Fyber – Cracking China's $50bn ad market

David Murphy - Sponsored by: Fyber

Fyber president Offer Yehudai explains how the company’s new Audience Vault segmentation tool will impact publishers in China.

In the ad tech world, data is king, but until now it has been almost exclusively in the hands of the buy side – the advertisers. Unfortunately for publishers, they have simply not had access to the kind of deep, rich and insightful data solutions that would allow them to start selling audiences in order to maximise the value of their inventory. There are a few exceptions to this rule, including large walled-garden publishers like Google and Facebook that dominate the ad market by leveraging their massive amount of user data. But according to Offer Yehudai, president at Fyber, change is afoot.

“In the past, ad networks used to buy bulk audiences at a single price,” he says. “With the introduction of programmatic, many advertisers started to cherry-pick the audiences they want to buy at the price they want, using their own CRM data, purchase data, location data, and more.

“The downside is that programmatic buyers have to sift through the high volume of traffic in order to identify the impressions they want, resulting in additional server costs and numerous inefficiencies. Now, if publishers could provide that same type of segmentation data, and also add it to what they know about their users’ behaviours – which ones engage with ads, for example, or watch videos through to completion – they would increase the value of their inventory for buyers, and possibly also increase the relevance of their ads to their users.

“This type of audience segmentation solution would enable publishers to package those audiences up and sell them at a premium, via private marketplace or direct deals, to advertisers who are looking to reach high-value target users that are actually engaging with ads. That is what Fyber is now offering the publisher community.”

Democratising data
Fyber’s segmentation solution for publishers, called the Audience Vault, launched worldwide this month. In growing markets such as China, this solution can help publishers better compete with the walled gardens. China is a country with huge potential, with ad spend projected to hit $50bn (£39bn) in 2017. However, as Yehudai explains, there are challenges too.

“The biggest challenge is regulation,” he says. “Some publishers have to manually verify and approve each piece of creative before an ad can be shown, which, as you can imagine, is a big issue in the programmatic environment.

“The second challenge is the tech. Ad tech companies can’t just rely on their Amazon Web Services stack back in the US to scale a business in China; they need to invest locally. They also need to spend time building trust with publishers and advertisers. We have seen a few ad tech companies try to break into China, and then later pull out because they implemented the same models they use in the US or Europe, and it just doesn’t work. You have to respect the local culture, have feet on the ground and be patient. Things are changing, but it all takes time.”

If the challenges are so great, then the obvious question is, why bother? “The opportunity is just huge,” says Yehudai. “China is now the second-largest ad market in the world, up from the fourth-largest last year. Added to that, publishers are really open to the changes that are happening. We believe that with proper education and investment to build relationships and trust, this will be a huge market, and Fyber will be a major player in it.”

Recently, Fyber has integrated technology from its acquired companies, including Inneractive (which Yehudai co-founded), Heyzap and Falk Realtime. This enables Fyber to offer a comprehensive platform for every type of publisher, and data is at the platform’s core with the Audience Vault. There are three types of data that are aggregated into the Audience Vault. There is first-party data, which publishers collect themselves (such as age, gender and GPS location). Fyber also provides data on ad engagement (video completion rates) and bid landscape (bid depth). Finally, there is third-party data, which leverages DMP data by aggregating various sources, both on- and offline (demographics data, income level, DMV data).

These are the same DMPs that the buy side is connected to. As a result, publishers get segment insights that allow them to serve tailor-made ad experiences to users, and also open up additional demand sources, such as new brand advertisers.

Levelling the playing field
“We realise that people will say that audience data solutions have been around for a long time,” says Yehudai. “But genuinely, if you look at the ad tech ecosystem, all the data initiatives and investments in data and audience have been on the buy side, from the likes of Amazon and Criteo, and the data vendors like Nielsen and ComScore. This is the first audience data solution for the publisher community. Other publisher-facing platforms talk about it, but no one else has the visibility into publishers’ platforms that we have, listening to 1.2bn unique users every month.”

The Audience Vault has been running in closed beta for the past eight weeks, and Yehudai says the response from both publishers and advertisers has been very encouraging. “Publishers love the fact that they can finally turn their data into action, with a more holistic approach to monetisation,” he says. “Gaming publishers, for example, want to know which users react better to ads versus in-app purchases, which helps them optimise the user experience. Premium news and sport publishers want to know which of their users watch videos to completion, and then they can sell them as a specific premium audience.”

Thanks to Fyber’s global footprint, the solution is also enabling Chinese publishers to develop relationships with advertisers elsewhere. “When a Chinese publisher tries to sell inventory in an app outside of China, such as in the US, the advertisers are not familiar with the app and are unlikely to be interested,” says Yehudai. “Selling an audience that advertisers want to reach, who just happen to be found in that same app, is a different proposition entirely, and one that’s much more appealing to Western buyers.”

Best of both worlds
It’s not hard to see why publishers would be keen on the Audience Vault. But what about the advertiser community? Are they not nervous about this shift in the balance of power previously held by them towards the publisher community?

“That would have been an understandable reaction,” Yehudai concedes. “The reality, however, is that advertisers welcome it, because – with the rise of header bidding and the increasing amount of traffic worldwide – it is getting more and more complicated and costly to find their target audiences. So, if the publisher can help in this process by connecting the advertiser to their desired audience through new inventory, it makes things more efficient. And when things are more efficient, ROI is greater for advertisers and agencies. So, what the Audience Vault is doing is creating a more efficient market that provides better results for both publishers and advertisers.”

All of this is set against a backdrop of a country that has now taken to programmatic with great enthusiasm. “Programmatic is growing fast in China,” says Yehudai. “And with this, there has been a growing recognition of the importance and value of audiences. We are firmly committed to the region, with a rapidly expanding office in Beijing. Our engineers are busy visiting publishers’ tech hubs in China to explain what it means to work with an audience segmentation solution, and what they have to do to leverage cross-device data. Our Chinese business is growing in line with the programmatic ad market overall in the country, and we expect this to continue through 2018.”