15+
2 3 4500+
Table of Contents
01 03 05 07 BARRICADED DATA INVENTORY INSUFFICIENCY ALTERNATIVE SUPPLY MUDDLED OTT 09 11 13 15 MOBILE STABILITY STATIONARY OUTDOOR CONTENT COMMODITIZATION REALITY BITES
BARRICADED DATA
Big data dream is unattainable
T he data wall in China is higher than ever . With digital spending concentrating on BAT assets and hero
apps, big publishers have become even more dominant. Publishers are building advertising products within their ecosystem and release minimal data to third parties and advertisers. It is not only BAT who are taking this stance, even hero apps like Toutiao are keeping their data walled.
T he dream of using single source tracking to optimize buys and understand consumer journeys is yet
to be realized. Tracking vendors like Miaozhen and Admaster have been talking about single source panels for a long time, and Miaozhen has tentatively promised a single source product in 2018. But there are reasons why single source panels do not yet exist and are unlikely to exist in the near future: the cost required to build and maintain a panel is extremely high, and data has been difficult to verify or correspond to other databases.brands are able to build their DMP (data management platform). But due to the lack of 3rd party date, it is unlikely to help understand user journeys or optimize their digital buying. Smaller clients are better off using PDB (programmatic direct buy) to ensure good inventory, better targeting and brand safety.
I t is not all dire. With rich first-hand data and technological advancements,INVENTORY INSUFFICIENCY
A seller's market of video advertising
A dvertisers looking to use video to reach their audiences will face significant challenges to secure inventory on TV and
OTV this year.
I nventory shortages are due to a maelstrom of issues: supply dramatically decreasing while demand from advertisers
remaining high. Ratings decline in local TV (LTV) have eliminated a source of supply--LTV spending share of top 10 advertisers has dropped from 19% to 15% in the past three years. Even national TV (CCTV) and top provincial satellite (PSTV) channels are suffering from a sharp decrease in ratings. To build reach, brands are fighting for prime time inventory on CCTV/PSTV, exacerbating the situation from the demand side.
B rands are mitigating the dwindling TV video supply by moving to OTV.
Many advertisers still expect OTV to offset the prohibitively priced inventory on TV, but it is no longer the case in high demand tier 1 and 2 markets. There are chronic inventory shortages in Beijing, Shanghai, Chongqing, Tianjin, Nanjing, and Xi'an. This issue is intensified as many brands choose only to buy from BAT video sites, though other video sites have available inventory.Rating
35 30 25 20
TOTAL TV RATING FROM 2015-2017 (PRIME TIME)
ADVERTISING CLUTTER
No. of ads watched per day per person
47 34 11 19
Jan
Feb Mar Apr May Jun
Jul
Aug Sep Oct Nov Dec
TV 2013
OTV 2017
2015
2016
2017
To
satisfy growing demand, video sites have increased pre-roll durations, from 60 seconds to 90 seconds on hot programs. OTV advertising clutter has risen by 72% in the past four years.This increased clutter has given viewers added incentive to buy memberships to skip over advertising. With 40%+ of viewers on BAT video sites subscribing to memberships, OTV inventory is even more scarce.
To build reach in the coming year, brands need to compete aggressively on the price or diversify their buying strategies beyond hot programs and prime time.
Data source: ADP, iresearch 2013-2017, Total TV rating is based on All people 4+
I t will continue to be a seller's market for online video inventory and prime time TV inventory.ALTERNATIVE SUPPLY
More options for video adver tising
To offset inventory shortages, brands are turning to more platforms for video advertising and looking for innovative ways to advertise. I n the next 12 months, video advertising investment will increase on non-OTV mobile apps like Toutiao, UC browser, Baidu news, and Weibo. These mobile apps are providing video advertising options like 5-second open page video ads in addition to in feed video or branded viral video ads. Together these apps provide another way to reach audiences: Toutiao itself has 232 million monthly active users.Tracking
vendors are also catching up by including these video formats in mix reach calculations. One substantial challenge for brands is that consumers can easily skip in feed videos; impressions are being counted one second into videos play. However, with negotiations, publishers can count impressions after four seconds of play.
the big screen, more brands will step into the OTT territory. Opening ads and video pre-rolls are the most common formats advertisers buy. In the past year, we have seen steady growth in OTT pre-roll advertising.
On
A lthough these innovations will not drive consistent mass reach for advertisers for now, brands should nevertheless test these formats to see if they drive incremental reach.
formats.MUDDLED OTT
Fragmentation brings confusion
OTT AD SPENDING BY FORMAT
Million RMB
2500 2000 1500 1000 500 0
O TT
( Over-the-top ) spending grew by 160% in 2017, showing the potential of OTT as a video media to backfill TV and OTV shortages. However, the Chinese OTT landscape is still very fragmented. There are multitudes of stakeholders involved in OTT, including TV hardware manufacturers, OTT video applications, content providers, broadcast license holders, OTT operation platforms, and OTT ad agencies.2 370 480
1750
520
2016 Opening Ad Pre-roll
2017 OtherData source: Nielsen 2018 China family screen industry development white book
A s a result, we are very far away from the optimal OTT
buying process. Monthly inventory supply is not stable. Vendors are checking with different TV manufacturers to get the previous months' TV open rate to guess next months' inventory. The OTT landscape still and will remain the wild west for the next 12 months.
Video Applications
Content Providers
O TT tracking involves much guesswork as well. Though
Miaozhen and Admaster have launched OTT tracking as part of their multi-screen product, the tracking data has yet to be validated by the market.
Broadcast License Holders
Operation Platforms
With more smart TVs replacing traditional TVs, inventory
will stabilize by 2020. Brands should understand the environment and try to find the best buying method available to them, then test on a small scale before treating it as a core part of media plan.
Ad Agencies
Hardware Manufacturers
8