Watching and sharing videos through social media is one of the most frequent and beloved activities of a typical China’s internet user. Due to Youtube’s inaccessibility from the Mainland, Youku has been the main video hosting service in China for some time. Since Youku’s merger with Tudou, the second largest video host, back in 2012, Youku-Tudou is estimated to hold about 60% of the total online video market share in China.

2013 statistics show that there were about 430 million online video users in China and this number has been steadily growing at the annual rate of between 12 to 15% since 2007: 

Given such enormous reach and, traditionally, high degree of video consumers’ engagement, advertising on this platform could be highly effective. In fact, according to Youku’s 2013 financial report, 89% of its revenue comes from selling ads.

On the other hands, advertising on Youku is significantly different from Youtube in several key aspects. In this post, I’m going to review different advertising options with Youku.


 

More about brand advertising, less about direct marketing

Although some targeted advertising is available with Youku, the options are quite limited. As opposed to Youtube, the platform seems to be unable to target specific users based on their preferences or browsing history. Instead, Youku is still focused on blanket advertising by pursuing the largest possible audience, similar to traditional media such as TV or newspapers.

There is an inherent disadvantage of such approach: displaying Porsche ad to a student or a soccer mom would be a complete waste of Porsche’s advertising dollars (not that we’d feel too sorry for them anyway…). It’s reasonable to assume that Youku is working on smarter ways to display ads but, unfortunately to marketers, it isn’t there just yet.

Youku does offer a lucrative opportunity to reach extremely large audience but it doesn’t come cheap. Also, lack of focus on direct marketing makes Youku platform less suitable for companies seeking to focus on a specific audience.

Limited value of the analytics

Just as with Youtube, Youku makes basic analytics available to its customers. The data includes viewers’ demographics, geolocation, browsing technology, language, operating systems etc. As mentioned above, since the targeting options are not yet well developed, the practical value of such statistics has its limitations. It seems that Youku does know how to display ads relevant to what a viewer is presently watching but can’t show them based on recent browsing history – something that Youtube or Google’s Adsense does quite well.

Great multitude of ad options

The ads can be displayed in various shapes and forms: from videos to banners which can be both static or animated, as well as text links and buttons. Those are often referred to as “hard advertising”. Other forms include product placements in in-house produced content, or branded viral videos all of which are collectively known as “soft advertising”.

The price depends on the type of an ad, where and how it is displayed, and what scheme is chosen by a client. The most expensive ads are the ones that are displayed near the top of the page and those that are larger in size as opposed to smaller ones or those that are visible only after scrolling.

For big spenders only

Advertising prices didn’t see significant changes since 2012 and they vary wildly depending on the type of ads.

There are three basic schemes:

  • CPM (cost per thousand impressions)
  • banners in various locations on the site
  • ads displayed with the video being watched which could be pre-roll, mid-roll and post-roll as well as pause ads.

Here is an example of the list prices (in RMB) for pre-roll CPM ads which are based on the IP address location and the length:

Pre-roll video ads 15 seconds 30 seconds
Nationwide3060
Beijing or Shanghai80160
Other major cities65130
Rest of China4080

 

These are the list prices for for banner ads (Youku does offer volume discounts):

 

Banners ads on Youku homepage RMB/day
Large ad in margin near page top250,000
Video ad in “Recent Originals”250,000
Banner ad near section break120,000
Small text ad near mid-page30,000

 

The actual price list of Youku ads choices is obviously much more elaborate and contains a few dozen different models, however, clearly, there are no low budget options here.

Who are the typical advertisers?

According to Youku, the vast majority of the advertisers are producers of the fast-moving consumer goods (~50%); IT services and telecoms (~20%); internet services (~10%) with the rest of the 20% spread between automotive companies, financial services and some others. Youku works with fairly large number of globally-recognized companies such as P&G, Coca-cola, General Motors, Apple as well as local heavyweights like China Mobile, e-commerce company Jingdong.com, food company Yum! etc.


In conclusion, Youku does offer a lucrative opportunity to reach extremely large audience but it doesn’t come cheap. Also, lack of focus on direct marketing makes Youku platform less suitable for companies seeking to focus on a specific audience. On the other hand, advertisers that could benefit less from accurate targeting, fast food chains for example, can see their advertising dollars well spent by using Youku platform.

In the next post, I’ll get into some more details on various advertising and ad display options with Youku. Stay tuned.

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