FYI 11.12.08

Tudou Launches High-Def Online Video Channel; Focus Media's Third-quarter revenues grew 63.7%.

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Tudou.com, one of China's leading online video web sites, is putting advertising products on a high-definition channel launched in late September called Heidou.com. Advertisers can air a combination of graphic and video ads and icons, either pre-roll videos or background panels, on the site's home page, hd.tudou.com.

As part of its media strategy, Tudou has gradually moved its pricing model to CPM (cost-per-thousand-impressions) and away from the CPC (cost-per-click) or time-limited CPT (cost-per-time) options. The new model more closely resembles traditional media's impression-based approach.

Online video marketing in China "is still at the infant stage," said Tudou's founder and CEO, Gary Wang, in Shanghai.

But the industry has already become fiercely competitive. Tudou has 38 million users, according to CR-Nielsen, a joint venture formed this year by Nielsen Online and Beijing Zhongqian Wangrun Information Technology Co. to deliver internet measurement and analysis services in China.

Tudou competes against Youku.com; the leading online video site with 47 million users; Ku6, with 46 million users; 56.com (25 M); Sina Video (24 M); 6 rooms (18 M); Mofile (14 M); Pomoho (9 M); Hupo (6 M) and Sohu Video (6 M).
Focus Media's revenues grew 63.7% year-over-year and 6.2% quarter-over-quarter to $224.8 million, during the third quarter ending Sept. 30, 2008. Focus Media is China's largest multiplatform digital media company.

In the third quarter of 2008, digital out-of-home advertising revenue totaled $153.8 million, up 62.4% year-over-year and 13.6% quarter-over-quarter.

Ad revenue from the company's commercial outdoor network grew 44.1% year-over-year and 14.8% quarter-over-quarter to $93.1 million, and revenue from its network of ads in elevators grew 90.6% year-over-year and 17.8% quarter-over-quarter to $44 million.

Internet advertising revenue was $70.8 million in the third quarter of 2008, an increase of 66.5% year-over-year but a decline of 7.0% quarter-over-quarter.

The recent global financial turmoil and slowdown in consumer demand in the U.S. and European markets have had "a significant negative impact" on the Chinese economy as well as on the mindset of corporate decision makers in China, said Focus Media's Shanghai-based CEO Tan Zhi.

"The macro headwind we are facing is the most severe in the modern history of the Chinese advertising industry. In particular, our internet advertising business saw online advertising spending slowing after the Beijing Olympics."


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