Bit by bit, China's investors are snapping up startups in the US marketing technology (MarTech) industry.
There was last month's $900 acquisition of Media.net by a consortium of Chinese investors, one of the largest deals ever in the industry.
Less dramatically, the Beijing-based Spearhead Integrated Marketing Communication Group made a $148 million bid in June to acquire San Francisco-based Smaato, a real-time advertising platform for mobile publishers and app developers.
Now iPinYou Seeks a Foothold
But now here comes something different: Beijng-based iPinYou, one of China's largest programmatic ad buying platform, is entering the US market by opening its own headquarters and partnering with MoPub, a start up Twitter famously acquired in 2013 for $350 million.
It is, frankly, a better move than an outright acquisition for iPinYou — or any foreign company — seeking to gain a foothold in the US market, Rob Enderle, principal of Bend, Ore-based Enderle Group told CMSWire.
"In general, most cross border merger and acquisitions fail because of a mismatch in corporate cultures," he said. This misalignment can be particularly deadly in the ad tech and social media industry, where even the slightest off-sounding note can cause a campaign to fall flat.
And for better or worse, China's ad tech market is No. 1 globally, Enderle said — which means, human nature being what it is, their industry execs think they know all there is to know about the space. "But that is a recipe for failure with a foreign acquisition," he added.
Evaluating iPinYou's Financial, Market Creds
Which is why Enderle is feeling positive about iPinYou's cautious approach. "To really understand a market, a company has to nurture its own talent, develop its own mindshare. That takes more time but the payoff is better" than an acquisition to expand market share, he said.
If iPinYou wanted, it could almost surely take the acquisition shortcut. Last December the company, which was founded in 2008, received the equivalent of a $78 million pre-initial public offering investment from its data partner, China Mobile, along with other investors. The financing is said to be the largest single round ever in the Chinese advertising technology sector.
What's more, iPinYou also counts China UnionPay and AsiaInfo are as strategic partners.
A demand side platform with real-time bidding, cloud computing and audience profiling technology, it has solid industry creds to build off an acquisition. The company reports it has a 59.8 percent share of China's branded programmatic buying market and its real-time bidding technology [PDF] — which is based on an intelligent ad purchasing platform that uses massive data sets for audience analysis and ad optimization — has been recognized by Google Double Click, Baidu and Tencent with a Best in Class award.
It counts about 1,800 companies as clients including McDonalds, Microsoft, Toyota, Adidas and Pfizer.
iPinYou's US Outreach
From its new US headquarters in Bellevue, Wash., which is headed by Sara Ye, president of international markets, iPinYou plans to target both Chinese brands that want to market to US consumers and US companies interested in the Chinese market.
Here it should be noted that those corporate culture misunderstandings that derail so many global M&A also tend to trip up cross border marketing campaigns.Ye told CMSWire iPinYou wants to address that from its US headquarters.
"With the rapid rise of the size and spending power of its middle class, China presents enormous potential for manufacturers of consumer goods and services from the United States," she said. "Yet given the completely different dynamics of the China market as well as the complicated Chinese media landscape, it is challenging for American companies to effectively find, target and reach Chinese consumers."
Besides the obvious language barriers, Chinese media policy can be difficult to navigate as well as its general media environment, she said.
China Is a Hot Market
But iPinYou has plenty of competition.
Earlier this year, when San Francisco-based Performance Horizon announced it closed a $15.4 million Series C round, it pointed to its customers across all major geographies, "including China and Japan."
San Diego-based mobile ad tech firm Motive Interactive, which just made its fourth appearance on the Inc. 5000 (a ranking of the fastest growing private US companies) reports close to 60 percent of its business is outside the United States — largely split between China and India.
Then there is Mobvista: its ad revenue from overseas markets is rapidly growing thanks to such deals as the NativeX purchase (hey, no one said cross border dealsnever worked). According to its most recent financial statement, overseas markets contributed 40 percent of Mobvista's total revenue.
The MoPub Partnership
It's notable that iPinYou has the MoPub partnership in its corner. The company is going to market with its products integrated with MoPub, one of the largest ad server for mobile application publishers in the world.
"We are pleased to be working with iPinYou and hope our partnership will better serve digital advertisers in China," according to Elizabeth Gilmore, head of global demand at MoPub. MoPub is a strong fit for companies who target broader markets, such as iPinYou, she said.
Title image by Athena Lam