China – Unlocking Affiliate Marketing’s Biggest Opportunity | AWasia 2016

China – Unlocking Affiliate Marketing’s Biggest Opportunity | AWasia 2016


Hello everyone, first I’d like to address
Hugh’s comments about Canadians, they’re entirely accurate. I got up at 7:00
yesterday to watch the Leafs game. So that explains a lot, but China
represents perhaps the biggest global opportunity when it comes to performance
marketing, advertisers, traffic sources, e-commerce, mergers and acquisitions for
ad tech, and more but there are challenges to the average performance
marketer that might make China a daunting market to enter. Today we
brought together three heavy hitters, who can speak to all sides of these topics
and more to help demystify China, unlocking affiliate marketing’s biggest
opportunity. Give our panel a warm welcome. To my far left, we have
Constantin, who’s managing partner at CodeFace Media, you’ve probably heard
him speak before at other AWA events. He’s been an active affiliate marketer
for over five years and runs his team, CodeFace Media from Beijing. CodeFace
specialises in native advertising and Facebook media buying for e-commerce
products, a network of content sites, app promotion and other niches. Constantin
can speak directly to working with Chinese traffic sources to make a lot of
money. Next, we have Emanuel Cinca, entrepreneur and head of Adify,
Emanuel is a former professional poker player turned affiliate marketer in May
2015. He’s originally from Romania and he now lives in Vienna, Austria. He can speak
very well to running some a Mobvista’s top offers, not necessarily
in China but working with Chinese advertisers and some of the
things you need to know about that. Then we have been Benny Zheng, business
operations general manager at Mobvista. Benny used to work in a
traditional FMCG business for more than eight years and he’s also worked in the
brand space with Proctor and Gamble, and Mars. He has a great experience in
business management. He now leads the Mobvista global business delivery team. So
let’s get started guys. So Mobvista has been a big part of this AWA
conference for a long time, since it began and so we sat here a year ago,
not we, but some other people sat here a year ago and talked about the Chinese opportunity. I wanted to start by just talking
about how in the intervening year, how things have changed, what’s
developed with the Chinese opportunity from year to year?
Can you start without one Benny? Yeah it reminds me of last year. The same situation,
the same place also in Bangkok talking to these friends, affiliate friends about
China mobile marketing and affiliate business. At that time, when we talk about
business it’s more focusing on China utility apps promotion but in this year
the things changed a lot. It doesn’t mean that the utility is not so good, it means
that it became more result-driven with the related content information. The
advertisers becoming more curious about the final result of ROI, of the payment
of the user you get, and also this leads more focus to games, to e-commerce, to
broadcasting. This kind of new information, promotions. So basically
in the past, the vertical is more focused on utilities, but now game, e-commerce,
branding, broadcasting, news information, this kind of product is becoming more
and more popular in this market. Constantin, you got anything to add?
Yeah, okay. I would just like to talk about how
much it’s changed at least, since I’ve been there because when I first got to
China and I was doing some Facebook dating stuff, it was pretty much
impossible to even get on Facebook and to even run campaigns
outside of China. It was incredibly difficult and then with the
rise of the whole app install wave and then e-commerce, dropshipping, which is
now going on. It’s really incredible to see not only how the
resources within China have developed and been able to support performance
marketing, but also to see the opportunities now that exist within
China. So for our e-commerce business, we spent a lot of time
using say e-packet shipping methods to go from China to other countries, but now
I also believe that there’s a huge opportunity just in
getting products that are maybe available at like a huge markup within
China and actually selling to Chinese consumers. With that you can really
leverage you know, Baidu search or some of these awesome Chinese DSPs that I’ve
developed over the past few years. Nice, and Emanuel, have you seen your business
grow with the number of available offers, moving from
CPI into e-commerce things like that? So we still do mostly apps actually. So I
can agree with what Benny said, although utilities were the main thing and maybe
close to the only thing that existed for Chinese advertisers before,
now they’re just a small part of it. So at the same time, they’re a
small part of the whole pie but the pie is still very big and that part is still
reasonably big. So I can actually not talk about the e-commerce part,
I’m not familiar with that yet. Maybe I’ll learn something at this event.
Nice, I hope so. Okay, so let’s start with the traffic
sources. So what are the biggest traffic sources when advertising in
China and what are some of the challenges with actually working with
them? Yeah, I think this is a very curious question. Almost everybody
sitting here wants to know because China, there’s a wall to protect this kind
of the internal market and basically Baidu, Ali and Tencent,
these three dominate mobile company and takes about 85% of
total China traffic. Their role is more like Google and Facebook in US, but the
percentage is even higher and for these three top super companies, Ali is more
focusing on e-commerce and they are not selling their traffic, they use their
traffic to sell their product. For Baidu, it’s more like Google, doing the
search, doing the display, this kind of advertising and I think he can talk
more because he also worked for Baidu for several years. Then for
Tencent, Tencent is more online now, looks like a game company. They have their traffic,
they develop their games to buy some game companies and they promote
tools. So basically if you want to buy the main source of the
traffic in China you can go Baidu or you can go Tencent, and what they are doing in
China is first they have direct clients, communicating
with P&G, Unilever, this kind of the super
advertisers and beyond that they have hundreds of resellers. I know Baidu is with more
than 300 resellers in China, focused on different kind of the verticals, the
manufactures, small company, medicine, this kind of different vertical
and industry. They have different kind of resellers if you want to buy
traffic from Baidu, you direct those to this kind of reseller and of course
Mobvista is one of them, who can direct. Come to us, we can open your account, you
buy traffic from Baidu. Yeah, so when it comes to buying traffic from these
places, I understand that they don’t really have self-serve interfaces that
you can just go on and buy from. So Constantin, what are some of the ways
that you actually have to go about to get this traffic and is it a challenge
when you don’t have or you’re not able to pull all the levers yourself directly.
Yeah, so it definitely depends on the platform and in some cases, it does make
it a lot easier to use a reseller, even if you’re within China.
So resellers typically work really well if you’re coming from outside
of China and trying to do some media buys on Chinese traffic, but even for
campaigns that we’ve run while I’ve been in Beijing, sometimes it’s easier because
Baidu has a pretty good reporting interface, but I mean it is
completely in Chinese and it only really works well on Windows. So it leaves some
things to be desired and if you do have a team who can help you manage
those campaigns, then obviously it’ll make things a little bit easier with
scaling. And there’s literally hundreds of resellers, correct? That can go about
doing this. Why have they chosen this reseller model – rather than
perfecting a self-serve interface for instance, why do you think
they’ve done that. Okay this is quite a big question because China economy
and the development pace is so much different from city to city like
Beijing, Shanghai, Shenzhen, this kind of the city is quite similar like New York
like Tokyo, this kind of the global big city, but there’s still some under
developing cities. So in this kind of different geographies,
they are located in different kind of industries. So to Baidu
their direct client is big, but they’re not so much. The client numbers aren’t so much,
but in China there are four million companies who is doing export, this kind
of business because in the past, made in China is a symbol for Chinese local
manufacture factories made in China. So now, these years, a lot of these
companies, they want to buy traffic transfer from offline to online. In
this way, it needs a lot of different industry familiar expertise
to get this kind of the client, get this kind of the budget. So that is why they
have so many clients, so many resellers in China. Yeah so Emanuel, as one
of Mobvista’s top affiliate partners, what are some of the cultural
differences about working with Chinese advertisers specifically, that you
find are important to think about when running Chinese advertisers? Alright,
so they definitely have a few different ideas about work ethics. So specifically
with some of the biggest advertisers in China, you need to be able to develop a
good working relationship through an intermediary. If you don’t speak
Chinese, which I don’t and I don’t have a contact in China aside from Mobvista, I
think it’s close to impossible to run with them. So biggest difference is that
you have an intermediary that can update you on your traffic quality, on your
payments, on your KPIs, on caps, on all these sort of terms. So that’s definitely
the most important thing. Aside from that, there are also smaller things which
apply not only to the advertisers but also to you, the affiliate network.
If you’re in Europe or even in the US, you have to adjust a bit your
time zone to be able to talk to your affiliate managers. Language, which might
be surprising to some is not an issue in my experience. Most affiliate managers
are very well trained. So they speak very good English, communication in
that sense is okay, and actually that’s all that comes to mind as the bigger
differences that could be a challenge for people. Thank you. So I understand
that Facebook and Google are still mostly banned or fully banned throughout
China. That obviously poses a big challenge as most people in the West
would consider those the biggest traffic sources.
So can you speak to why this is and do you see it
changing in the future? Yeah this is a good question because actually, Facebook
and Google, the world top two players, traffic players are banned.
It’s not almost, it’s totally been in China. Yeah but the thing is like that in
China the reason behind it is more like China government and local want to
control of this information and to make the government policy within it, but this is more like
the top layer situations. For the traffic side, there’s still four
resellers for Facebook in China and they’re still less than 100, but so many
resellers for Google in China. So basically, Mobvista is used to
help Chinese, local advertisers to gain users outside of China. The main
traffic source is directly coming from the reseller. They open an account
then we direct, promote apps on Facebook and Google. So basically
you still can buy traffic and promote your product on Facebook and Google but
their product is forbidden to use. The users can only use WeChat and Baidu, the Chinese version of Google and Facebook.
Yeah so Constantin, these are methods that you use basically, in
order to still advertise on these sources? Yeah definitely. I’ve
made a lot of use of resellers over the past few years and I mean it helps a lot
actually, because they’ll also give you a percentage of spend back,
which can be very beneficial to the the overall ROI of the campaign, but
speaking to Google and Facebook being banned as a whole. It could be
extremely frustrating at times, but I’ve actually heard rumblings and Benny also,
we were talking about this earlier that there may be a Facebook opening up
into China. So this will be a huge change to the social media landscape of
China as many of you may know, right now. WeChat is pretty much the hugest thing,
even when I’m not in China, I’m pretty much on WeChat all day,
and when Facebook is I guess granted entry into China, there will be some huge
huge shifts in terms of just social media usage among normal Chinese people,
but there are also be huge advertising opportunities because as many of you
know, Facebook has some of the best targeting in the world. Yeah,
actually we have talked about it, that Facebook is now developing a simple
version Facebook tools and they are now looking for resellers to promote their product in China. So they
come to us and we are now in negotiations. I think Zuckerberg is brilliant in EQ,
he knows how to work with China government. So basically we
think it will be in the future. So Constantin, what does your
traffic breakdown look like on the offers that you run. Where are
you buying most of your traffic and just on a percentage basis, what
does that look like. I mean, so I would say, for the work I do outside of China,
that a lot of it is between Facebook and native. Within China, the campaigns that
we run tend to be much more e-commerce focused. So it would be basically
American companies that want to test their products in China on a relatively
limited spend compared to like a full product rollout. So what we do is set
up a team all store, which is like a kind of like eBay but way, way better
for brands and we would just drive Baidu to either Baidu display network
traffic or Baidu search traffic directly to their team all stores. And that has
worked really, really well in the past for us, but we have not
actually dived too much into the different DSPs that have popped up, so
I’d be interested to hear more about that actually.
And how many DSPs are there in China? According to my knowledge, there’s
more than 300 companies doing DSP business in China. Yeah, more than 300.
Yeah and almost half of them have their own DMP. Data management platform.
So this is something that we’re doing, always trying to build up your audiences
based on their locations, based on their contextual data, this is all happening in
China obviously as well. Because programmatic is
happening China, we’ve seen just several years but it really grew so fast. Today in
China, the total mobile industry budget percentage is about 30% occupied
by programmatic. It grows so fast but actually, it’s still in progress. Not
like US. US is about 60% to 70% is programmatic.
So basically Mobvista is also doing this kind of DSP, SSB, hour exchange and
also our DMP now. So the thing is that we also want to be one-stop
solution for the advertisers. If you want programmatic, we have, you want affiliate,
we have, if you want network, we have. So basically
DMP, the programmatic is one component just like I mentioned many times. We have
Hamburg, we have Candy, we have Soap, what do you like. Yeah and what’s the demand
in China for products that come from the West, like you were saying that you
sell in a little bit of helping companies have sort of, beachheads in the
Chinese market. Is there a strong demand for Western products?
It depends on of course what types of Western products, but if they tend to be
more niche or like slightly higher-end products then yeah, there’s a huge market.
I mean pretty much any Western company wants to break
into China, and so if they’re able to test that on a small budge, then
they’re more than happy to give it a shot. And the Chinese consumers,
especially in the first-tier cities, they spend a lot on Western products and
so I think that’s only gonna get way, way higher in the next few years.
So there’s definitely a huge opportunity there with advertising within mainland
China. And that’s a characteristic we’re seeing of
the Chinese market changing where, you mentioned this earlier,
but it’s really about the middle class rising and you’re not just looking
to export products to the rest of the world but to increase demand within the
country itself. You see this happening and you see it in the business. Yeah,
actually this is a very big trend happening these two years because in the past,
past just like I mentioned, made in China is a symbol. But what kind of product
Chinese company made, it’s more comedy, manufacture, these kind of things and in the past, there’s usually
the foreign buyers or sellers that come into China for this kind of physical
visit. They go to Guangzhou, Shanghai, Beijing, this kind of city to place order by
hard copy and then they need to come back and to sell the products, to
get prepaid and to wait for the product delivery, but now the thing is like that
e-commerce greatly improved the efficiency and in this year,
China government has placed huge policy. A lot of disadvantage for this
kind of company to ship or export Chinese local product outside
of China, and also just like I mentioned, China mid-class is now rising, they
have huge money, they have a lot of money to spend. So you can see almost old
woman, old man everywhere. They buy almost everything in Japan, Korea,
Southeast Asia, US, almost everything. So basically
e-commerce is definitely one big direction I can see. I’ve been really
impressed in Bangkok with the sneaker culture here. The desire for Nike’s
and Adidas is just off the charts. I’ve been trying to get a
pair of ultra boosts and can’t quite find them, but it’s pretty
interesting. So can anyone share information on Qihoo 360 or the Soso
League, which apparently on 30% of the advertising market share.
Emanuel, you got anything to say about that? Well I only know about Qihoo and a few
of the other big utility players, so there’s Qihoo, there’s Baidu, there’s
Cheetah Mobile, and APUS. Probably those are the top four, Benny can correct
me if I’m wrong here. Yeah, and all of them actually have their own, or
they monetised all their users, almost all of their users so like a big percentage of
the users are monetised through advertising. For example, Cheetah Mobile
apps are also on Go2mobi, I know they are very high volume for native. Then
they also have their own SDK, then Baidu is Baidu, everyone knows them and they
are just, are they the biggest player in China? You can correct me.
For Advertising. Yeah. So Qihoo is also
one of the companies that I think, they are the ones that actually started
the utilities and tools trend, and they were the first one to make it really big,
and then the others follow suit. So all of them are huge advertisers that try to
go global and it’s a funny thing that I’ve noticed that. Since they
monetise advertising, there are very, very different payouts in many, many different
geos. So maybe some of you’ve noticed that when you try to go to an
affiliate manager and ask for offers there’s gonna be like the US pays $1
and then you go to an offer that is advertised in Romania or India and $0.3.
So there are a few reasons and mostly it’s because of the how much
the user is worth. Are there any key differences then in working
with affiliate networks in China? Would that promote external or
what’s different about the offers that you’re gonna get from Mobvista then
you might from a Western affiliate network? Well the main thing is that
Mobvista that can work directly with the advertisers, and all Chinese networks
usually try to do that because they can build that relationship, while if you try
to work with another affiliate network that is not based in China, if they
don’t have an office in China, I don’t think they get a direct deal. So they
often get the offers from Mobvista or Yeahmobi, Mobidea. All the other Chinese
affiliate networks. So if you want to have a better payout and usually a
better conversion rate for mobile, because loading speed is the key thing
basically, you should work as direct as possible. So that’s why you should go to
Chinese networks. Although maybe it would be a bit of a shift in how you work
initially, I think it’s worth it. Could you go into some specific details
about offers that are working well in China? Okay, I think this is quite
interesting for everybody. Just like mentioned by Manu,
the China utility top four advertisers are 360 and APUS and Baidu and Sungy Mobile, they’re based in Guangzhou. Yeah that’s our number one client in Southeast Asia, in
South China. So now the top three offers in China. The first one is still
360. They have a lot of products, just like 360 security, Opera Mini. I can
show you some numbers, 360 spent about $2 to $3 million on Mobvista
every month and we are not exclusive. We are just one part of their spending. So
basically, they’re this big. $2 to $3 million every month. This is the number
one. So basically, you can run their security, their browser,
Opera Mini, these kind of offers. Opera Mini, we can get about, $800,000 per day. This is the budget. $800,000 per day yeah.
So this is the biggest and then after that, it’s Baidu.
DU Booster, DU Cleaner, antivirus, this kind of thing. They’re
quite sustained. They’re not as big as 360, but they still spend about $1 million
to Mobvista every month. Many people I think in this
room, maybe ran this campaign already. Beyond that, this is the utilities,
talking about e-commerce. Since we are seeing within e-commerce is a quite
big direction next year. For example, VIP.com, Little Red Book,
these are the companies that have some support on the back by the Chinese government. So
they are pretty rich. They ask for high quality users with no
limited budget. Only if you have the traffic, but the most focus is still in China. You have China iOS traffic, no limit.
This is e-commerce utility. For game, I think most of you already
know. Say, Clash of Kings, Magic Rush, this kind of the game. They run
pretty well in US. And finally, news apps, JRTT.
This is the number one in China, JRTT. They also spent millions of
the US dollar to Mobvista every month. All of these apps, are they
looking for Chinese users or they also have global offerings?
Okay so e-commerce, they are looking for Chinese offers, they are looking for
China local-based users but for utilities they are more looking for
traffic to US, European, the tier 1 countries just like Manu who talk
about it, because last several years, about year 2013 to 2015, these kinds of
utility apps are asking for the user globally.
No matter where it is, they just need a number, the called quantity, but
especially starting this year maybe their investment is spread out, so they
are now looking into the ROI. Finally, the competition is
still existing in US. US user in eCPM is about 10 to 15 times
versus Southeast Asia users. So Southeast Asia budget
is in the declining way, they’re not asking for this kind of number but finally
they need monetisation in a high efficiency way. So that is why US and
Europe tier 1 countries payment is pretty high. Is there a lack of offers in
China or are affiliates just looking in the wrong place? It’s kind of a softball.
I can tell you that we run 2,300 offers in China now. 2,300 this is the latest number.
I don’t know how many offers you can get. We can touch almost every
client in China because we’re base here. We have more than 300 employees in China. So
you can imagine, we can touch almost everybody. Doesn’t sound like there’s a
lack. So Constantin, when it comes to e-commerce is there a different
credit culture in China than there is in the west? People in the west
love putting things on credit cards. I remember a few years ago it probably wasn’t as common, is
billing all done through credit card in the same way?
It’s quite similar but actually the more popular payment method these days is
actually, WeChat payments and there’s also, others, I guess you could
call them copycat versions where there’s like a Baidu wallet and actually the
oldest is the Alipay. These are the more
common payment methods compared to credit cards and honestly, I probably
use WeChat payments maybe three times a day, three or four times a day, and
I think WhatsApp needs to actually, catch up. Is there a fee on
that? So there is a very, very little fee. If you withdraw the money from their
system like 0.1%. Seems like a pretty efficient
method of payment right up there with bitcoin, but a little easier to understand. Yeah and they actually just added that
fee like a couple months ago, so for the first, I guess was like a year or more, it
was a 100% free but even now it’s almost nothing. Yeah, only if you withdraw
your money, but outside of the bank, outside of the account. It will charge a
bit, otherwise if you do any transactions it costs nothing.
So for affiliates out here looking to break into the Chinese market, just
lay it out. What are the first three steps that they’d have to
take in order to let’s say run Chinese offers in China.
What are those first three steps they’d have to take in order to make that
happen and start making some money? Actually, from my perspective, I would say
that there are not insignificant barriers to entry, and even for me
I can speak pretty okay Chinese and I’ve lived there for a long time and I
kind of know how to get things done eventually, but even then, it takes a very
long time to even set up directly with Baidu because you need to register
a Chinese company, and you need to go through all these hoops. So, if you’re
actually just starting out and you don’t have any real access, I do think that
running offers is a great way to get started. And Emanuel, from your
perspective as someone who runs a lot of Chinese offers globally, what are
the first three steps to really get going from that perspective?
Well to run them globally, it’s actually not so hard because they are very
interested in just getting users over the world. So what I would say is
that you should keep in mind the quality of the traffic because that’s usually
important for them because they like Benny said, they’re starting to
monetise, so you need to make sure that your traffic quality is
pretty good and then just sign up to a good affiliate network. They will manage
the relationship for you. One thing that is a bit different in running with
Chinese affiliate offers locally, is that at least in Europe and
especially in the US, there’s this culture that the customer is always
right. I would say that in this case, if you consider yourself the customer, as
the affiliate promoting their offer, you’re not always right and they’re not
going to treat you like you’re always right. So expect that there’s gonna be
some friction. So back to Emanuel here, what are some differences
between the Chinese ad networks that you’ve worked with, what has your
experience been like? Well, so the experience between them was usually
quite different between each. So I wouldn’t be able to generalise that Chinese networks are like this, are like that. So my
best experience was with Mobvista so far, but then all the other affiliate
networks were really good in the sense of spoke good English,
they had well-trained affiliate managers, so always very polite, sometimes too
polite to be honest. So at least younger start-up people are more, I wouldn’t
say impolite, but just informal. They sometimes are a bit more formal and I’m
25, I don’t feel like being called sir, so those are a few awkward things. It’s not
a very formal industry generally. Yeah exactly, that’s true
but then there’s not much of a difference in Chinese networks or
international networks. So say based in Canada, based in Germany, they are all
very similar in the sense that some are good, some are bad, you just have to test
each of them and it’s not always the for the network itself, you might just be
unlucky with an affiliate manager or your contact person there is not the
best person to have. So you should not be afraid of dealing with them. It’s the
same as choosing globally. Can you talk a little bit about the payouts
and the cap situation that you’re finding with Chinese networks? Oh yeah,
that’s actually quite interesting. One of the good things about apps from Chinese
developers is that they have lower payout but the reason they have a
lower payout is that they usually convert really well, so they want to
acquire users at a cheap price because they can, but at the same time once you
get something going, they usually don’t have a budget. They have unlimited cash.
So if you can bring them good users, they’re gonna pay you for all the users,
all the time and maybe they will try to take over the world. So you’re
finding the caps make up for less high payouts. Exactly, there’s a bit of extra
work, there’s a bit of extra work to get in, the payout might be fooling some
people that are just starting out that oh how can I make thousands of dollars
if they’re paying me 25 cents or $1 per install in the US, well once you have
it going, they won’t care if you can bring them 100 million users, go
for it. Yeah I think I can say something because this is a very
common question many people, especially outside China affiliates will ask. I can
show you a real case, last year. Number one affiliate working with Mobvista just
ran about one, two three, four – four campaigns. The revenue is just half
a year, six months is $6.6 million. $6.6 million for six months for four campaigns. This is the number one, I
cannot tell the name yeah but this is what Manu said, if you can bring the
quality users, the budget is almost unlimited. And what’s the
average payout on those four offers? It’s on Facebook, it’s for global, it’s about $1.
$1 is pretty good. Last year because last year Facebook and
Google ran pretty well in China. So one of the biggest opportunities in
the entire performance marketing space we’re finding is video. Videos,
it ends up being the most sort of profound experience for the consumer,
it packs in the most meaning, it’s the least dismissible. What are you seeing
with the Chinese opportunity when it comes to video advertising, Benny?
Video is very good traffic, frankly speaking. Everybody wants it. The
experience to me, just like when I go to the US, the first question the advertiser usually asks is do you have video traffic. So when it comes back to
China, we do video traffic like this. First of all in China,
the main traffic source of video is Youku. IQIYI, Tudou, this kind of the local
website. They also have their apps. They pretty much like Baidu, Ali and Tencent
in video industry. They almost dominate about 80% of this market total traffic
of the video, but also we work, with Van Gogh, AdColony, Unity, this
kind of the global company. They directly have the ad traffic for video. So we work
with them to monetise their traffic in video. If
you want to buy the top media traffic for video in China, it’s really hard but
you can work with developers for the developer traffic for the video. Have you
guys run with any video? Yeah we’ve definitely run a lot of video and it
converts the best for us. Pretty much exclusively, we’re running video. If we’re
doing maybe some retargeting campaigns, we’ll go back to other traffic
sources but we like video a lot. So you’re based in China right, Constantin?
Yeah, Beijing. So how big of a team have you put together, what was your
experience putting that team together? Is it expats mainly
or is it a remote team or? Expats and local Chinese as well but like very
westernized local Chinese, we try not to have a very large team. We’re actually
much more code-focused so we like hooking up into all the API as possible,
and just going programmatically whenever we can that’s more our focus. So what
about ad formats, are they similar as
they as elsewhere? Are there different kinds, different sizes? Yeah pretty much
the same, pretty much the same in China and outside China. It’s banners, its in-app,
stream, native this kind of thing. Pretty much the same.
Where would you hire a China-based freelancer? Got any company
insights on that? Well limited experience, tried Upwork a few
years ago, remote work doesn’t seem to be the best idea. So the locals can get more
info there. Yes maybe I can talk about it because I can share some information
that especially in Beijing and Shanghai, these two cities this year, let me see
AVPnext is coming, Zomato is coming, PleasePi has already been there,
InMobi is one of the best in China local traffic based in Beijing and Applovin is in Beijing. This
kind of the network companies all enter China market within this year or last
year. They go to these cities, hire small office, hire about two
to ten. The biggest one is maybe InMobi. InMobi, about 40 people in China doing
about $7 to $9 million every month. They’re the biggest and
beyond that is about several people with a GM and several from
the supply side, one or two from the demand side working with Mobvista,
and this kind of networks to drive the business. So basically foreign companies
or foreign teams enter China in this way. It’s really hard to hire freelance to
work for you from this remote distance Chinese people are pretty smart, and actually you don’t know what they’re
doing, it’s really hard to manage their energy or power, how much percent is
spent on your business, on your project. So I don’t think it’s a
good suggestion to hire this kind of the people remotely. So when you want to run an offer in China, what’s the best way to get something
translated? What’s the best way to actually, if you don’t speak the language, Google Translate is probably a bit of a too
much of a hammer, you’re not gonna get the right subtitles. How do you go about
hiring translators that can allow you to run in China. That’s not
particularly different than any other country, there are the obvious
resources that everyone uses like One Hour Translation or even Fiverr and
just split testing the translations against each other, but for me
obviously it’s not too difficult because a lot of the
times I’ll translate stuff myself and then I’ll have a native person
look at it and say okay. It’s pretty much the standard sources that you would use for other geos as well.
Mandarin is the main language of the business? Yeah.
Only one. Why is that because everybody’s speaking it? Yeah this is the formal and
standard language in China and if possible, I think you have also hire
some college student to do it for you. They are pretty much low cost for
high efficiency and they’re also looking for some kind of part time job.
This is what we do. We’re seeing a lot of activity with both IPOs,
mergers and acquisitions, it’s the most exciting space in the world.
If you own an ad tech company, you want nothing more than to be bought by
a Chinese firm. So can you talk a little bit about that. What’s
happening in the space, why is it so hot and why is the valuation so high?
Okay, this is a quite big topic, frankly speaking but this is a very hot topic.
Applovin sold to a Chinese company this year and Zomato sold to Chinese company
this June. I already know many foreign companies
like in US and the Europe, they want to sell to Chinese companies but I cannot
tell the name. So basically this is more like a trend because from Mobvista’s
side, we think the advertising business is in four layers of protection. First
one is the client level, you can get the budget so you are stronger than the
others. The second is the operation, your operational efficiency is higher,
which means they can run 20 campaigns but you can run 2,000 that means
huge differences. The third layer is product and technology, it means you have
your own solutions, you will have your own data digging, these kinds of solutions,
you can do retargeting, you can do anything, you can do something that anybody else
cannot, this is the third. Finally the fourth thing is the investment and
capital, this is what we believe in because when you look back to the
advertising industry, you know WPP, you know Hoovers, the super big
companies. They have hundreds of sub-companies. So basically when it comes to
the end of the day, advertising is more competes with scale, with technology,
what I mean by scale that is investment, budget, that this kind of thing. So this
is the direction, so based on this direction Chinese local capital market
is quite unique on this earth. Basically our PE times is the highest in
the world. So that is also why so many China companies, even if they’re already IPO or Nasdaq, they want to withdraw and go back to China. There they can raise more
money with the same performance. So that’s the first question and the second
thing is that China now is exporting not only their products but also the
culture, their solution. They are willing to do business with foreign companies.
They get together. So that is why now in China, existing companies like Mobvista
now look into partners like Europe companies. So this is
the second. The third thing is that once this account merger and acquisition
happens, it can leverage both sides strengths. For example, we buy native ads
this February and in the past Mobvista has no incent traffic for the
bursting campaigns like games, like Disneyland,
but when we buy native ads, they’re a good supplementary to us and also in the
past, native ads, they can get so many non-incentive offers but they
don’t have incent traffic. So when this kind of merger acquisition happens,
we can leverage the resource on both sides. So the thing is that finally, when
this kind of investment happens for the mother company they can
pay at a lower price but they can get a higher return on the China local
capital market. For this kind of the merger and acquisition of the
company, they can leverage the mother company’s resource to burst, double
or triple their existing business. If they have an issue or
problem in capital in overseas market in global expansion.
Basically this is what I can see, that’s why the valuations are a bit higher.
Are they are or are the deals like, you don’t have to go into
detail, but are deals structured differently with Chinese
companies than they would be externally? Are there more stock,
or is there reason that that happens?
Yeah, frankly speaking, in Europe and the US, the average merchant acquisition price for
a company is about 6 to 8, 8 is higher, 6 to 8 times versus any
margin. This is in US and Europe. In China minimum is 10, minimum is 10 to
12 times. So basically that is why we want mergers and acquisition with
foreign teams, outside China companies, more than in China.
In China, the price is pretty high. Interesting. It’s good for external
companies as well that’s why they want to sell. Actually, last time when
I talked to Lorenzo and some co-founders of STM, we were also
talking about this kind of the corporations because STM knows many
teams, knows many these affiliate teams, where we are not
familiar but actually we have the desire to know these teams to
do some kind of the investment. So last time in Berlin, in July we
talked about it, but finally I see STM already has its own VC already.
With the last minute here, let’s talk about some predictions for
the future. Kyle, where do you see your business
going in the next year? Like I’ve been saying, I want to do a
lot more selling actually to Chinese consumers. I think at least
personally, for me and my team, it’s somewhere where we can really leverage
ourselves against the rest of the affiliate world so to speak and
really make some big moves in the next few years. And you’re in a good position,
straddling the worlds, right. You, having as much knowledge you do
living in China, but also having a foot in the west as well, so being able
to balance that, bringing in external goods and all. Yeah, like I feel like it kind
of comes full circle from when it was impossibly difficult even to
upload ads on Facebook when I first got there, and coming to a point where I
can actually do performance marketing, selling to Chinese consumers. So
it’s very nice and I hope to develop that a lot more.
Emanuel, any predictions for the future? Well, I just agree with Constantin, but I would just
summarise it as China is going global. So ride the wave. Yeah, how about you Benny?
To me 2016 is a great year. We worked with affiliate members to deliver double business
growth, and almost the triple margin growth in the 2016. For the next year
we have many priorities. In simple words, from geography-wise, we want to
develop the US, Korean, Japan, and Europe as our top priorities. We want to start
our office there. Korea is already done. Japan is next month.
So basically, this is geography-wise and for business-wise, we expand the
current performance-based business to branding, which means we have our DSP, SSP,
and monetise the traffic in-app and then selling to Auto, Procter &
Gamble, this kind of companies by CPC and CPM and also to the vertical level,
we are not just focusing on utilities, especially for example
in Korea, where half of our business is game, another half of the business is
e-commerce, so I still think e-commerce is a very big direction for
our affiliates to work together. So exciting times to come.
I want to thank our panel today. Thanks everyone for coming out.
Thank you.

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