Charlie Wang
Jun 5, 2017

Advertising in China's walled garden means weighing options

The spat between Alibaba-backed logistics affiliate Cainiao and competing courier brand SF Express over data is only a symptom of the 'walled garden' in China.

Advertising in China's walled garden means weighing options

Alibaba-backed logistics affiliate Cainiao had a major fight over data ownership with competing courier brand SF Express last week. This reinforces Alibaba's tendency to withhold data within its own ecosystem. From a publisher’s perspective, protection of consumer privacy and data security is often used as an excuse for restricting access. Even if the spat between Cainiao and SF is over logistics data as opposed to advertising data, Alibaba used the same privacy and security arguments.

However, in digital advertising, there are always technical measures that can be taken by third parties . The technology has never been a barrier to an open ecosystem, because digital advertising is not rocket science. Hence, the root of the 'walled garden' lies in the commercial side: to gain an upper hand in sales by having exclusivity in data and inventory.

The 'walled garden' has long existed in digital marketing. In the West it’s represented by the closed ecosystems of Facebook, Google and Amazon. In China, the same form of protectionism is imposed by various big and small publishers. In today’s ever fragmented media environment, these digital siloes are increasingly detrimental to all advertisers looking for data and inventory consolidation.

In order for advertisers to face the walled gardens in China, they must first be able to identify them. One misconception is that the walled gardens are only built by the big publishers; while this is true the majority of the time, it’s not the defining trait. A big platform can be very open, while a smaller platform can be tightly closed. To sum walled gardens in one word, it’s all about access.

For example:

  • Is third-party verification allowed?
  • Can targeting data be used outside of the publisher’s own stack? (Without bundling with inventory)
  • Is inventory only accessible through the publisher's own platform?
  • Are there no open APIs for custom development?

Let’s examine two big publishers in China that are at the opposite ends of the spectrum when it comes to controlling access:


Alibaba’s monopoly in China’s e-commerce arena lets it control the top dimension in all marketers' minds: purchase behaviour. Restricting access to this valuable dataset is the centre of Alibaba’s walled-garden policy.

Sales-conversion data cannot be tracked at all by a third party; the data flow stops as soon as it enters the Tmall ecosystem. Enabling end-to-end tracking from impression to conversion is next to impossible, unless the advertiser is using Alibaba-owned products such as Alimama to drive traffic. Or else, Alibaba will impose the use of its own tracking company, Youmeng, as the measurement currency.

If an advertiser is interested in Alibaba's purchase-behaviour data for targeting, they are only offered two routes: one is to use Alimama’s own DSP product, UniDesk, and another is to use an external DSP to buy from Ali’s ad exchange, TanX. These two routes all bundle inventory together with data, making it impossible for advertisers to choose media channels outside the Alibaba ecosystem.


Perhaps, with Tencent’s roots in gaming and social media, which tends to favour sharing and collaboration, they have a more open policy, compared with Alibaba's.

All Tencent assets are open to third-party tracking, all the way to WeChat. With its Nielsen partnership, its valuable social-media datasets are made available for all advertisers looking to upgrade from pure panel-based methodologies.

Like Alibaba, Tencent also offers similar programmatic products, namely GDT and Tencent Exchange. The core difference is Tencent’s data is accessible through these products, and advertisers have the flexibility to pick and choose only the parts they want.

For example, advertisers that want to utilise Tencent’s data to target other media channels are free to do so if they are using the Tencent DMP. And GDT opens up APIs that allow data exports, as well as complex operations plugins.

Comparing these two publishers, both Alibaba and Tencent have full-stack programmatic solutions (Alimama and GDT). It’s important to note that having a full-stack solution does not mean it’s a walled garden. In fact, what differentiates Alibaba and Tencent is the option to pick and choose only parts of that stack (such as only data, or only inventory).

It’s obvious which publisher gives advertisers more flexibility. But then again, not all brands will require that level of flexibility, so it’s important to know your own objectives and deal with the walled gardens accordingly.

To help advertisers formulate their own strategies in dealing with walled gardens, they have to ask themselves this simple question: Do you want McDonald’s or Subway?

The classic combo meals offered by McDonald’s are comparable to Alibaba’s closed ecosystem, which only allows advertisers to choose its pre-set combinations. This is fine if the vast majority of the advertiser’s sales are through e-commerce. In that case, Alibaba’s combo solutions can meet all of the brand’s needs. However, if e-commerce is only a single piece of the advertiser’s marketing strategy, then the advertiser have to ask whether purchase-behaviour targeting is more important than losing access to the rest of the inventory outside the Alibaba ecosystem.

Compared to McDonald’s, Subway offers consumers the choice of every single ingredient in its food. This is comparable to Tencent’s open ecosystem, because advertisers can pick and choose only the elements they are interested in (data or inventory). Of course, some consumers will have the option of leaving the choices to the sandwich maker, so advertisers can simply choose to work with Tencent GDT without any customisation.

Charlie Wang is COO of AddNewer

Campaign China

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