As a significant market, China is a resourceful market for international brands to enter. At the initial stage of market entry, outbound marketing, such as advertising, could be a good choice. For those who have already established brand awareness in China, advertising remains essential for market penetration. This article will explain how Chinese ad ecosystem works.
01 Ad Category: Programmatic Ad is the mainstream with more complexity
According to Emarketer, 4 years ago, programmatic ads account for a significant 44% share of China’s digital ad market. Additionally, with more stakeholders engaged in the context of programmatic advertising, we believe that the introduction of programmatic ad ecosystem in China will help you better understand Chinese ad environment.
02 Composition of Programmatic Ad Ecosystem in China
An outline of the stakeholders in Chinese programmatic ad ecosystem could make it easier to get the whole picture. Brands, companies, or even individuals who wish to pay for advertisements aimed at attracting target audience are advertisers. In that course, DSP/ADN and Trading Desk are tools in the demand side; while ADX/SSP are platforms on the supply side, which serve media or publishers who have the final say over traffic and ad inventory. Data platforms such as DMP will collect and provide data for the publish of ads as well as connect the audience and advertiser someway.
The programmatic ad ecosystem in China works like a tree. Advertisors are the root because of their products and services hidding behind the ads are the fundamental factor of purchasing. And advertisors will make the final decision of what messages shall be communicated in their ads, by what means, in what places. Other stakeholders or tools such as ad agencies, DSP/TD, AdX/SSP, ADN, are functioning as the trunk that brings the “nutrition” ads all the way up to the branches “media owner” or “publisher”, so that the audience as the leaves will be reached and feel the commitment and value of the advertisors’ brands.
03 Key Players of Programmatic Ad Ecosystem
In China, the basic logic of advertisement is the same. Within the ecosystem, we got three key players as advertiser, publisher and the audience. The advertiser would like to convey message to their target audience via the impressions on publisher. And that’s what advertisement will achieve.
As the bridge to connect advertiser and the audience, media/publisher controls the ending ad inventory, which could be the most important resource in advertisement. In China, the leading comprehensive publisher includes: ByteDance, Alibaba, Tencent, Baidu, Kuaishou, Meituan, Jingdong, Pinduoduo (Temu), Xiaomi, Weibo, etc.
With the booming of publisher’s quantity and categories, Ad Network (ADN) came up to the ad ecosystem, which purchases ad inventories from different publisher and sell to advertisers or ad agencies.
Some advertisers, especially those leading enterprises would like to invite another role in during advertising: advertising agencies. Some of the most popular and influential advertising agencies in China include: Ogilvy, WPP, Omnicom Group, Publicis Groupe, BBDO, BlueFocus, etc. You might be quite familiar with some of them.
04 Platforms to Collect and Communicate Ad Demands
Demand-Side Platform (DSP)
For both the advertiser and ad agency, DSP (Demand-Side Platform) is a must in conducting programmatic ad. DSP provides real-time bidding services and algorithm & AI capabilities to enable automated buying and selling of ad inventory, so that advertisers and agencies could efficiently manage their advertising campaigns, such as audience targeting, budget management, bidding management, creative management, etc. The AI and algorithm embedding in DSPs will make all those actions above more agile, precise and accurate.
The more inventories a DSP covers, the more powerful and efficient it is. YOYI Tech, which has focused on AdTech in China for over 10 years, has developed a DSP that integrates 80% publisher inventories across Chinese internet, with full coverage of mainstream CTV inventories as well as rich Ad formats within different media touchpoints, will accelerate market penetration in China and precisely reach your target audience at a lower cost, as well as enhance your advertising strategy with data-driven insights.
Trading Desk (TD)
A trading desk integrates different DSPs and can manage advertising in a comprehensive manner, .which often handle more complex budget management and bidding frequency control, etc.
Here is a list of the different types of trading desks operating in China:
Agency Trading Desk (ATD): A trading desk within a 4A advertising agency serving multiple brand advertisers. Examples include Xaxis, Accuen, AOD, and Charm (昌荣）, etc.;
Independent Trading Desk (ITD): Similar to ATD, but ITDs can serve multiple advertising agencies or brands. Examples include YOYI Onedesk, Marketin, Chinapex, and Fugetech, etc.;
Brand Trading Desk (BTD): Typically, this is an in-house trading desk built by the advertiser themselves or with the help of a technology provider, such as Yili Trading Desk, etc.
05 Platforms to recieve demands and release ad inventory
Both supply-side platform (SSP) and Ad exchange (AdX) are essential to process ad demands from DSP and trigger ad impression.
A supply-side platform allows ad publishers to sell their inventory within an appropriate price range after the evaluation of advertisers, bidding prices, TA requirements, etc., so as to meet both publishers’ and advertisers’ needs.
Therotically, an AdX will connect DSP and SSP. However, nowadays the differences between SSP and AdX are so slight to take into account. Hence we would like to introduce you some representative platforms of SSP/ADX running in China:
The third-party SSP/AdX collects and reallocates traffic of all kinds (premium traffic, medium traffic, long-tail traffic, etc.) from media owners or publishers. Some examples can be: BES from Baidu, Tanx from Alibaba, Tencent AdX, 360 MAX, etc.
The examples of private AdX/SSP owned by media giant who has their own natural traffic are YOUKU AdX, AIQIYI AdX, Netease AdX, Sina AdX, etc.
06 Supportive Platform towards Agility of Advertising
Data Management Platform (DMP) generates tags for different audience segements and build user profiles and portraits based on user data, which would enhance the precision and efficiency of advertisement.
YOYI Tech creates a DMP that collects first-party user data from advisor-owned channels such as websites, apps, social medias, as well as second-party data from our own DSP and third-party data from our partners such as ecommerce giants, media, and agencies, etc. Moreover, YOYI DMP is open and ready to accept any other data sources and with our powerful ID mapping capability, our DMP will match household IDs with individual IDs and calculate user tags for various scenarios.
For advertisers, after navigating through the initial strategy formulation, plan refinement, and qualification review, only to be thwarted by media platforms repeatedly returning advertising materials and even facing penalties and restrictions from the platforms due to non-compliant materials, it’s a loss that no one wants. The following guidelines from China’s top traffic platforms can help brands avoid pitfalls in advance, thus smoothly advancing their deployment plans.
01 Advertising Must Not Have the Following Circumstances
Use or indirectly use the national flag, national anthem, national emblem, military flag, military anthem, or military emblem of the People’s Republic of China.
Use or indirectly use the name or image of state organs or their staff.
Must not exploit the images of party and state leaders (including various cartoon virtual images), including current, former, or deceased party and state leaders for commercial promotion.
Impair the dignity or interests of the state, or disclose state secrets.
Disrupt social stability or harm the public interest of society.
Endanger personal or property safety, or disclose personal privacy.
Disrupt public order or violate social ethics.
Contain obscene, pornographic, gambling, superstitious, terrorist, or violent content.
Contain content discriminating against ethnicity, race, religion, or gender.
Impede environmental, natural resource, or cultural heritage protection.
Other circumstances prohibited by laws or administrative regulations.
02 Advertising Must Not Contain False or Misleading Content, Must Not Deceive or Mislead Consumers
Advertising should be recognizable, allowing consumers to identify it as such.
Must not disguise advertising in the form of news reports. Advertisements published through mass media should prominently display “Advertisement” to distinguish from other non-advertising information, preventing consumer misunderstanding.
Must not deceive or mislead consumers with non-existent goods or services.
Must not present information about the product’s performance, function, origin, purpose, quality, specifications, ingredients, price, manufacturer, shelf life, sales status, honors received, or promises related to goods or services that do not match the actual situation.
Must not use fabricated, forged, or unverifiable scientific research results, statistical data, survey results, excerpts, quotes, or other information as proof.
Must not fabricate the effects of using products or receiving services.
Apart from the above, must not deceive or mislead consumers with false or misleading content.
03 Prohibition of Using Absolute Phrases Such as “National Level,” “Highest Grade,” “Best,” etc.
Advertising is prohibited from using absolute phrases such as “national level,” “highest grade,” “best,” “top level,” “number one brand,” “elite,” “supreme,” “most popular,” etc. Expressions in the form of “one of the most…” are considered to represent the highest degree of an adjective and are also prohibited in advertising. However, objective statements that meet the following specific conditions can be used:
Objective factual statements, but legal evidence should be provided.
“XX Competition First Place” falls into this category. For example, if an advertiser participates in an authoritative competition or an analysis report issued by an authoritative institution shows their winning rank, such as a design company winning first place in an international competition. If the “national level” title is obtained through legal or administrative authorization (non-authoritative awards without legal or regulatory authorization do not qualify), the standardized name should be allowed for use. Advertisers should provide award certificates, selection results, and other relevant proof documents.
Temporal or spatial order statements, but legal evidence should be provided.
Expressions such as “first model, debut, first release, earliest, exclusive, only” belong to this category. For example, if game company A launches mobile game B for the first time, it can be described as “A’s first mobile game” or “A’s first mobile game.” If advertiser A obtains exclusive authorization for a game, they may use “A’s exclusive release” or “A platform’s first launch” in advertising. Advertisers should provide authorization letters, copyright registration certificates, and other relevant proof documents.
Explicit self-comparison of degree grading.
This refers to the objective existence of different grading quality products in one’s own products, and the use of words to distinguish these grades.
For example: The largest housing model of Company X, the smallest size of Product X, the top configuration model of the X series of cars, the mobile game with the most users of Company X, etc.
Grading recognized by relevant standards in a certain industry field, or grading widely accepted by the public.
For example: In the national standard of Anji white tea, the product is divided into four quality grades: “boutique, special grade, first grade, second grade”. For specific “boutique grade” Anji white tea advertisements called “the highest grade” or “the highest level” usually do not belong to the absolute words prohibited from use. Advertisers need to provide relevant grading basis and grade inspection certificates, and must not promote multiple grades as the highest level at the same time.
Explicitly indicate the business philosophy and pursuit goals of the merchant, and objectively there is no possibility of misleading.
“Customer first, strive for perfect quality” and so on belong to this category. Such expressions must not lead consumers to think that the advertiser’s products and services are “first” or “perfect”, that is, they must not lead consumers to link the advertiser’s business philosophy or pursuit goals with the quality of products and services.
04 Standards for Data and Material Citation
Any content cited in advertising is considered part of the advertising content itself. Therefore, the expression of cited content must also comply with the relevant regulations of the Advertising Law, and the review standards for the expression of cited content are consistent with the general advertising content review standards. When using data, statistical materials, survey results, excerpts, quotes, and other cited content in advertising, it must be true, accurate, and indicate the source. If the cited content has an applicable scope and a validity period, it should be clearly stated. The following are prohibited for cited materials:
Cited materials must not involve the highest level of expression, national level expression, and other content that violates the relevant provisions of the Advertising Law.
Cited materials must not involve obviously false propaganda content.
Cited materials should be consistent with the original content and must not be fabricated, switched, or exaggerated. They must not engage in taking things out of context, concealing facts, distorting the original meaning, or causing misunderstandings among the audience.
It is forbidden to use consumer evaluations, beneficiary images, and other related comments from individual natural persons or users as cited materials.
05 Standards for Patent Expression in Advertising
When using patented products or patent methods in advertising, the patent number and type should be indicated.
Those who have not obtained patent rights must not falsely claim to have obtained patent rights in advertising.
It is forbidden to use patent applications that have not been granted and patents that have been terminated, revoked, or invalidated for advertising.
06 Regarding the Use of Names, Images, Copyright, and Trademarks
Utilizing the name or image of another party (including individuals, enterprises, and other organizations) in advertising requires prior written consent; for those without or limited civil conduct capacity, consent must be obtained from their guardians. Proof of authorization must be provided for such use.
Unauthorized use of others’ works and trademarks is prohibited; consent and proof of authorization are mandatory when needed.
According to the “Trademark Law of the People’s Republic of China,” producers and operators are prohibited from using the term “well-known trademark” on products, packaging, containers, or in advertising, exhibitions, and other commercial activities; the term must not appear in advertisements.
An advertising endorser is a natural person, legal entity, or other organization that recommends or certifies goods or services in their own name or image, apart from the advertiser. The following rules must be observed when using an endorser in advertising:
Endorsements must be based on facts, comply with relevant laws and regulations, and must not endorse goods or services that the endorser has not used or received.
Minors under ten years of age may not be used as advertising endorsers. When using minors, verify their age (under ten is prohibited) and obtain authorization from the minor and their legal guardians.
The names or images of medical institutions or doctors must not be used in food advertising. Expert or consumer names or images must not be used to certify specific effects in food advertising.
Investment-expected goods or services, education, and training advertisements must not use the names or images of research institutions, academic bodies, educational institutions, industry associations, professionals, or beneficiaries for recommendations or certifications.
Medical, pharmaceutical, medical device, and health food advertisements must not utilize endorsers for recommendations or certifications.
Advertisements for pesticides, veterinary drugs, feed, feed additives, crop seeds, forest seeds, grass seeds, breeding livestock, and aquaculture must not use the names or images of research institutions, academic bodies, technology promotion organizations, industry associations, or professionals, or users for recommendations or certifications.
Natural persons, legal entities, or other organizations that have received administrative penalties for endorsements in false advertisements within the past three years must not be used as endorsers.
08 Protection Regulations for Minors
Advertisements for goods or services targeting minors under fourteen years of age must not contain the following: 1.1. Encouraging them to demand that their parents purchase the advertised goods or services. 1.2. Content that may prompt imitation of unsafe behaviors.
Mass media targeting minors must not publish advertisements for medical treatment, drugs, health foods, medical devices, cosmetics, alcohol, beauty products, or online games detrimental to the physical and mental health of minors.
09 Prohibition of Disparaging Other Producers’ Goods or Services
Advertisements must not fabricate or invent facts to defame or belittle others’ products or services.
Advertisements must not indirectly belittle others’ products or services by claiming superiority in quality, price, etc.
10 Standardization and Regulation of Advertising Language
Pinyin must not be used in isolation in advertisements; when used, it should be correct, standardized, and appear alongside standardized Chinese characters.
The use of numbers, punctuation, measurement units, etc., in advertisements must comply with national standards and regulations.
Foreign languages must not be used in isolation in advertisements; when necessary, they should complement Mandarin and standardized Chinese characters.
The use of idioms in advertisements must adhere to national regulations and must not mislead or negatively impact society.
Handwritten fonts, artistic fonts, variant characters, and ancient scripts used in advertisements for creative purposes must be recognizable and must not mislead.
The following are prohibited in advertising language and script:
The use of incorrect characters.
The use of traditional characters in violation of national laws and regulations.
The use of obsolete variant and simplified characters.
The use of obsolete print character forms.
Other non-standard uses of language and script.
11 Respect for Heroes and Martyrs
Commercial advertisements must not use or indirectly use the names or portraits of heroes and martyrs.
Commercial advertisements must not feature the Monument to the People’s Heroes in Tiananmen Square, Beijing, or any related names, inscriptions, texts, reliefs, graphics, or logos.
Images or videos depicting activities that harm the environment or atmosphere of memorial facilities for heroes and martyrs are prohibited.
No promotion or glorification of aggressive wars or acts of aggression is allowed.
12 Miscellaneous
The maximum value of the top prize in lottery-style promotional sales must not exceed 50,000 yuan.
The depiction of the RMB is prohibited in advertisements.
Content implying “national inspection-exempt products” or similar regarding quality exemption is prohibited.
Advertisements are banned from featuring tobacco, smoking images, including real and cartoon characters, and the promotion of cigarettes and e-cigarettes is forbidden.
Advertisements must not be disguised as news reports.
Advertisements must not contain content such as “special supply” or “exclusive supply” to state organs, with specific requirements as follows:
Content containing “special supply” or “exclusive supply” to state organs or similar.
Using names of specific locations or landmark buildings closely associated with state organs, and using state banquets, state guests, etc., to promote “special supply” or “exclusive supply.”
Falsely using “special supply,” “exclusive supply,” or similar names to sell goods or services, engaging in misleading false propaganda.
Other content containing “special supply,” “exclusive supply” to state organs, and similar, which may cause adverse social impact.
Except for the above, if a product is specially made by the manufacturer for a specific region or event (such as special packaging, models), it can be used, such as “exclusively supplied to Hangzhou area.”
