Monday, February 26, 2007

Why Online or Web Advertising in China will continue to increase.

This is my second day of work after the Chinese Spring Festival. Having spent the holiday doing extensive research on China's internet and mobile advertising market, i must come to a conclusion that the market is huge in view of the existing size of the traditional advertising market, whereby china spent a whoppingUS$50 billion of ad advertising in 2006. Thats a third of what is spent in the US. Quite a phenomena for an economy and an advertising industry that was almost no where on the international scene some 20 years ago. Bulk of the ad spending had been budgetted for tv commercials. The big chinese broadcasters are having a fantastic bull run enjoying one of the best growth and the highest profit ever.

In contrast, spending on web or online advertising in china has been relatively small in comparison, with no more than US600 million spent in the year of 2006. US is estimated to have spent in the region of US$14-15 billion for 2006. With an internet population that had just surpassed 140 million and growing at the pace of 800,000 users per week, the internet population in china will surpass that of the US in 2008. If the US is spending $14-15billion, it just doesnt make sense why a nation with 7/10 of the internet population in the US is only spending as fraction of what is spent in the US. Lets not forget the internet users in China spent a great deal of time browsing, chatting and playing games on the internet. As highlighted by Jan Van den Bergh :

"Half of the internet users are extremely young Chinese addicted to games" said a 4A's boss recently here in Shanghai. The reality is that only 17% are younger than 18, that 35% is in between 18 and 24....and that the rest (65,000,000 Chinese!!) is older than 24 probably living in the area and a large part of them probably earningmore than RMB 40,000/year. The recent survey conducted by the China Internet Network Center (CNNIC) proved even that the Chinese do exactly the same things asthe rest of the world's users: check e-mail (56.1%), read the news (53.5%) and searchfor (51.5%) and acquire information (41.0%).

With the internet population of china continues to grow exponentially, it will be a matter of time before more ad spending will be apportioned more logically. This will further be fuelled with the Wireless Advertising when 3G takes off in China by next year. With Mobile subscribers reaching the 500 million mark and mobile phone becoming an integral part and personal item of the mobile user, its just a matter of time before advertisers will be rushing into a new media of advertising call "Mobile Advertising."

With the capability of targeting the right audience , its what the advertisers had been wishing and dreaming of; building a scalable and highly interactive one on one customer relationship. For the first time the advertisers could review and discover the effectiveness of their advertising in real time. Thats the power of targetted mobile marketing and advertising.

In conclusion, with so much dynamics in the fast growing advertising industry in china, I m confident that online advertising will continue to grow exponentially. With the beginning of the new Piggie year, I can only wish all the best to all the internet and digital media players in China and rest of the world....

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