In both the US and China, internet ad revenue is on a solid uptrend, and it’s no thanks to desktop ad spending. Both markets are growing around 23% annually, driven almost entirely by mobile.
In 2018, the US spent about 37% of its digital ad budget on desktop and 63% on mobile, while China spent anywhere between 68-71% on mobile, depending on who you ask. The desktop-mobile gap is only expected to widen as mobile internet penetration rates increase.
Where the two markets differ dramatically is in ad serving platforms. The US focuses most of its ad spending on search-based ads (mostly via Google, with 42.2% market share) and social-network-based ads (mostly via Facebook, with 20.9% market share). In contrast, China spends the largest percentage of its ad dollars on Alibaba’s e-commerce sites.
China’s ad revenue by media platform
|Media platform||% of all ad revenue|
|Tools (like anti-virus software)||2.8%|
Why it matters
China’s specific mix of ad spending is thanks in part to Alibaba’s ad model, which is designed to integrate into the shopping process by taking advantage of a captive audience that already has their wallets out. Sellers with accounts on any of Alibaba’s retail sites, like Taobao and TMall, can use Alimama‘s marketing platform and ad tools to promote a storefront via banner ads on the same shopping network, or they can pay to increase the visibility of individual products.
Amazon is beginning to see results using a similar model, with the launch of its simplified and rebranded ad platform, Amazon Advertising, launched in 2018 (eMarketer):
- US digital ad revenues at Amazon will more than double this year, eMarketer estimates, moving it up the ranks past Oath and Microsoft to take the No. 3 position behind Facebook and Google.
- US advertisers will spend $4.61 billion on Amazon’s platform this year, accounting for 4.1% of all digital ad spending in the country.
Another key part of Alibaba’s winning equation is its deep familiarity with user’s purchasing patterns, allowing it to leverage insights not necessarily available to search engines.
The bottom line: If you’re selling physical products in China, traditional search engine marketing isn’t necessarily the best way to spend your ad dollars.
- Zhongguancun Interactive Marketing Lab: 2018中国互联网广告发展报告
- Marketing Charts: Mobile’s Now Up to Almost Two-Thirds of US Digital Ad Spend