Advertising experiences a boom
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China Daily, June 20, 2011
Group-purchasing websites have the most potential for advertisers, who are witnessing a boom for their industry on the Internet thanks to the increasing number of netizens and the development of online companies in China, according to a new report.
During the first quarter of this year, leading Chinese group-purchasing websites Lashou.com, Nuomi.com and Gaopeng.com each invested more than 10 million yuan ($1.54 million) in television advertisements, said the report by Charm Communications Group, a domestic advertising and media service provider.
Group-purchasing websites need to advertise to establish a well-known brand before they can solicit more customers, the report said.
They regard TV as the top priority when choosing an ad platform because it gets the message across more quickly than other media platforms.
However, the report pointed out that the trend cannot be sustained because the group-purchasing industry is experiencing consolidation. After the restructuring of the sector, from thousands of players of various sizes to just a few big companies, the advertising expenditure will shrink.
The popularization of smartphones such as the iPhone enable more convenient surfing, resulting in more time spent on the Internet.
The number of netizens in China reached 457 million - more than one-third of the nation's population - by the end of last year.
Since last year, Chinese websites have been competing to go public, with Dangdang.com and Youku.com listed in 2010 and Qihoo360, Renren.com and Jiayuan.com going to the Nasdaq this year.
A large part of these websites' revenues came from advertisements. When they can raise money from the market, they will invest more to increase the quality of their adverts and expand market influence.
The report predicted that the Internet will continue to be the important growth engine of the advertising industry in China over the coming few years.
Currently, transportation, Internet services, real estate, IT and finance are the top five sectors for Internet advertisements.
China's advertisers spent 148.65 billion yuan on advertising fees in the first quarter of this year as the nation's economy grew steadily. The amount was 18.6 percent higher than the fourth quarter of last year's 125.36 billion yuan, said the report.
Shrinking commercial time intervals has caused an increase in advertising prices, the report said, adding that China's fast-growing economy also paved the way for an upsurge in the advertisement industry.
TV remained the most attractive advertising platform in China, bringing in 121.01 billion yuan. Newspapers in second place took 15.9 billion yuan, followed by radio, the Internet and magazines.
According to the report, makeup products, foods, medicines, beverages and the service industry contributed 63.8 percent of the total number of TV advertisements. National-broadcasting channels were more favored by advertisers than local channels.
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