Holding groups aim for China's online ad market

28 July 2010

BEIJING: Competition between the major agency holding companies to gain a leading position in the Chinese online advertising sector is starting to intensify.

According to estimates from Magna, part of Interpublic Group, web adspend in the world's most populous nation is due to reach $2.5bn (€1.9bn; £1.6bn) in 2010, up 25% year-on-year.

In order to tap in to this trend, Mediabrands, which is owned by IPG, is looking to forge alliances with local agencies or to acquire them outright. 

Quentin George, chief digital officer at Mediabrands, argued the substantial possibilities available in the country will only be realised when improved options are developed for planners and buyers.

"There is nothing that competes with China in terms of the opportunity for scale," he said.

"On the demand side, it is very high. On the actual doing stuff side, it is a lot more complicated than most people would like it to be."

Publicis Groupe has recently formed a tie-up with Menlo Technologies, based in Shanghai, to create a platform enabling to obtain inventory from publishers quickly and easily.

Clients can utilise this auction programme to identify relevant portals, and to specify how much they are willing to pay using data such as visitor numbers and dwell time.

VivaKi, the new media arm of Publicis, is also adapting models first built for customers in the US as it seeks to offer a wide range of search, display and video advertising solutions in China.

WPP Group has made several purchases in China to broaden its portfolio, and took a minority stake in Leading Smart Holdings, parent of digital ad measurement firm Moment Systems, in mid-July.

"China represents the bull's eye and digital is incredibly important," Sir Martin Sorrell, ceo of WPP, said.

John Wren, the chief executive of Omnicom Group, has similarly outlined the organisation's intention of making acquisitions in the near future.

"We expect to see more activity going forward, especially in markets like Asia," he said on a conference call last week.

The obstacles in China include working with a new set of partners like Tencent and Baidu, the latter of which has cemented its grip on the search category after Google paired back its domestic operations.

Elsewhere, a lack of accurate statistics relating to the online behaviour of netizens may hamper the progress made by this medium in the short term.

But redressing this situation should unlock explosive growth.

"A lot of the emerging markets are still big TV markets, but some of the emerging technology on the digital side could leapfrog traditional media," James Dix, an analyst at Wedbush Securities, predicted.

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