AirMedia Group Inc. (Nasdaq: AMCN), a leading operator of out-of-home advertising platforms in China targeting mid-to-high-end consumers, and China Petroleum & Chemical Corporation has announced that they have entered into an exclusive concession rights contract under which AirMedia will develop and operate outdoor advertising platforms at all of Sinopec’s service stations located throughout China for over five and half years, except for service stations in limited cities which still have original contracts with other operators in effect. The contract is effective immediately and will expire on December 31, 2014. AirMedia will incur concession fees to Sinopec beginning in the third quarter of 2009.
The move extends AirMedia’s leadership in China’s air travel advertising sector to the advertising market, the target demographic of which is the country’s rapidly growing population of automobile drivers and owners who, along with air travelers, are among the most affluent members of China’s emerging consumer class. As of the end of 2008, there were 122 million drivers and 64.7 million cars for civil use in China, of which 41.7 million were privately owned.
“As a leading operator of out-of-home advertising platforms targeting mid- to-high-end consumers in China, we are extremely excited to partner with Sinopec to extend our media reach to China’s rapidly growing population of automobile drivers and owners,” said Herman Guo, chairman and chief executive officer of AirMedia.
“Similar to the air travel industry in China, Sinopec’s service stations are frequently visited by consumers with higher-than-average disposable income. Expanding our advertising network to Sinopec’s service stations is a natural extension of AirMedia’s operation and will create synergies with our current media platforms and customer base,” Mr. Guo continued. “China’s consumer base will continue to evolve in exciting ways and AirMedia’s extensive experience in targeting mid-to-high-end consumers in the air travel sector well prepares us to achieve further success in other advertising sectors. Our growing network allows us to provide advertisers with even more flexible and effective marketing solutions to reach a broader base of affluent consumers in China.”
Haichao Zhang, Sinopec’s vice president stated, “We are pleased to be working with AirMedia as our exclusive partner for operating outdoor advertising platforms at our retail service stations throughout China. We look forward to benefiting from the synergy between our extensive national retail network and AirMedia’s experiences in operating nationwide media platforms targeting mid-to-high-end consumers.”
Sinopec is the operator of China’s largest network of service stations, with more than 28,000 retail service stations nationwide. AirMedia plans to install advertising mediums such as scrolling light boxes in at least 3,500 service stations in provincial capitals and other developed cities throughout China by the end of 2011, and in at least 8,000 service stations during the contract period.