The Chinese mobile games market was reckoned to be worth around $2 billion in 2013.
In that context, we can conclude the country has shaken off its reputation for being about downloads, rather than revenue.
It remains immature compared to markets such as Japan, Korea and the US in many aspects, however; often because of the market friction created by fragmentation of stores, services and billing.
One such area is mobile advertising, although thanks to developments such as PapayaMobile’s just announced real-time bidding (RTB) system for its AppFlood platform, things are changing quickly.
Designed to overcome the barriers that have walled off the Chinese mobile advertising market, we spoke to general manager of Papaya Mobile, EMEA, Chris Hanage about the new opportunities the technology will offer advertisers and content creators.
Pocket Gamer: While China is a huge mobile market, do you think it's now matured enough for global advertising campaigns to be meaningful?
Chris Hanage: In terms of a realistic target for non-Chinese brands, the demand has been there for some time - but creating and executing campaigns has been the major problem.
Last Autumn, UK Chancellor George Osborne relaxed the visa rules for China and, in part, that was in response to UK businesses clamouring for him to make it easier for us to welcome China tourists. The motivation behind our RTB solution is not disimilar, we’re making it easier for Western businesses to welcome Chinese ad dollars and for Chinese publishers to carry Western campaigns.
A specific example? Nearly 100 million Chinese tourists visited foreign countries during 2013 and they spent over $100 billion. That makes them bigger in number and spend than tourists from any other country.
Why is AppFlood’s new RTB platform good news for game developers?
We’ve long been talking about the opportunity for Western developers to launch their games in China, which although still quite fragmented is already second only to the US for downloads.
As games have shifted to overwhelmingly support an ad-based, F2P model, then advertising becomes essential for either monetisation or acquisition - so therefore effective advertising is essential as part of any game launch, and our RTB platform will really help to both deliver campaigns and also ensure maximum efficiency of spend.
On the other side, for publishers there is a rising demand from Chinese companies for inventory outside of China, as most of the mobile ad spend by Chinese brands is happening in overseas markets.
So there’s potential for proactive publishers to dramatically increase their eCPM and make more money through the ability to link the two markets effectively.
You say latency has been an issue for the Chinese mobile ad market, something you’ve solved via off-the-shelf Amazon Web Services. So what competitive advantage do you have in the Chinese RTB market?
It’s not quite right to say that we’ve simply used an off-the-shelf solution from Amazon; our team in China has done extensive work to optimise the delivery and response rates in and out of China in conjunction with our use of Amazon as the backbone of the platform.
Location of the exchange is also an issue when you need to optimise down to the millisecond, so that’s also something we have had to consider in building out an RTB product.
There are other Chinese companies with RTBs, but they are focused on the domestic market. AppFlood is the first to build something to connect the two, and aside from just the technology, we’ve been building the relationships needed to deliver this for several years now. After all, an RTB is no good without any advertising to sell through it.
Do you think this move is more about Chinese companies marketing to southeast Asia markets rather than international brands marketing to Chinese mobile users?
We believe it is actually both, as AppFlood's mobile RTB platform will genuinely work both ways.
As I’ve mentioned, the bulk of the spend we are already seeing from our Chinese customers is focused on acquisition outside of the Chinese mainland, and there is certainly demand from Western advertisers for Chinese inventory.
You are also right to say that plenty of Chinese campaigns are looking to near-neighbours in Asia, because these countries are being used as test beds before full-on global expansion.
We've seen this on AppFlood's network through Q3 2013 where our Chinese advertisers suddenly started shifting their strategy from targeted regional campaigns to global campaigns and even overtook the spending of our US advertisers. We're expecting to see this trend continue through 2014 and beyond.