Spending Still Strong In TV, Internet and Outdoor Media

China's Growth Is Sustainable Says Patrick Stahle, Aegis Media's CEO, Asia/Pacific

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Patrick Stahle
Patrick Stahle
China's growth is sustainable and will continue after the Olympic Games.

Albeit some forecast a slight decline in the advertising market in China from record 19% growth in 2008, the market is continuing to power ahead after a slight downturn post-Olympics.

The Olympic Games created an almost infinite demand for advertising space which drove media inflation to artificially high levels.

Now that the Olympic are over, we expect to see more sensible but still high growth, driven by China's fast-growing middle class and the need for both international and national brands to capture consumer attention.

China's ad market will likely grow 14-18% in 2009, partly because advertisers are now moving quickly into second, third and fourth tier cities. These markets represent enormous opportunities and challenges for marketers and brand owners.

Of course, the growth in first tier cities remains strong and provides a platform for new product innovations to be launched on a regular basis to a more affluent consumer base.

China is a unique advertising market from a global perspective. Television is the predominant media vehicle, representing more than 70% of total ad expenditure.

China's TV market is very large and complex with almost 3,000 channels. It's mainly driven by CCTV, the national state-run broadcaster, but satellite channels play an increasing role. The introduction of digital TV will continue to make TV the dominating marketing channel for years to come.

Ad spending in the country's internet market, meanwhile, has grown 50% over the past year. Internet penetration is still only 20%, with 253 million Chinese users logging on as of July 2008, but that figure is growing over 25% annually.

The internet will create further opportunities for marketers as broadband capabilities increase and TV and the internet continue to converge. Search marketing with strong local platforms like Baidu.com will take an even larger stake than today's 30% share of the internet ad spend in the coming year.

There is no indication that the development of China's internet market will be any different from the western world, where the internet is one of the main media formats. In the U.K., for instance, the internet is now the second largest spending category.

The rapid development of online communities, rich media applications and improved mobile technology will offer more effective ways to engage consumers for brand owners.

China's out-of-home media market is undergoing an interesting change. Most local governments in China are cleaning up the outdoor media environment and moving into technology-advanced platform such as interactive digital out-of-home furniture. The space for old fashioned billboards is shrinking to make room for high-def LCD screens with flexible interactive capabilities.

New technology won't help marketers, however, if they fail to embrace consumers' changing media behavior. A big shift is taking place with the increase in domestic demand making China less dependent on a global marketplace or on western countries now in recession.

The rise of local Chinese brands going national and international such as Haier, Lenovo, Tsingtao, Changhong and TCL represent a fast-growing opportunity.

Looking across all of the mainland's media trends, China will probably become the second largest advertising market in the world in 2009. Failure to capture this growth will have serious impact for many brand owners.

Patrick Stahle is the Singapore-based chairman and CEO, Asia/Pacific at Aegis Media.

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