Market Insight

China’s demand-side platform iPinYou expands to the US by partnering with Twitter’s MoPub

September 21, 2016  | Subscribers Only

Kia Ling Teoh Kia Ling Teoh Senior Research Analyst – Advertising & Television Media, IHS Markit
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Beijing-based programmatic digital ad buying firm iPinYou is entering the US by teaming up with Twitter’s MoPub. This is the company’s first attempt to exploit the mobile market outside China. Via the iPinYou DSP platform, it plans to connect US brands and advertisers with Chinese consumers by making extensive ad inventory available in China; and the mobile inventory provided by MoPub in the US will allow Chinese brands and advertisers to connect with US consumers.

Since its inception in 2008, iPinYou has received investments totaling $98million in three funding rounds led by China Mobile Innovation Industry Fund, Shenzhen Capital Group, CBC Capital and Beiguang Wenzi Gehua Fund. According to iPinYou, the company controls 59.8% of China’s programmatic buying market with a capacity of 18 billion daily ads on average in December 2015.

Twitter acquired MoPub in 2013 to manage mobile publishers’ ad inventory. It reported more than 335 billion monthly ad requests (about 11 billion daily) in November 2015.

Our analysis

This deal follows the $900million acquisition of New York-headquartered Media.net by Chinese tech conglomerate Miteno Communication Technology, in August 2016. Chinese companies have been snapping up a string of foreign ad tech technologies since 2015 and an M&A study by IHS found ad tech capabilities in US and Europe are ahead of other regions.

To iPinYou, this partnership means a wider customer base outside of China and complementary technology. The Chinese online ad market offers ample user volume and ad inventory; however, the budding programmatic buying ecosystem needs enhancement for service optimization and better targeting. IPinYou wants to reduce its dependency on the home market where ad traffic and revenue is dominated by local giants Baidu, Alibaba and Tencent. These companies adopt closed APIs where third-party platforms have little control - similar to the US “walled gardens” of Facebook, Google and Verizon. This makes the position of independent DSPs like iPinYou difficult and their partnership with MoPub is a reactive move to keep the company competitive in the world of walled gardens.

In view of the limited growth in their home market, Twitter’s ability to offer international audiences is critical to iPinYou, at this point. Twitter reported 313 million total MAUs as of Q2 2016, of which 79% are international users. As of July 2016, the company recorded 10 million users in China, a tiny fraction of their total user base. Though the company’s advertising revenue growth slowed in FY 2015, its live sports streaming of the NFL games could be a game changer and useful for Chinese brands to target audiences in the US market. By making use of its existing knowledge about China’s publisher landscape and pairing it with MoPub’s complementary technology and brand name of Twitter, iPinYou is hoping to be in the same league with foreign DSPs such as Google’s DoubleClick to serve brands inside and outside of China.

To MoPub, the deal means providing advertisers with Chinese data and local knowledge for better targeting, a hugely valuable asset as the Chinese market is an enigma to many international brands. Locally, iPinYou is a data partner of China Mobile, UnionPay and AsiaInfo. Also an investor of iPinYou, China Mobile is the largest telco in China by subscriptions, according to IHS.

Furthermore, Twitter’s domestic business is stagnant and they’re looking outside the US to accelerate growth. Twitter’s US MAUs figure was stagnant in Q2 2016 year-on-year, while international MAU grew just 3.3%. IHS expects the social media platform to continue growing its international audience.   China is a unique advertising market, and challenging for a US company like Twitter. In addition to market expertise, a local partnership with iPinYou will help Twitter overcome barriers such as consumer preferences, language and communication when expanding their company footprint in China. 

Research by Market
Media & Advertising
Category
Advertising
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