Digital to drive Chinese adspend growth

BEIJING: Adspend levels are continuing to rise in China, with the internet, television and digital outdoor advertising set to be the main beneficiaries of this trend.

In a new report, GroupM – which is the media arm of WPP Group – predicted advertising expenditure would increase by 13.4% on an annual basis in 2012, reaching RMB394bn. Returns will then jump by a further 11.6%, to RMB493bn, in 2013.

Television will remain the dominant channel, as ad sales improve by 6.5% this year, hitting RMB210bn, a 53% share. It is due to witness a 5.3% lift next year, to RMB221bn, equating to 50% of the market.

GroupM also suggested that digital cable penetration should record significant growth from the 115m households, some 57% of the total, registered in 2011, requiring a response from marketers.

"It is critical that advertisers deepened their understanding of audiences' culture and entertainment needs in the living room," the study said.

"This will become even more important as networks are upgraded to provide more interactive services, such as lottery tickets and games on TV.

Elsewhere, online ad expenditure was pegged to surge by 55.7% this year and 35.4% next year, expanding from RMB79.4bn to RMB107bn as a consequence.

Given that internet penetration now stands at 40%, or 538m users, it is clear that this medium offers a sizeable opportunity, and still has considerable space to progress further.

By contrast, newspapers will see demand fall by 1% in 2012, and remain flat in 2013, yielding RMB45.7bn in all. More positively, magazines could post gains of around 7% each year, taking figures over the RMB10bn benchmark at the end of the forecast period.

"Most newspapers are making strategic choices to digitalize and visualize their newspapers to survive," GroupM said. "Magazines ... face a similar challenge from digital and mobile media and are reacting with similar strategies that integrate interactive content."

Elsewhere, the resources dedicated to out-of-home advertising are expected to improve by 15.6% in 2012, to RMB37.9bn. This channel will gain further momentum in 2013, growing by 13.8% to RMB43.2bn.

Within this, digital outdoor formats will enjoy a leap from RMB14.3bn to RMB17.2bn, while the non-digital category logs an increase from RMB23bn to just under RMB26bn.

The development and spread of technologies such as near field communications, QR codes and smartphones augur especially well for digital out-of-home, the analysis added, as they allow for greater interactivity. Mobile commerce should benefit from the same trends.

• This article was amended on Friday, September 7th, 2012. The original article wrongly stated that Chinese adspend would rise by 6.5% in 2012.

Data sourced from GroupM; additional content by Warc staff, 7 September 2012

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