MagnaGlobal Puts China's 2011 Ad Revenue at $28.8 Billion

Beyond TV, Online Media Has Become a Critical Vehicle for Marketers Seeking National Reach

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SHANGHAI ( -- MagnaGlobal, a division of IPG's Mediabrands, predicts ad revenue will rise by 18.8% to RMB 182 billion ($28.8 billion) in 2011 in China, now the world's third largest ad market.

China's rapid growth will drive double-digit increases in media spending over the next five years. Marketers whose sales in their home countries are tepid will continue to look to China as the next frontier and invest accordingly,

Global and domestic brands alike hope to capitalize on the purchasing power of the growing middle class. To achieve national brand recognition, marketers typically look to China's state-run national broadcaster, China Central Television (CCTV), which has the widest national reach.

CCTV recently concluded its prime time advertising auctions, raising RMB 12.7 billion in revenue, a 15.6% increase from 2009. Overall, MagnaGlobal expects TV advertising to grow by 21.4% in 2011 to total RMB 85 billion, almost $13.6 billion.

Beyond TV, online is swiftly becoming a critical vehicle for marketers seeking national reach. In addition to sustained growth for display advertising, online video is taking off due in large part to content and platform investments made by top online video sites YouKu and Tudou. These sites have secured partnerships with Disney, National Geographic, and the National Basketball Association.

Youku and Tudou also plan to go public, giving them better access capital and support ongoing growth. Further, the rise of e-commerce and the development of improved payment systems are driving growth of search. Total online advertising should grow by 29.7% in 2011.

Print faces the same challenges in China as it does in other countries, namely a migration of readers to digital sources and the rising cost of pulp and paper. However, a flourishing luxury market and an influx of new titles are lifting the magazine industry while government ownership supports the newspaper industry.

Radio, like TV, is state-owned and is thriving thanks to the exponential growth of car ownership. Vehicle sales in October 2010, for instance, grew 25.5%. Increasing affluence and government subsidies are driving car sales and heavy traffic means more time spent in cars. Those are catalysts for radio penetration, but radio's limited geographical reach and competition from digital sources limit long-term growth potential.

Other out-of-home media will fare better over the long run, according to MagnaGlobal. Outdoor advertising, particularly digital and cinema, is expected to thrive in 2011. Ongoing commercial real estate development will supply new inventory required to satisfy marketers' demand and let more brands use out-of-home media.

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