencies," he added.

The act of perfecting an ad exchange system in China is not only on the shoulders of agencies and but also the big online players in the market. "It will likely take someone at the top, QQ for example, switching to impressions buys in full before ad exchanges can fully take hold," said Sutton.