BEIJING: China is on course to become the world's second biggest advertising market next year, a study has predicted.

Estimates from Magna Global suggest expenditure levels in the country should rise by 20.4% in 2011, in constant currency terms, hitting 188.7bn yuan ($29.1bn; €20.1bn; £18.2bn).

Figures are then likely to stand at 218.9bn across 2012 as a whole, making China the second largest advertising market globally, overtaking Japan, but behind the US.

Depending on the contours shaping the domestic economy, particularly government policy, revenues could double that amount by 2016, equating to a compound annual growth rate of 16.6%.

Consumer, investor and corporate confidence all remain high, while increasing competition among brand owners to engage shoppers is proving especially beneficial to the media sector.

Magna Global identified digital as the "biggest story" during the next few years, as e-commerce and group buying sites register considerable progress.

"International firms including Groupon and PayPal have made swift deployment into the Chinese market, hoping to capitalise on the booming industry and vast populace," the company said.

"The fragmented market has helped boost advertising spend in search and other digital channels as well as traditional media including TV and outdoor."

Online video, featuring players like Tudou and Youku, should also enjoy a surge in demand, it added.

The report said: "In a country where copyright and intellectual property limitations do not present a hurdle for content distribution, the over-the-top sector has developed much quicker and more robustly than the majority of other media markets."

Elsewhere, TV is expected to retain a lead role, as it still constitutes the most efficient and effective method of reaching a mass audience.

Radio's totals are similarly due to improve, while magazine advertising is set to expand at a faster pace than the newspaper equivalent, primarily thanks to strong interest from luxury brands.

Outdoor is in line to gain from urbanisation, which will see the construction of roads, shopping centres and other commercial complexes, Magna Global asserted.

Data sourced from Asia Media Journal; additional content by Warc staff