Chinese online ad market will improve, Sina says

10 June 2009

SHANGHAI: Sina, the company which controls China's biggest web portal, saw profits fall by 31% year-on-year, to just $9.7m (€6.9m; £6.0m), in the first quarter of 2009, as ad revenues posted a double-digit decline, but ceo Charles Chao said it has since witnessed "improved confidence and sentiment" among advertisers.

According to iResearch, the growth of China's online ad market is set to slow to 36.7% this year from 105% in 2008, but the country remains one of the few areas where total adspend levels are likely to improve.

In Q1 this year, Sina's net profits fell from $14.1m in the same period a year ago, although they were still slightly ahead of analysts' estimates.

Revenues rose by 3%, to $73.8m overall, with adspend falling by 10% compared with the first three months of 2008, to a total of $43.2m.

This also marked a 38% decline quarter-on-quarter, and the company reported that 98% of ad sales were from China, with just 2% originating from outside the country.

Chan said that the "uncertainty in the Chinese economy at the beginning of the year had a severe impact on our online advertising business in the first quarter of 2009."

Despite this, and the fact that "market visibility is still relatively low," he argued that both confidence and sentiment have improved among marketers, with the situation improving markedly after February. 

The company now expects ad revenues to reach a minimum of $55m in the second quarter, with overall revenue also improving, having seen quarterly expansion rates of 16.6% in Q2 2007, and 28.1% in this period in 2008.

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