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 $03 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, VIPcom, 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 01%

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 $66 million

$66 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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