Digital mobile media and OTT will lead China’s media inflation rates in 2020 thanks to the continued popularity of streaming services and wider access to 5G connectivity, according to a report by independent consulting firm, R3.

The China Media Inflation Trend Report for 2020 noted that though advertisers will be buoyed by the Chinese government’s plans to reduce interest rates in order to stoke consumer spending, a slowing media market is expected to have a negative impact on media inflation rates in the coming year.

Sabrina Lee, managing director at R3 China said rate cards for mobile media, OTT, OOH and radio will cap at 10% next year, despite the media market slowing to 2.8% in 2019, a decrease on both 2018 and 2017.

“With 99.1% of all China’s netizens connected through mobile phones, digital will dominate advertiser investment,” she added.

Print suffers negative media inflation rates as social and online rises

Traditional media continued its downward trend in 2019. Newspapers took the biggest hit, with a 30.6% decline in media investment during the first half. Dwindling readership has resulted in publishers facing permanent shutdowns and content overhauls. All of which has made print less favourable with advertisers and this trend will cause newspapers and magazines to suffer a further drop in media inflation rates in 2020.

Loyal audiences are helping national television networks maintain single-digit growth, though overall television performance has been flat. Media inflation will decrease to 3% in 2020, making it the lowest across PC, mobile, OTT, OOH and radio.

Only mobile media inflation rates will experience an increase in the coming year. OOH and radio will remain stable.

Short video apps and news feeds drive inflation increase

All short video apps and news feeds will see up to a 10% increase in media inflation in 2020 as such platforms become a staple for advertisers. Digital media accounted for more than 60% of advertisers’ media spend in 2019, with 80% of that allocated to Baidu, Alibaba Group, Tencent and ByteDance.

Baby vertical goes negative on mobile

As China’s car industry is expected to continue its slowdown into 2020, demand for advertising in automotive verticals will drive inflation media rates up 1% across PC and Mobile. Media inflation in beauty verticals will see no change on PC, but advertisers can expect a slight increase on mobile. Notably, media inflation rates in the baby vertical will see a 6% decrease into the negative on mobile, and a 3% decrease on PC.

5G connectivity and urban travel sees radio inflation rates increase

The inflation of radio and OOH media will increase in Tier 1, Tier 2 and Tier 3 cities as commuters embrace China’s large subway networks. This year, Beijing introduced 5G connectivity across its entire subway line, which will encourage people to consume more online mobile media during their travels.

The increase in radio media inflation rates in 2020 can also be attributed to time on the road, particularly in Tier 2 markets like Chengdu and Xiamen, where the increase is as high as 13%. Though China has more than 3,000 radio stations, radio audiences have started exploring audio entertainment on other digital platforms.

Sourced from R3