Group M Forecasts 17% Ad Spend Growth in China Next Year

Experts Differ on Whether China Is World's No. 2 or No. 3 Biggest Media Market

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Ad spending in China is forecast to jump by more than 15% this year and by almost 17% in 2012, even as the rest of the world slows down, according to Group M's latest forecast for China.

Despite economic doldrums around the world, China has roared ahead at more than 9% growth, and measured media advertising has been growing even faster in this increasingly important market.

The report issued today by Group M China said ad spending is expected to reach $54 billion this year and is likely to grow nearly 17% to $63 billion in 2012. Group M estimates that China has passed Japan this year to become the second-largest ad market in the world after the U.S., due partly to a drop in ad spending in Japan because of the earthquake there. The other main global ad spend forecaster, ZenithOptimedia, is keeping China in the No. 3 slot, and estimates a lower total ad spend figure for China of $29.6 billion.

"China offers not only a complex and diversified market, but with the development and rapid adoption of new technology and communication channels, it also offers consumers who have become much more interactive," said Lucy Zhang, futures director at Group M Knowledge, China. "Brands are learning to become not just content creators but content curators and will need to explore more ways of engaging consumers, including co-creation of content."

TV remains the most important medium in terms of ad spending, with an estimated $31 billion this year, or 58% of all advertising dollars, Group M said.

But the biggest area of growth is online, where spending is forecast to grow an estimated 46% this year to $7.4 billion and expand further to $10.6 billion next year.

China has the world's largest online population of 485 million people, and is continually adding new users; internet penetration is currently 36 %. For marketers, key areas of growth online this year included group buying and microblogs such as Sina Weibo, the report said.

"Our positive outlook for internet advertising spend is underpinned by our belief that the internet will continue to attract budgets from advertisers as coverage grows and content improves. But it will also grow as advertisers understand how to better leverage the data garnered from online campaigns and plan more efficient campaigns," Ms. Zhang said.

Rapid growth is also expected in mobile, as smartphones and 3G mobile technology become more widespread.

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