AdExchanger: What exactly does this partnership with Nestlé entail?
CHARLIE WANG: The first part of the programmatic implementation is focused on video on demand. We're working with the big four video publishers: Yoku, iQIYI, Tencent and Sohu. The second half of this year will roll out to the display space.
In the Western world, there are so many different data sources – BlueKai, eXelate, Lotame – all those companies that provide different sets of data for us to be able to target via a DSP. But in China, there isn't really a third-party DMP out in the Chinese market. And we also had to choose a local DSP because none of the global ones were connected to the publishers that we wanted to put our ads on. So we're working with ReachMax as a DSP and Miaozhen as the DMP.
Why did you decide to start with video?
WANG: In China, we actually call it online TV. We're seeing consumers shifting their viewing behavior from traditional TV to online TV. If you look at the content on online video publishers in China versus YouTube, YouTube is 100% user-generated content; here, it is about 80% to 90% broadcast content.
Within China, we have a planning methodology that we call "online TV mixed reach," which is that if you buy across TV and online TV, you get some incremental reach by mixing these channels. The biggest reason we were focusing on video is that if you look at most advertisers, TV is such a huge part of their spend, no matter if it's online TV or mixed reach. When we looked at tackling the programmatic problem, we said, "Which is the most important part of digital for our clients?" And in this case, it was online TV.
What is different about this partnership?
WANG: We're now working on a fixed pass-back ratio model, which means what the brands and advertisers are paying for includes picking rights.
If I wanted to buy 100 impressions in a certain market, they have to give me 200 to select from. So it's a fixed pass-back ratio of 50%. Publishers want to monetize their impressions as much as possible, so the fixed pass-back ratio model gives them comfort that at least 50% of it will be sold. And the higher the pass-back ratio, the higher the markup. So that was one of the top reasons why they were willing to accept this model, because there is a markup.
Because bigger companies back these publishers, it was rare for them to open up premium inventory this way. Previously it was a walled-garden approach: everything was in their own ecosystems, and they don't want to release anything to third parties. This signifies a change in the market and a change in mindset on the publishers' side.
Are other brands starting initiatives like this?
AMRITA RANDHAWA: Every brand has a different need, so the model we created for Nestlé may not work for someone else. At the end of this year – not just in Mindshare, but across the industry – a number of brands will have set up some trading desk or operation to buy inventory better.
What goals do you have over the next year or so?
RANDHAWA: Beyond programmatic, the agency is incredibly focused on a performance-based offering for our clients. Typically, media agencies are focused on demand generation, but very little on demand fulfillment and selling the product and making it more accountable. As an agency overall, programmatic is part of the performance piece that we are super focused on.
Who are some of your clients in China, and how does this market compare for Mindshare overall?
RANDHAWA: Our largest clients are L'Oréal, Yum Brands, Nestlé, Jaguar Land Rover and Pepsi Kang-Shi-Fu. Kang-Shi-Fu is a local beverage player, but they have a partnership with Pepsi. And we have all of the international relationships that Mindshare has, such as Kimberly-Clark and Nike.
China is an incredibly important market for the Mindshare network. Someone from the global leadership team is always in China, every month or couple weeks. Globally, we're within the top five markets for Mindshare.
How is programmatic doing in China, from Mindshare's perspective?
RANDHAWA: It's about 15% of the market in terms of digital right now. In the next year or two, you are going to see that 15 grow to 50 quickly. The key thing that will either expand or stop this growth will be the clarity with which the market operates. How clear are we on the DSP and DMP players that emerge? How flexible are they to adapt to China? That's what's really going to make a big difference.
The agency willingness is there, and the client willingness is there, and even the publisher willingness is there. They're starting to see the value in a more accountable digital spend. With more data-led solutions in the market, advertisers know they're not just getting a billion robots watching their ads. With that knowledge, programmatic is going to skyrocket, because it's where the consumer behavior is.
Your parent company, GroupM, has taken a somewhat controversial stance regarding viewability. How is that 100% viewability stance playing out in China?
RANDHAWA: Viewability as a debate in China is pretty immature, if I'm honest. There is a fair bit of resistance on the publisher side. There are very few tracking tools and very little allowance of tracking tools on the various platforms. It is a debate we are trying to push in the marketplace, because it is a very real question in people's minds, but I don't think it's a very mature debate in China as of yet.