GroupM forecasts 13.4% ad spending increase for China in 2012 and 11.6 Percent Hike for 2013

7 September 2012 9 h 09 min Comments Off

Despite uncertain outlooks in both the Eurozone and the U.S. economy, GroupM projects measured media advertising spending in China will increase by 13.4 percent compared to 2011 to reach RMB 394 billion.

The forecast was made in GroupM’s “This Year, Next Year: China Media Forecasts” report, which also predicts an 11.6 percent hike in 2013 to reach RMB 439 billion.

The study 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. The report’s positive forecasts are set against a backdrop in which the International Monetary Fund (IMF) predicts China’s GDP will grow in real terms by 8.0% in 2012 and a further 8.5% in 2013, compared with global economic growth of 3.5% and 3.9% for this year and next respectively.

The following highlights of the GroupM report demonstrate China’s strategic importance for advertisers:

Television Still Dominates

TV continued to dominate media advertising spend with an estimated RMB 210 billion in 2012, representing a 53% share of all advertising expenditure due to the large audiences it attracts. As digital cable continues to penetrate deeper in the next two years from its 115 million households, or 57%, in 2011, it is critical that advertisers deepen their understanding of audiences’ culture and entertainment needs in the living room. This will become even more important as networks are upgraded to provide more interactive services, such as lottery tickets and games on TV.

Internet Enjoys Rapid Growth

Growth in measured media advertising spending has been led by Internet spending, which GroupM predicts will grow by 55% this year and by a further 35% in 2013. China had 538 million Internet users by the end of June this year and Internet penetration reached 40%. The report says the growth of online videos and e-commerce is an important trend that advertisers should note. With the rapid development of online video, interactive video series, and micro-movies, brand marketers are identifying fresh opportunities to tell stories that resonate with consumers, while e-commerce is becoming an ever more important market driver with further development of online buying and payment.

Digital Challenges Print

In 2011, the Internet replaced newspapers as the number two medium by ad revenue with increases of only 4.2%. GroupM predicts this growth will continue to slow down this year and next in the face of rising print and distribution costs and the rise of digital media, which is changing reading habits and ways of obtaining news and information. Most newspapers are making strategic choices to digitalize and visualize their newspapers to survive. Magazines, accounting for only just 3.1% of total media advertising spending, face a similar challenge from digital and mobile media and are reacting with similar strategies that integrate interactive content. Magazine ad revenue growth will slow down to 7% both this year and next, GroupM forecasts.

Outdoor and Mobile Media Embrace Further Development

Digital Out of Home (OOH) advertising will increase in China at a faster rate than non-digital outdoor, the report says. With revenue growth of 28% last year, compared with just 10% growth in outdoor advertising and 2.4% in non-digital OOH, the evolution of technology is propelling its development.

New technologies such as Near Field Communication, for example, are helping conversion and interactivity rates, which are stronger in digital than in other media. Likewise, mobile smart devices are developing rapidly in China, as is the 3G network. There were 159 million mobile 3G users by April 2012, equivalent to 15% of all mobile phone users. Mobile e-commerce grows in the wake of mobile smart device adoption. This provides a channel for media communication and brand marketing and the means for consumers to purchase. Explosive growth in this personal medium, sat in the consumer’s pocket or hand, is poised to play a highly important role in brand marketing in the near future.

“China is full of challenges and opportunities for marketers. Technology is changing the lifestyle and media habits of consumers. Mobile offers rich opportunities for creativity by providing a new platform capable of harnessing the potential of both consumers and marketers. This is the age that requires big creative and cross-media cooperation. Though China’s mobile is still at an early stage, using it effectively will help brand marketing to win great success in the future,” said Eve Lo, Chief Knowledge Officer, GroupM China.

About GroupM China

GroupM is WPP’s consolidated media investment management operation, serving as the parent company to agencies including Maxus, MEC, MediaCom and Mindshare. GroupM is the global number one media investment management group. GroupM employs more than 1800 people in eight cities across China. With total media billings in excess of USD 5.1 billion (RECMA: 2011 Definitive), GroupM is China’s top media communications group and the industry’s biggest investor in syndicated and proprietary media research and optimization tool development.

Source: GroupM (06/09/2012)

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