With the Chinese display market now worth around 30 billion YUAN, most senior Chinese ad execs believe that programmatic buying and selling will grow substantially over the coming 12-24 months. The RTB market is estimated to be currently around 5% of the total display market, with industry insiders predicting that it will represent 30% of a display within two-to-three years.

Already, the Tabao ad exchange is handling around $160 million dollars, after just 12 months of trading - and that's without opening up its own and operated inventory to RTB. In this series, China Ad Trade, we speak to a host of market leaders on the Chinese buy and sell side.

First up, is iPinYou, the leading (Super) DSP in the market. The company has built out a strong proposition, offering buyers (agencies and client direct) not just a DSP, but also an ad server and data layer. The company recently did a hefty Series B raise to build out more features on the platform. Grace Huang, CEO, Co-Founder at iPinYou, discusses the company's position in the market, as well as key local buy-side trends.

Can you give some overview on the growth of the RTB market in China?

The RTB market experienced significant growth in 2012 and we expect it to grow by 5-10 times this year. On the demand-side, many international brands have already tested out RTB ads and have seen some great results. DSPs, such as iPinYou's, have connected to multiple exchanges and offer world-class features to clients/agencies. Publishers are actively putting their inventories on exchanges or, for the bigger ones, setting up their own private exchange. There is lots of movement in the market.

iPinYou sees itself as a SuperDSP. How would you describe a SuperDSP?

In the US, DSPs work with data exchanges, ad serving companies, and sometimes even more parties, to place an effective RTB ad. In China, we offer a complete stack of ad serving, real time bidding, audience data and optimisation for clients. Therefore, it's much easier for clients and agencies to understand and use. I, personally, don't believe in separation of parties providing the data and the parties using the data for optimisation. We, therefore, work directly with data sources and build everything into a proprietary audience profile database for our system. We also have a much larger team than a simple DSP to provide necessary technology, products and service.

Let's discuss your data offering. Where do you get the data - ecommerce, etc - and how does it benefit your current clients?

We have always believed in the value of data. We have worked with over 1,000 data partners over the past years, including publishers, email companies and ecommerce sites. We have built a patented technology to model the behaviours, (surfing behaviours, search behaviours, purchasing behaviours, etc.), to the profiles of individual consumers. We also developed a proprietary audience taxonomy in China based on our past five years' research. As a result, we have already profiled around 80% of Chinese online consumers with our taxonomy. Today, with access to billions of daily activities, we continuously refine our understanding of consumers on a real-time basis. Audience data is a huge advantage of the iPinYou DSP, because our client can not only target against site and time, but also against very comprehensive audience data. It has proven to increase the conversion rate by two to three times. We do lots of look-alike modeling for our clients as well. Besides, our clients get much deeper insights into their campaign on the audience dimension.

Are the big agency trading desks operational in the market? Are local players launching their own trading desks, or do they still lack the skill and resources to trade?

Yes. Most of the big agency trading desks are active in China already and we work with most of them. Local agencies are still behind in launching their own trading desks. As they haven't experienced the benefits of RTB for their business, they are still studying and learning. I believe they will launch their trading desks down the road by working with a DSP like us.

Has there been significant shift of budget to DSPs? How has this affected the market?

In terms of percent of budget, it's still small. However, in 2012, the iPinYou DSP ran campaigns for world-leading brands in IT, Auto, Financial service, Travel, Consumer Goods, Ecommerce, Online service, Gaming, etc. Those campaigns repeatedly prove the benefits of our DSP: reaching target audiences, with larger scale, at lower cost. When compared to traditional ad networks or CPD buys, the benefit is so significant that almost all of our clients will decide to shift a much bigger percentage of budget to DSPs in 2013. That's why we are confident in the growth of the market this year, and forward.

In terms of inventory supply, is it mostly coming from big exchanges like Tabao?

Taobao and TANX are the largest public exchanges in China. They syndicate inventories from third-party publishers. However, one thing unique to China is that big publishers are very powerful, and therefore you will see more private exchanges. Tecent and Sina built their own private exchanges, and we forecast there will be more. Inventory is abundant on exchanges. The great news for clients, and us, is that the quality of the inventory is fairly good. Many premium publishers put their high-quality inventory on an exchange. We see over three billion daily impressions, and expect to see doubling of this size this year.

Will we see more display budget flow into the programmatic channel? Will this all be Direct Response, or will we see more brand campaigns moving to data-driven buying?

That's for sure. For the direct response clients, it's a no brainer. We work with the largest hotel booking sites, ecommerce brands, recruiting sites, education brands, etc. However, one exciting aspect about our DSP is that we offer brand advertisers the ability to reach their audience in a whole new fashion with programmatic buys. When we worked for a Fortune 10 consumer goods company, they saw clearly that, through our DSP, the reach per target audience is one sixth of a traditional internet ad, and each audience we bring to the site will generate three times higher engagement activity than benchmark. What's more, the brand can see the demographic distribution of consumers who view the campaign and who engage with the campaign.