Guide To The Online Advertising Market in China

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1 Guide To The Online Advertising Market in China It is hard to deny that Asia-Pacific is already a giant in the online advertising market since the ad expenditures in the region have reached $27.3 billion in It is expected that by the end of, Asia-Pacific would become the second-largest digital ad market in the world, surpassing Western Europe by nearly $2 billion. Among the Asian countries, China plays a more and more important role in the worldwide advertising market. This article aims to give international companies a guide to enter the Chinese online advertising market and launch campaigns effectively. 1

2 Rapid growth of online advertising market in China According to China Daily, China s online advertising market achieved around 100 Billion Yuan ($16 billion) in sales in 2012, boosted by increasingly large amount of spent by e-commerce business. However, it is a little bit complicated to get access to the Chinese online advertising market since it has a lot of specialties and local media ad networks dominating the market due to the absence of Google amongst other issues. In order to spend the budget wisely in the Chinese online advertising market, today we would like to give you a guide to the online advertising market in China. Why should international companies invest in the Chinese online advertising market? Due to the booming prosperity of online shopping and increasing internet users in China, increasingly large amounts of funding flow into online advertising, in comparison to the weakening situation of the traditional media in China. According to the statistics by CNNIC, the population of Chinese internet users in the end of 2012 has reached 564 million, including 420 million mobile serving users. 2

3 The annual trading volume of E-commerce in China in 2012 is around 6 trillion CNY, including 800 billion CNY for online retailing businesses. According to the estimation of the Ministry of Industry and Information Technology in China, the trading volume of E-commerce in 2015 would exceed 18 trillion CNY, which indicates that the huge potential of the online advertising market still needs to be explored. In order to avoid losing the market share in the Chinese market, international companies should invest wisely in the online advertising market to target their potential customers efficiently. Better understanding of the current Chinese online advertising market Since Google left the mainland of China in 2010, except for its DoubleClick advertising business, local Chinese internet companies like Baidu, Alibaba and Tencent developed their businesses quite quickly and started to dominate the online advertising market in China. Since 40% of total online advertising sales in 2012 were driven by online search engines, the strong increase of advertising sales through e-commerce websites will be a big driver of the market. That is why that Taobao 3

4 (Alibaba Group) and Tencent launched their Ad exchanges to utilize their inventory resources, transforming the role from Ad affiliate to the RTB ad exchange platform provider. Besides, Baidu, the largest search engine company in China (around 78% market share), also made efforts to add more functions for its ad affiliates, such as geo-targeting, retargeting, and so on, which is already not far away from an ad exchange. Chinese Internet User Demographics According to the Internet World Stats, worldwide Internet users reached almost 2.5 billion by 30th June The population of China in 2012 was around 1.3 billion and the internet users in China was around 564 million, which is around the total population of USA, Canada, Australia, Germany and the United Kingdom combined, with a penetration rate of 40.1%. There are 420 million mobile Internet users in China, which means 74.5% of China s Internet users use mobile devices to access the Internet. There are 156 million rural Chinese Internet users. Users spend an average of 18.7 hours online per week. There are now 210 million online shoppers in China. First tier cities like Shanghai, Beijing, Guangzhou and Shenzhen ranked among the top commercial cities and top innovative cities in China, according to Forbes. The population in Beijing and Shanghai were both around 24 million in 2012, with an internet penetration rate of around 70%. This means that the use of internet in the major cities of China has already reached the same level as in Europe and in US. 4

5 According to the statistics of Alipay, the trading volume of Beijing internet users on overseas online shopping websites in 2012 ranked as No.1, around 21% of the total volume in China, while Shanghai and Guangdong ranked right after Beijing, with 18% and 16% of the total volume in China. Chinese online advertising market landscape The following chart shows the Chinese online advertising market landscape. 5

6 Ongoing change of the payment models in the Chinese online advertising market The online advertising marketing in China right now is in an ongoing change when it comes to payment models in online advertising. CPT (cost per time) used to be the dominant price model for the online advertising market in China, which is a fixed charge model without considering the actual advertising results into the pricing. That s probably why it s distribution decreases year after year. Comparatively, CPC and CPM are getting more and more popular and even account for more than half of ad revenues in 2012, which are widely used by Google Adsense and Baidu Promotion. It is getting common for Chinese publishers and ad networks to accept third party tracking, allow retargeting, site targeting, geo targeting and adapt more specific requirements to meet individual advertisers need. The best way for international companies to launch online marketing campaigns in China From the Chinese online advertising market landscape displayed above, we know that the online advertising market in China is full of local players, except for a few global advertising companies like DoubleClick, OpenX and Yahoo!. In order to gain sufficient premium inventory to launch display campaigns effectively, it is important for advertisers to choose the right partner. Joinville works closely with large pools of ad partners, ad networks and RTB ad exchanges in China. Therefore Joinville can provide advertisers with sufficient both premium and cost effective inventories to target the Chinese audiences within or outside of China. In addition, it is also possible to target the foreign groups living in China as well with the technology support of Joinville. Don t miss out. 6

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