Chinese Web Giant Buys Up Outdoor Ad Network

24 December 2008

SHANGHAI: Sina, one of China's most popular online news portals, has extended its offline presence by purchasing the country's biggest out-of-home digital advertising network from cinema-to-internet marketing services group Focus Media.

The deal means Sina, China's biggest web portal in terms of advertising revenue, will take over thousands of digital screens located everywhere from supermarkets to offices and elevators.

Charles Chao, Sina's chief executive, described the purchase as creating the "dominant new-media advertising platform in China", which covers "a significant portion of mainstream urban consumers in the China market." 

As part of the terms of sale, Sina will release 47 million new shares to Focus Media's shareholders, valued at $1.37 billion (€979m; £927m). 

While recognising the tie-up gives the internet giant an opportunity to offer more integrated services to advertisers, some observers sounded a note of caution about the new venture.

In a research note JP Morgan research analyst Dick Wei warned: "The idea of a 'media conglomerate' has not worked well in China."

This was demonstrated, added Wei, by the fact that Focus Media's "original plan of cross-selling between Internet, in-store and elevator lobby business has not shown much success."

Data sourced from Wall Street Journal; additional content by WARC staff