The Trade Desk chief executive Jeff Green is courting advertisers into China as part of his broader plan for Asia to become the company’s biggest source of revenue. But he knows the path may not be smooth.
At an event held for agencies on Tuesday, Green (who appeared over video link) was one of a trio of executives from the online advertising marketplace pitching China as the next big frontier for marketers.
They pointed out that the market boasts the fastest growing middle class, leading to hikes in discretionary consumer spending, an advertising industry weighted heavily in digital, and a concentrated media ecosystem dominated by three main players.
Conveniently, The Trade Desk last year became the first global DSP to integrate with the big three—Baidu, Alibaba and Tencent, collectively known as BAT. The Trade Desk's platform offers advertisers outside of China the ability to buy media across Tencent and Baidu’s properties, as well as streaming services iQiyi and Youku.
Green expects the majority of the platform’s business to originate from Asia in the “not too distant future” as the company funnels ad dollars into the Chinese media giants.
“Because China is growing at double the pace of the US even though it is half the size, at some point it will represent the largest market for us,” Green said.
According to Green, multinational corporations are underspending in China, where typically around 60% of a brand’s total global retail purchases come out of China, but only 30% of spend goes into the country.
This is due to brands “struggling with knowing where to spend” and generally being “afraid of the market,” Green said.
“China is a fragmented market, it is complex and sometimes challenging," The Trade Desk’s Southeast Asia general manager Henry Shelley added. "Our goal is to make this as easy to activate as possible."
But while the market represents a “big opportunity” for the right kind of brand, Green acknowledged it does not come without its restrictions.
“The Chinese government represents one of the most aggressive VCs ever,” he said. “Their interest is in growing their economy at all costs, and they believe with growth they have to control some amount of speech. I don’t think it is more complicated than that.”
His advice: don’t criticise the government publicly, don’t run political ads, don’t disrupt their way of life, and bring value into the economy.
“If you are simply trying to sell soap, hamburgers or shoes with multinational brands that Chinese consumers already know and love, it represents a big opportunity, and both the Chinese government and BAT welcome that because we are bringing something incremental to China,” he added.
He said the best way to win trust with both the government and China’s media companies is by taking an “outside-in” approach.
“We are bringing something into China instead of taking it out, which is what Google and Facebook have done because they don’t have the chance to win trust and bring money in. We think it important for that [taking money out] to be phase two,” Green said.
He went on to assure agencies in the room that The Trade Desk “hasn’t had to make any compromises” on transparency, and has spent time bringing industry standards such as brand safety “up to the level we have in the rest of the world”.
The company spent three years building the infrastructure needed to stay on the right side of regulation before making the Chinese inventory available, including integrating data partners Adbug, RTB Asia and Grapeshot.
“It does mean at times we won’t take access to certain inventory if they [the media partners] don’t give us the assurances we want, but we are swimming in inventory now,” he added.