GroupM forecasts 15.2 percent ad spending increase for China in 2011

Shanghai : Measured media advertising spending in China is expected to reach RMB 347 billion this year, a 15.2 percent increase compared to 2010, according to a new forecast from GroupM China.

The study, “This Year, Next Year: China Media Forecasts”, is part of GroupM’s media and marketing forecasting series drawn from data supplied by parent company WPP’s worldwide resources in advertising, public relations, market research, and specialist communications, and it is an upward revision to the group’s global forecasts published in June.

The report also projects advertising spending to reach RMB 406 billion in 2012 in China, a 16.9 percent increase compared with 2011.

The International Monetary Fund said in its World Economic Outlook in April 2011 that China’s GDP will grow in real (inflation-adjusted) terms by 9.6% in 2011 and a further 9.5% in 2012. China’s impressive economic growth amid a gloomy global outlook has underpinned increases in advertising investment in 2011.

China is an important strategic market for advertisers. The continued year-on-year growth, whichreflects this importance, was attributed to several factors:

In dollar terms, TV continued to dominate media advertising spend with an estimated RMB 201 billion in 2011, representing a 58% share of all advertising expenditure due to the large audiences it attracts.

With Cable Digital TV’s continued growth in penetration and the acceleration of China’s Tri-Play policy, Cable DTV providers will be able to upgrade their networks, enabling a transition from ‘watching TV’ to ‘using TV’. The report concludes that this will ensure TV maintains its advantage in the near term. There were 88 million digital cable households in China at the end of 2010 and this figure is set to grow in 2011 and 2012. In 2011, there will be 102 million Cable DTV households in China and this figure will reach 125 million households in 2012, according to Research-DTV.

Growth in measured media advertising spend in China has been led by Internet spending, which GroupM predicts will have grown by 46% this year and by a further 44% in 2012.

China had 485 million Internet users by the end of June this year and Internet penetration reached 36%. The report identified online group-buying and micro blogs as two important applications that lay behind the hike in online activity.

By the end of June 2011, there were more than 42 million users of group-buying, an increase of 125% compared with the end of 2010, as the trend spread to tiers 2 and 3 cities.

By June 2011, the number of micro-blog users in China had tripled since the end of 2010, with 195 million users.

“Looking ahead, we estimate that Internet advertising will continue to grow this year and next. Our positive outlook for Internet advertising spend is underpinned by our belief that the Internet will continue to attract budgets from advertisers as coverage grows and content improves. But it will also grow as advertisers understand how to better leverage the data garnered from online campaigns and plan more efficient campaigns in future,” commented Lucy Zhang, Futures Director, GroupM Knowledge, China.

Outdoor advertising revenues grew by 17% in 2010. The driving force behind last year’s strong performance was digital Out of Home (OOH) advertising, which saw revenue growth in excess of 30% last year – three times that of non-digital OOH. The report forecasts that it will continue to increase at a faster rate than non-digital outdoor.

Strong growth will also continue in mobile media, according to the report, as the mobile network has been developing continuously in China. Rapid growth is forecast for advertising spend in mobile as a result of the introduction of new technologies and the growing number of 3G users.

“China remains one of the most exciting and challenging media markets in the world. China offers not only a complex and diversified market, but with the development and rapid adoption of new technology and communication channels, it also offers consumers who have become much more interactive. In this interactive era, brands are learning to become not just content creators but content curators and will need to explore more ways of engaging consumers, including co-creation of content, ”said Lucy Zhang.

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