Digital Media Group (DMG), the leading provider of digital out-of-home (”DOOH”) media and advertising solutions for subway systems in China, has signed the biggest DOOH contract in China with Shanghai Metro TV. This contract gives DMG the exclusive right to operate digital advertising (in trains and station platforms) for all 13 lines in the Shanghai Metro system for the next five years. DMG currently reaches a daily subway audience of 4.3 million passengers in Shanghai which is expected to grow to 9 million by 2013.
”Although numerous companies bid on the Shanghai project, we chose DMG because they have the strongest operating track record for subways, and we have been working with them since 2002,” said Zhu Yushan, General Manager of Shanghai Metro TV. ”By partnering with DMG, we will deliver a better experience for passengers and a superior platform for advertisers.”
According to Zenith Optimedia, China’s advertising market is expected to increase from US$21.9 billion in 2008 to US$28.2 billion in 2010, an increase of US$6.3 billion. Other players in the DOOH space include publicly listed companies such as Air Media (AMCN), Focus Media (FMCN), and Vision China (VISN). Since Tier 1 cities account for more than 60% of advertising spending in China, the importance of Shanghai in any digital network is clear. Shanghai is China’s most populous city with nearly 19 million people.
This DMG contract provides a unique opportunity for multinational advertisers to reach commuters of all 13 Shanghai metro lines through one operator in a cost-effective way. According to the Metro TV Audience Measurement Report by Nielsen in June 2008, advertisers would need to spend 4.5 times more on TV (based on 2008’s rate) than on DMG to reach an equivalent audience.
”With the win in Shanghai, we increase our national subway media network to 30 lines and reach 10 million passengers a day(2),” said Thomas G. Tsao, Chief Executive Officer of DMG. ”This solidifies DMG’s position as the biggest operator of subway digital media in China.” By comparison, DMG’s nearest competitor operates 11 subway lines and reaches 5.7 million passengers a day.(3) In the critical cities of Beijing and Shanghai, DMG will operate 17 lines and currently reaches 7.8 million passengers a day while its nearest competitor covers 5 lines and reaches 2.3 million passengers a day.
DMG also exclusively operates the digital screen network for 3,000 bus shelters throughout Shanghai. Combining its subway and bus shelter networks, DMG will reach more than 14.1 million passengers just in Shanghai (nearly 80% of the city’s entire population) by 2010. In that year, the World Expo is expected to attract 70 million tourists over a six month period.
DMG recently raised US$30 million in a Series C financing from existing investors Oak Investment Partners and Gobi Partners. ”This is a game-changing opportunity for DMG,” said Ren Riley, general partner of Oak and a director of DMG. ”With this additional capital infusion, DMG will continue to aggressively drive its leading market position and help shape the industry’s exciting future.”