China's internet advertising is developing faster than ever, with the automobile and IT sectors powering its growth.
Editor's note: The statistics quoted in this article are mostly drawn from the December 2007 "AdRelevence Report" from Nielsen Online.
Driven by advertising in the automobile, IT and electronics industries, the online advertising market in China finished 2007 with a healthy growth, hitting RMB9.4 billion on display advertising. On the whole, 2007 saw approximately 3,100 advertisers and 27,000 campaigns advertised online.
In dollar value, online display ads for each of the first four quarters of 2007 was RMB 1.7 billion, 2.3 billion, 2.6 billion and 2.8 billion respectively, with the second quarter recording the biggest growth in online ad spend.
At the moment, China's online advertising market continues to be very much driven by the top 500 enterprises and multinational advertisers. The ad value of the top 50 advertisers online accounted for 46 percent of total online advertising market, and 31 percent of the total number of campaigns. Topping the list with the biggest online advertising spend in 2007 were Mazda, Toyota and Lenovo. China Mobile and Mengniu were the only two local Chinese brands on the list.
Compared to traditional media, there is a lot of room for growth, as well as great potential for small and medium size advertisers to beef up their advertising efforts online. It's also worth noting that while vertical websites featuring specific content like entertainment or IT, etc. have been successful in attracting ad spending, portals are still holding a leading position among advertisers when it comes to allocating advertising dollars online.
While significant, China's online advertising pales in comparison to that of the U.S., where internet advertising took off much earlier. The former registers only one-tenth of the U.S. total online ad spend. Seen from another perspective, this signals the enormous potential for China's online advertising market, which is certainly on a fast track in the lead up to the Beijing Olympics. Underpinning this upward trend is the rapid growth of internet penetration in the country.
China firms ride the Beijing Olympic wave
Looking at recent trends, it appears that sports marketing have become one of the most effective of all marketing strategies. It is estimated that there will be over 550 athletes from the China Delegation to join the sports party and more than 11,000 players from all over the world.
China Mobile, McDonald's and Coca Cola were the top three advertisers among all the partners and sponsors in 2007.
Interestingly, the Beijing Olympics is the first Olympic games in history that allows audiences to watch the games live on the internet and their mobile phones. This heralds a milestone for China's new media.
Appropriately, more and more companies in China are leveraging the publicity and hype surrounding this national event and producing more Olympic-theme advertising.
Online advertising in 2008
The online advertising market will continue to grow in tandem with the rising internet penetration in China. Industries such as entertainment, finance and media are likely to lead the growth in 2008.
China's online display advertising market in recent years has set the stage for an even greater and faster growth in 2008 in view of the Olympic Games. It is expected that growth in 2008 will be at least 50 percent more than that of 2007.
Another factor fuelling the growth of online advertising may be attributed to the increased marketing platforms as offered by the emergence of online communities, media streaming and blogs. Hopefully, the maturing internet advertising, with its more diverse offering, will make the online advertising industry a more vibrant one.
Sail Ma is research analytic director of Nielsen Online, China & Southeast Asia. Read full bio.