What's the difference between world's top 2 ads markets?

1. US - China
Internet Advertising Brief 2016

2. Highlights
Internet Ad
Spending 2016e
$ 66.8 BN
(=1.65*China’s)
$ 40.4 BN
Market Leaders
Google (52.6%)
Facebook (15.0%)
Baidu (28.0%)
Alibaba (24.8%)
Key Ad Formats
Search (43.6%)
Display (45.4%)
Search (33.1%)
E-commerce (27.9%)
Programmatic
/Total Display
67% 51%
Pricing Models CPM, Performance CPT, GD, RTB

3. Ad spending of both markets keeps growing. In 2016 US ad
spending is expected to rise 70% higher than China’s, while
China’s mobile ad share continues to be larger than the US
20.0% 15.5%
12.4% 11.9%
0%
5%
10%
15%
20%
25%
30%
35%
0
10
20
30
40
50
60
70
80
90
100
2014 2015 2016e 2017e 2018e
US Internet Ad Spending
Mobile Desktop/Laptop Y/Y Growth
Billions($)
Source: eMarketer, March 2016
Y/YGrowth(%)
49.7
59.6
68.8
77.4
86.6
63.4%
32.0%
30.0%
25.0%
23.0%
0%
5%
10%
15%
20%
25%
30%
35%
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
100.00
2014 2015 2016e 2017e 2018e
China Internet Ad Spending
Mobile Desktop/Laptop Y/Y Growth
Y/YGrowth(%)
Billions($)
23.6
31.1
40.4
50.5
62.1
67.6%
Source: eMarketer, March 2016
Note: converted at the exchange rate of US $1 =RMB 6.23
68.2% 70.7%53.0%35.8%
34.9% 54.9% 74.5% 79.1%
Ad Spending

4. Both markets are dominated by key players. Google & Facebook in
the US and BAT in China, captured over 60% of national ad revenues
Baidu
28.0%
Alibaba
24.8%
Tencent
7.8%
Others
39.4%
China Internet Ad Revenue Share,
by Company, 2015
Google
52.6%
Facebook
15.0%
Other
32.4%
US Internet Ad Revenue Share,
by Company, 2015
Source: eMarketer, March 2016, Quarterly earnings of Facebook, Google
Note: Facebook revenue includes Canada. Google USA ad revenue
Source: eMarketer, Sept. 2016
Note: net ad revenues after companies pay traffic acquisition costs to partner sites
Market Players

5. The majority of ad spending comes from search. In the US, display ad
spending will account for the largest share in 2016, while in China, ads
that are directed to e-commerce sites are a strong #2
43.6%
11.1%
14.3%
20.0%
3.1%
8.0%
US Internet Ad Spending,
by Format ,2016e
Search
Rich Media
Video
Banners
Lead generation
Others
33.1%
3.5%
8.5%
14.5%
27.9%
12.5%
China Internet Ad Spending,
by Format, 2016e
Search
Rich Media
Video
Banners
E-commerce
Others
Ad Formats
Source: eMarketer, US digital display advertising trends, Jan.2016 Source: iResearch, 2016

6. Programmatic Ads captured over half of the display ad spending in
both US and China, and will continue to be important areas
10.32
15.83
22.1
27.4749%
59%
67%
72%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
5
10
15
20
25
30
2014 2015 2016e 2017e
US Programmatic Display Ad Spending
Programmatic digital display ads % of total digital display ad spending
4.21
6.26
9.29
12.72
38%
44%
51% 57%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
5
10
15
20
25
30
2014 2015 2016e 2017e
China Programmatic Display Ad Spending
Programmatic digital display ads % of total digital display ad spending
Programmatic Ad
Source: eMarketer, US digital display advertising trends, Jan.2016 Source: eMarketer, Sept. 2016

7. A performance-based pricing model is preferred in both markets.
China also has a time-based method for brand impressions
Performance
65%
Hybrid
2%
CPM
33%
US Internet Ad Spending,
by Pricing Model, 2015
China Internet Ad Pricing Model:
• CPD: Cost per Time
• GD: Guarantee Delivery
• RTB: (CPC, CPM, oCPC:
Optimization Cost per Click)
Pricing Models
Source: eMarketer, US digital display advertising trends, Jan.2016 Source: Tencent, TouTiao

8. Thank you!
Meng Xie
(530)-760-8744
mmxie@ucdavis.edu
https://www.linkedin.com/in/megxie