'Is it expensive?': Sellers not pleased by price-comparison tool for China digital ads

On a self-stated mission to get rid of guesstimates and pricing chaos in media buying, a martech startup called FugeTech has created a WeChat mini-program that lists advertisement prices from brokers and exclusive ad-sales agents of various mobile apps, online video sites, and over-the-top (OTT) services in the mainland.

The tool in essence transplants the concept of a price-comparison tool from consumer categories such as air tickets and hotel rooms into the advertising arena. It includes data on CPM, cost per day, and rebate percentage.

“Have I been ripped off?” is a question advertisers often ask themselves, Bessie Lee, ex-CEO of WPP China, wrote in a spirited Linkedin post upon the introduction of the tool, adding that the effort caused "panic" among several media agencies in China. Lee's own incubator and early-stage venture fund focused on martech, Withinlink, is an angel investor in FugeTech.

"Some clients were very happy because they found out the prices they are paying are cheaper than those listed on the platform (congratulations to these clients)," wrote Lee in another post on Toutiao.

If this sudden pricing visibility seemed too good to be true for brands, it was. Within a few weeks after a mid-April formal launch, under-pressure sales agents asked FugeTech to either remove their prices from the tool, or anonymise them (so the prices are still listed, but without identifying the source).

"The biggest obstacle to transparency is people. Some people in the market do not want transparency."
—Bessie Lee

Lee, who spent more than a dozen years in WPP-owned media agencies before venturing into the VC space, detailed in her LinkedIn post the approaches taken by advertisers in China when they want to know how much they're paying for media:

2. A third-party media audit: Advertisers ask third parties to compare the prices of their existing agency against the auditing companies' own internal price pools to understand the gaps. Such price pools are built over time by aggregating pricing submissions from media agency pitches, Lee wrote. The problem is that if most of the agencies in the pool paid premium rates, then the pool’s pricing in general is above market averages. Media auditors can only tell advertisers whether they are paying more or less than other advertisers. Furthermore, Lee wrote, media auditors often have a hard time tracking whether agencies actually honoured the prices they committed to at the pitch, as auditors lack the technology to do so.

3. Discreet enquiries with media platforms: Advertisers "quietly" ask various vendors how their prices stand, in contrast with their competitors.

Each of these three approaches has pros and cons, Lee wrote, but thay all have a common shortcoming: a lack of transparency.

"The biggest obstacle to transparency is people. Some people in the market do not want transparency," Lee wrote.

However, transparency can be a reality if all intermediaries in the media-buying chain can be eliminated, Lee believed.

According to FugeTech founder and CEO Wei Guo, the mission of the startup is simple: Use technology to improve marketing efficiency. "We know that brands are stuck in the industry's 'opaqueness'," he said. "Therefore, we are eager to do something to help ourselves and help everyone."

Screenshot of the FugeTech mini-program

The martech startup claims it does not make money by buying and selling media slots, so it does not see itself as in competition with existing players.

As the tool's introduction played out, all the OTT ad sales agents on the list requested the removal of their prices, Dong Wang, business partner at FugeTech, revealed to Campaign China. "It is especially obvious, but I wouldn't characterise them as 'untransparent'," he said. "The OTT industry is relatively new, and so their ad prices are 'non standard', I would say." Wang added that in the bigger picture, the number of suppliers volunteering to upload their prices is four times the number demanding to be deleted.

To both Lee and Guo, responses from "4A" agencies (which in China is synonymous with "multinational agencies") were somewhat surprising. "Some urgently notified their suppliers and asked to be immediately removed," Guo said. "Others looked for us in the hope of using our data to optimise supplier management." FugeTech received three letters from lawyers in the past month, he said, but was unfazed. "There was even a media agency that prohibited its employees from forwarding my article," Lee told Campaign China.

"We just want to noiselessly create a platform that makes it easier for the supply side to publish prices and easier for the demand side to obtain information."
—Wei Guo, FugeTech

Those 4A agencies most worried about transparency must have more vested interests than the other players, Guo said. For other agencies, they instead see opportunities from being transparent. "It is short-term thinking versus long-term thinking, so everyone will make different choices," he said.

Guo added that the company doesn't want to be a referee or set any standard. "We just want to noiselessly create a platform that makes it easier for the supply side to publish prices and easier for the demand side to obtain information," he said.

The company maintains that it doesn't have motives on making money from the tool. Due to cashflow from FugeTech's other products, Guo said he does not have to rely on the mini-program to earn income, so the service will remain free.

What will happen next? FugeTech will expand the list to include new categories like search, outdoor, TV, KOLs, creative production, and advertising technology. 

"We are doing something right," Guo said.