Oct 18, 2016

Well-timed: Programmatic OTV advertising

The Chinese consumers have shifted — with screen-time moving dramatically towards streaming television — and the media industry is ready and poised to take an evolutionary step forward: Programmatic OTV advertising.

Screen capture: Changing consumer habits show that media is now consumed through various handheld devices.
Screen capture: Changing consumer habits show that media is now consumed through various handheld devices.

TV has shifted out of the living room to the tablet and the mobile device. With the numbers flocking online, the traditional viewing model is in terminal decline.

But as one door closes, another opens. Clarence Zheng, CEO of hdtMEDIA, believes that brands can get ahead of the game through programmatic ad buying. In the US, programmatic buys only accounted for 39 percent of OTV advertising in 2015, but its growth is expected to skyrocket to 65 percent over the next two years. 

Programmatic is the most effective way for brands and agencies to capture online audiences as they migrate to online TV, Zheng says. 

“Consumer habits are changing. They don’t sit in front of the TV. Instead, they consume content through different devices in their hands. In the subway, it may be the mobile phone; at home, it may be the iPad or the tablet,” he says. 

“This is basic. Now, very few young people watch traditional TV, and devices are changing. Homes typically have multiple devices, and handsets are becoming quite large. With an iPad you can watch in the kitchen or while applying a face mask. 

“Also, everyone is very busy, young people in particular. They have little time in the evening to watch TV, so they watch it online.

“Everything we turn on is online and everything is connected. Devices are changing and the TV collaboration model is changing.”

In 2015, according to data research firm eMarketer, digital media accounted for 47 percent of time spent on media — up from 32 percent in 2011. TV, on the other hand, has fallen, going down from 41 percent to 35 percent. Although TV’s advertising share has remained consistent — at over 40 percent — radio, print magazines and especially newspapers have seen their share shrink from a whopping 40 percent to just 10 percent. 

The audience shift to online media offers a chance to reach consumers in a more targeted and efficient way through algorithmic buying. It also opens up tremendous inventory, Zheng says. “Online TV has a huge capacity for advertising. Online TV was not originally programmatic, but is now accessible. That means we can access its sizeable inventory.”

It’s not 1,000 or 10,000 banners per day, but to a scale of 1 million or 1 billion, he says.

Following the consumer 

To follow the shift of consumers’ eyes, hdtMEDIA launched hdtOTV early this year — a dedicated online TV buying platform to tap the massive potential behind the market. hdtOTV provides access to a rich traffic flow, including sites such as Tencent, iQiyi,, Youku-Tudou,, and ad exchanges like Mediamax, ValueMaker, Acelink and BesTV.

“It’s machine learning,” Zheng says. “The more data it has, the more accurate it is. The system buys from many publishers, according to certain settings and criteria. The ad is placed in the market, where ads on every site are all being bid upon. The competition is quite intense. It requires a lot of technology to make this happen.

“If you have a large volume or scale, you can be independent. Also, because it is fairly visual, programmatic TV’s KPIs are not the same as banners. So we had to specially provision hdtOTV for this.” 

Zheng says hdtMEDIA’s platforms have multiple components that can support clients, including growth channel, user experience and brand safety. 

Brand safety 

The brand safety function is particularly important in China. “There is some content that you can’t put an ad, or some that might be unsuitable for young people. There are also politics. We can block them all. With this technology, we have blocking capabilities but also an allowance for a degree of openness in the buying,” Zheng continues. 

Clarence Zheng: Predicted the rise of programmatic.

“If an advertiser doesn’t like some website content, or a certain position, or image, our system can accommodate that. We have a white list and black list. We can differentiate these different kinds of content, and if we think your brand doesn’t need this content, we can filter it.”

But Zheng sees the market increasingly swinging toward programmatic.

“Everybody is realising now — whether it’s the supply side or the demand side — that the system can help supply ad reach and raise your advertising effectiveness,” he says. “With these platforms you can better target, increase simplicity, and produce even more of an impact on your target audience.”

Demand and development 

Now 17 years old, hdtMEDIA is a pioneer of digital media in China and offers seven media platforms, including its most recent launch hdtOTV, which supports video ads. 

“The programmatic buying model now is as we predicted a few years ago — growing extremely quickly,” Zheng says.

Leading the pack, hdtMEDIA launched a DSP for banner advertising in 2012, but the industry took to it slowly. However, last year saw an incremental demand from clients to place online videos into its inventory for the ad exchange. “So we took advantage of the opportunity and went ahead to launch hdtOTV, which is also a programmatic buying product.”

The underlying concept in programmatic is data analytics, or big data. “Whether it’s information or advertising, you need to segment it, and to do that you need big data technology,” Zheng says, adding that the capability for programmatic has been around for a decade, but for technological reasons, it wasn’t ready for commercial adoption until recently. 

It requires massive storage and computing power, and it took big data investment from companies like Google and Facebook and even the emergence of an ecosystem around the world for the technology to achieve a lift-off. 

Investments set to increase

Zheng believes that the total advertising budgets will not change. “We will optimise the demand cost, not reduce it,” he says. “We will take this online budget and shift it to programmatic. The budget will remain the same.”

After shifting the budget to digital, “programmatic will execute this better than humans”. Previously, it would take one or two weeks to compile a budget and conduct the analysis and insight. “Now we are all online and we can do it all in real-time.” 

He compares the process to trading in stock. “Twenty years ago, you may have gone to the stock exchange to make your trade. Now you can do it from home through various software. With our system, it works in real-time. If it falls, I will quickly dump it, right? This is the promise of our system. This is programmatic.”

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