SHANGHAI (AdAgeChina.com) -- China's media environment is big, "making it hard to achieve national scale, it's complex, it's highly regulated, and it's evolving rapidly," said Karl Cluck, Mindshare's partner, invention for China, based in Shanghai.
Television remains the primary ad medium in China for multinationals, with 96% penetration, but a shift towards digital media is taking place. Chinese adults spend 3.3 hours per day watching TV, a figure that has remained steady for years. The amount of time spent online per week has risen from almost zero a decade ago to 16.1 hours.
"While TV remains the primary focus for advertisers, the time spent with that medium is declining among young consumers. But internet penetration reaches 23%, exceeding the global average. China has rapidly become the world's largest digital market," Mr. Cluck said.
Growing interest in new media tops the list of 10 media trends in China, Mr. Cluck said at a Shanghai seminar organized by Ad Age China and Stern Agee, a U.S. brokerage firm that specializes in Chinese tech companies. Below is an edited version of his presentation.
1. Screens are everywhere.
Spending on out-of-home digital media grew 42% in 2008.
Growth is focused in two areas. LCD screens, usually operated by Focus Media Group, are found inside buildings, shopping malls, health clubs, KTV clubs and other venues. Screens are also placed by a variety of vendors on public transit systems around the country, as well as at airports and inside taxis in Beijing, Guangzhou and Shanghai. Mega-sized LED screens are found on building exteriors and at street level.
"China has a tremendously robust LCD/LED out-of-home (OOH) environment, so video content isn't just at home. There are almost 100 cities covered by OOH digital TV, creating an alternative TV option [and] compelling creative opportunities," Mr. Cluck said.
Advertisers in China such as L'Oreal, Procter & Gamble Co., and Sony Corp. use a combination of online video-sharing sites and LCD screens on public transit systems, for example, to air webisodes with branded content.
2. Consolidation is redefining China's digital media industry.
Consolidation will downsize the industry to a few key players, but advertisers will continue to leverage online platform partnerships. Digital marketers like Unilever, P&G and Nike rely on the country's leading publishers and platforms, such as Tencent's QQ instant messaging platform, portals like Sina.com and Sohu.com and online-video sites such as Youku.com and Tudou.com.
The top players will continue to offer brand endorsements, an environment for trustworthy engagement, access to customer relationship marketing opportunities and a cost effective way to build traffic and scale in China.
3: Bulletin board sites (BBS) and blog monitoring is becoming a basic marketing tool.
With the explosion in online media, advertisers must initiate monitoring programs. If a crisis occurs, like the melamine scandal last year that affected brands like Nestle and Lipton, advertisers need real-time updates of consumer word-of-mouth, breaking news about issues related to the crisis, hourly tracking of forums, response teams, daily reports and weekly insights and recommendations.
4. The internet is creating options that can enhance TV, and provide an alternative.
Among every 14 Chinese internet users, 10 use online video sites. What are they watching? Mostly serialized dramas produced in South Korea, Taiwan and Hong Kong. China also has 40 million direct TV households, mostly tuned into variety and talent shows produced locally.
5: Copyright enforcement is starting to spur licensing and online content development.
China's government is finally getting serious about controlling intellectual property rights and piracy issues, prompting local digital media companies to work with music and entertainment companies.
"U.S. brands like Disney are suing any company with a U.S. presence that places ads next to copyright-infringing material," Mr. Cluck said. The implication? It "forced Youku to sign content deals with 32 TV content producers."
6. Cross-platform time-shifting and availability of illegal content have created a Chinese form of Tivo.
Chinese households still don't have DVR machines, but they do have pirated DVDs, online TV and download sites like Baidu, the Chinese search engine giant. Chinese consumers can watch entertainment on computers and DVD players at home, at school, at work, at internet cafes...almost anywhere they want.
7. This means "mainstream" stars can be created through entirely alternative media.
Marketers who need to know what programming and which celebrities are hot should tune into this form of underground Tivo.
For example, a show that's never been broadcast legally in China, "Prison Break," is one of the hottest programs among Chinese youth. It is viewed strictly through pirated discs and illegal downloads. But the popularity of the American series and its leading man, Wentworth Miller, prompted General Motors Corp. to hire the star to appear in the launch campaign for the Chevrolet Cruze model last spring. It included an action-themed TV spot modeled on the series.
8. The social networking phenomenon is strong, but there is no clear winner yet.
More than 50% of Chinese internet users have visited a social network site, and those sites are home to a large portion of Chinese blogs, BBS sites and personal journals. But there are several sites gaining popularity, like Xianonei.com, 51.com, Chinaren.com, Kaixin001.com, Myspace.cn, 5460.net, Wangyou.com, Ipart.cn, 360quan.com. There's no single dominant player on the horizon.
9. E-commerce is finally reaching critical mass, and is already a huge "browsing" platform.
Over 64 million Chinese have made purchases through the internet and 25% of web users say they now prefer to shop online. Online travel services, which generated around $750 million in sales last year, are especially popular. Taobao.com, the consumer shopping site run by Alibaba Group, the Chinese e-commerce giant in B2B sales, is the clear leader with more than 80% of the total e-commerce market.
Every week, about two-thirds of Chinese internet users use "life search" sites which provide local information including maps and addresses. Those searches are often related to retail stores and other businesses in a particular area, making them more useful to web users than general search engines like Baidu or Google.
10. Branded content will continue to grow, both in broadcast media and online.
Foreign content rights holders and channel operators like Mexico's Grupo Televisa, Sony Pictures Entertainment, British Broadcasting Corp., News Corp., Endemol and the Hong Kong-run broadcasters Asia Television (ATV) and Television Broadcasts (TVB), as well as local producers, see branded content as a lucrative new revenue stream.
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