Ana Swanson on Dec 01
Willy Yang, the current CEO of Media V and former president of Focus Media's (Nasdaq:FMCN) online advertising subsidiary Allyes, has made it his mission to drive industry growth by increasing the effectiveness of online advertising. Yang joined Allyes in 2000 after obtaining an MBA and work experience in an Internet company at Shanghai's prestigious Fudan University, and he had his hands in almost all of Allyes' positions and businesses before announcing his resignation on May 20, 2009. Over the last six months, Yang has joined Shanghai Manku Advertising Company and other online ad experts to set up Media V. JLM Pacific Epoch recently spoke with Yang about Media V, which provides an intelligent online ad management platform that helps advertisers to improve returns on investment and online media to better manage ad resources.
What was your background at Allyes?
Since joining Allyes in 2000, I held almost every position and worked in every business in the company. In 2004, I led the development and operation of the "Smart Trade" pay-for-performance online advertising network, and then headed the development of our "Smart Media" product in 2007, and also a "Smart Keyword" search engine ad management system. Before leaving Allyes, I was mainly responsible for technological development and sales related to this area.
What was the impetus for creating Media V?
We started preparing for Media V in the first half of 2009, with the initial goal of making Internet advertising more effective and efficient. Chinese Internet users see an average of 2,000 to 3,000 online ads per day, but the revenue earned from each of these ads is roughly only 1/16 of that of similar ads in the U.S. Websites sell a lot of advertisements, but only earn a limited amount of ad revenue from them; advertisers also air a lot of ads, but only reach a low level of effectiveness. For this reason, we saw a big opportunity to improve the effectiveness and efficiency of China’s online ads.
Can you tell us a bit more about Media V’s structure and goals?
We currently have about 50 to 60 employees. We began building our technological research team in June and now have about 20 people, and we have been strengthening our client services team over the past few months. Media V management consists mostly of Internet industry experts, some with technology or product backgrounds, as well as some of my previous colleagues.
In terms of our goals, Internet technology is developing so rapidly that it’s hard for us to set a three- to five-year plan. At the outset, we are developing our products and services and plan to launch them at the end of November 2009. Testing our products in the market will show us whether they really can greatly benefit online advertising and give us the opportunity to continue to improve product effectiveness. Our goal is to make our products satisfy the requirements of more and more ad inventories.
What are Media V’s key products and target audience?
We have solutions to help both online media and online advertisers improve their effectiveness and efficiency. For online media, our products will help clients improve their ability to turn their ad inventories into realized income and target the advertisers who need their ad space most. For advertisers, our products will help them to select the most competitive price and most effective ad resources.
At present, Media V is mostly seeking out online media partnerships with portals or vertical sites that have a large amount of surplus ad inventory and concentrating on e-commerce sites for online ad development. Since e-commerce advertisers are paying on a cost-per-click or cost-per-action basis, they are more concerned about ad effectiveness -- whether they can generate profit on a larger scale, to a large degree depends on our ability to optimize their ads.
What sets Media V apart from other agencies?
Our key advantage over competitors is that we provide an "ad serving system," whereas most online ad agencies have no technologies or only have an "ad tracking system." An ad tracking system simply tracks and records user behavior. An ad serving system, on the other hand, identifies the kind of user within 30 milliseconds after he or she opens a webpage and uses this information to decide what ad to display, enabling us to make accurate matches for our online ads and convert more ads into revenue. The serving system depends on tracking system records to differentiate users and may also rely on third party historical data, for example Omniture.
What trends are you currently seeing in online advertising and other Internet industries?
I see a few very positive trends in the online ad industry this year. One is that the FMCG industry has increased online ad spending very quickly, signifying that Internet is more and more recognized as a form of mass media, with users from every industry, social class and age group. In order to further speed up FMCG advertiser spending, however, the online ad industry may need better methods to compare ad effectiveness with offline ad resources like TV. Another key issue will be whether the interactivity of online ads gives it an advantage over offline media. According to my knowledge, the online advertising industry in the U.S. released some standards aimed at evaluating the effectiveness of SNS advertising in March 2009, and these kinds of measures may really help to drive the industry.
Another major trend is the emergence of e-commerce sites, including some traditional retailers that have moved their business online. These advertisers are very willing to spend money on online ads if they can see a good return on their investment. As far as I know, there may be dozens of e-commerce advertisers who would spend tens of million of yuan per year on online ads. And if these advertisers are successful, more spending from other advertisers is sure to follow.
I don't believe that SNS and online video sites can take the place of portals, but their popularization has led to more fragmented and individualized behavior, which has subdivided Internet users and created very positive implications for targeted marketing. I believe these sites have great potential for future development. I don't expect them to take users away from portals; I simply expect users to spend more and more time online and using applications on these sites.
About JLM Pacific Epoch
JLM Pacific Epoch is an independent research firm focused exclusively on China. The company was created to meet institutional investors' growing and unmet demand for accurate and insightful China business intelligence.
The JLM Pacific Epoch team is comprised of China experts with backgrounds in finance, industry, journalism, and international relations. Its seasoned analysts are based in Beijing and Shanghai, with an extensive network of researchers throughout China.
This rare combination of China knowledge, talent and in-country expertise puts JLM Pacific Epoch in a unique position to provide global investors with unbiased big-picture insight as well as independent China data, primary research, and analysis.