BEIJING: As online video rather than linear TV becomes the primary option for younger Chinese viewers, the advertising industry is having to recalibrate its approach, with one industry figure suggesting that advertising formats will become more important than choice of channel.
Shann Biglione, head of strategy for media agency network ZenithOptimedia China, told Media Business Asia that while more people continued to watch linear TV than online TV, the market was shifting towards the latter and some brand spending was following suit.
"It's likely that more and more display advertising will be relegated to conversion – visits, leads, sales – while online TV takes a big share of the pie of the online awareness budget," Biglione asserted.
"In general, this will also bring more and more questions on the validity of splitting budgets between traditional and digital," he added. "I think in the next two to three years, we will be talking more about the format – video, display – than the channel – TV, OTV."
Official figures show 439m people were watching online video in mid-2014, with most watching traditional TV as well, while local research indicates TV makes up around two-thirds of viewing among online video viewers in China, a figure that dips to 60% for 15-30 year olds.
But Media Business Asia noted the risk of competing video sites undermining their appeal which currently rests on a wider selection of programming than is available on linear TV and which is delivered over broadband networks with shorter commercial breaks.
Faced with growing investment in content, online video sites will have to introduce more ads and/or increase subscriptions, either one of which may lessen their attraction.
"This will soon raise questions on the effectiveness of the advertising, and we're not sure how far this can be pushed without triggering negative reactions from the viewers," Biglione noted. "So far, we're okay, but this is something that could impact the whole industry."
Data sourced from Media Business Asia; additional content by Warc staff