Adspend to rise in China

15 September 2011

BEIJING: Advertising expenditure will continue to rise rapidly in China this year and next, fuelled by the uptake of digital cable TV and the popularity of online services like microblogs, a study has argued.

GroupM, the media unit of WPP Group, predicted adspend in the world's most populous nation was due to increase by 15.2% in 2011, reaching RMB347bn ($54.2bn; €29.5bn; £34.4bn) overall.

Looking further ahead, GroupM projected that the Chinese ad market should expand by 16.9% in 2012, attaining a value of RMB406bn as a result.

Key drivers behind this trend include the growth of China's economy - set to climb by 9.6% in 2011 and 9.9% in 2012 in real terms, according to the IMF - and the country's strategic importance for many brands.

TV revenues are anticipated to improve by 13%, hitting RMB201bn, in 2011, and post a 14% leap, to RMB229bn in 2012. However, the medium's share will fall slightly, from 58% to 56%, in this period.

Greater penetration of digital cable TV is one factor supporting television's on-going strength, as 88m households possessed such services at the end of 2010, a figure that may surpass 125m by 2012.

Elsewhere, internet ad revenues are expected to increase by over 40% this year and next, coming in at RMB46.9bn and RMB67.7 respectively.

GroupM stated 485m Chinese consumers had used the web by June 2011, a penetration of 36%. Within this, 195m used microblogs, treble the total from the close of 2010, and 42m used group buying sites, up 125%.

"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," Lucy Zhang, futures director, GroupM Knowledge China, said.

"But it will also grow as advertisers understand how to better leverage the data garnered from online campaigns and plan more efficient campaigns in future."

Newspapers should see a 5% leap in advertising demand in 2011, taking RMB46.6bn, and an 8% lift in 2012, to RMB50.3bn, in 2012. Magazines are due to record double-digit gains in both years, generating RMB8.2bn and RMB9.3bn in turn.

Outdoor spending could reach RMB33.5bn this year and RMB36.7bn next, with digital formats contributing 11.7bn in the first of these periods, and RMB13.9bn in the second.

Data sourced from GroupM; additional content by Warc staff