Online Advertising Set to Buck China's Southbound Economy

12 December 2008

BEIJING: Even the hitherto unstoppable juggernaut of China's capitalist-fuelled communist economy is feeling the icy chill of global recession, ironically creating an even more favourable climate for online advertising.

Seeking to maximise the efficacy of their ad budgets, cash-strapped local companies are turning to the internet in an effort to maximize their ad RoI

Reports Karl Cluck, a partner at MindShare Shanghai: "The economic crisis is ... prompting a lot of our clients to rethink their marketing spending." Among marketers of youth-oriented products, especially, there is "a lot more interest" in digital advertising.

The trend to online marketing is fuelled by the nation's massive cellphone usage. According to Ted Dean, managing director of Asian markets analyst BDA, there are currently 500 million active cell accounts in China, and the number will grow to around 784 million by 2011.

And by that year, he predicts, 239 million people will access the internet by cellphone. Moreover, coverage "has begun to spread to rural China", with some 63% of China Mobile's new customers coming from rural areas.

But online is unlikely to have it all its own way in the battle for ad yuan. 

Hong Kong-based Citigroup analyst Jason Brueschke  says the impact of China's slowing growth over the next three quarters may be greater than people realize.

Even if marketing budgets currently being drafted  are strong, "it doesn't mean the budgets will actually get spent" he warns. 

In a deep downturn, Brueschke forecasts that marketers will need to choose the most productive ad media, which is still TV.

He cites monopoly state broadcaster China Central Television, which last month garnered $1.4 billion for 2009 in its annual auction of primetime commercial spots. A year-to-year increase of 15%.

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