Brought to you by AdChina January 2012 Sina Microblog: @AdChina 易传媒 www.adchina.com/en/us MEDIA SCENE 2012 CHINA DIGITAL
Dear Partners, We start off the year 2012 with great excitement. In the past five years, the category of technology-driven internet advertising has grown from 0% to 8% of the total internet advertising spending in China. We estimate this number to double in 2012. Our confidence is based on the daily work we do for our clients, who are the largest 1,000 advertisers on the China market. Last year we upgraded several of our products, such as the cross-media planning system eTV2.0, and our clients’ satisfaction has risen dramatically. They have responded by increasing their project requests exponentially. An important agenda of AdChina in the past two years has been to expand our advertising operating platform both to the supply-side (media) as well as to the demand-side (agency and advertisers) of the value chain in China. Today, 200 online and mobile internet publishers are using our supply-side platform ASP, and 4 of the 6 largest international 4A media agencies in China are using our demand-side platform ADP to manage their advertising operations. We’re launching this 2012 Digital Media Scene Report with the aim to provide a practical digital outlook for the coming year for our clients: what are the new digital media trends in China and around the globe? What are the investment opportunities that no one should miss? During the process of preparing this report, we referenced a lot of domestic and overseas research reports, interviewed our clients and overseas collaborators. We also sponsored a Harvard Business School project on “the Future of China’s Technology-driven Advertising” in Q4, 2011. All in all, we hope you’ll find this report useful. Last but not least, we wish you and your loved ones a happy Lunar New Year and prosperous Year of the Dragon. May you find great health, happiness and success! Yours, AdChina Team Introduction Jing Pan VP of Marketing, AdChina Sina Microblog: @Jing 潘静
The core advertising operating system Agencies -workflow mgmt
- Data collection - Report & analysis Ad operating system for agencies / advertisers Supply-side Publishers
Publisher advertising mgmt
Ad operating system for publishers
- Processing 1 billion requests / day
Advertising placement on 400 PC publishers and 10,000 mobile publishers daily
Matching the right ads with the most appropriate audience
Automated company workflow mgmt
Generating financial reporting data for mgmt decision-making
AdChina is China‘s leading integrated internet advertising platform. A leader in online advertising space in China, AdChina provides the technology platform and creates the marketplace for publishers, agencies/advertisers, as well as other third party players with a comprehensive range of digital advertising technologies, online user data solutions, and audience management systems. By end of Q3 2011, on a monthly basis, AdChina platforms have access to over 457 million or ~90% of total Chinese internet users across PC internet and mobile internet. AdChina was founded in Silicon Valley in 2007. AdChina is the leading technology-driven integrated internet advertising platform in China Demand-side
100 premium online publishers are using ASP
80 mainstream mobile publishers are using ASP
200 additional campaigns per month
300 campaigns at any given time
4000 historical campaigns
4 of the top 6 international 4A groups in China are using ADP
Online video to grow significantly. TV and internet overlap exceeds 50% in the top 60 China cities.
Chinese internet population exceeded 500 million in Jan. 2012. Driven by government policies, short term growth comes from urban and long term from rural markets.
Chinese internet advertising budget as percentage of total is ½ of that of the developed market. We estimate dramatic growth in 2012.
[ PART 1 ] 2011-2012 Digital Media Outlook [ 1.1 ] General [ 1.2 ] Display Ads [ 1.3 ] Mobile internet [ 1.4 ] Video [ 1.5 ] Social Media [ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5, Augmented Reality, NFC, QR code, Open Platform, Interest Graph
[ PART 1 ] 2011-2012 Digital Media Outlook [ 1.1 ] General: Winning on internet = winning the current & future consumers [ 1.2 ] Display Advertising [ 1.3 ] Mobile internet [ 1.4 ] Video [ 1.5 ] Social Media [ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5 ， Augmented Reality, NFC, QRcode, Open Platform, Interest Graph
China internet population exceeded 500 million; rural growth drives long term outlook
Government policies are the main drivers. “The National 12 th 5-year Plan” indicates that information technology construction for the rural areas is the main focus of rural development in China in 2011-2015.
The urbanization process also accelerates the progress.
Bandwidth upgrade and 3-screen development brings opportunities for new internet applications, hence drives urban internet growth in near term
“ Broadband China” strategy is part of “The National 12 th 5-year Plan”. The internet bandwidth in urban cities will be upgraded and the prices will drop dramatically. “3-screen project ”will continue to be important.
Online video, cloud services, and internet TV will proliferate accordingly and change urban internet users’ behaviors.
Data source: CNNIC China Internet Statistics2009-2012 Users(millions) Mobile internet Rural PC internet
Social media continues growth, mobile to drive social
Growth for traditional social networking and microblogs will slow down. User fatigue starts to appear.
Mobile social isto take off. Weixin* as the killer APP, will lead the next social networking tide.
Consumer online video usage will increase dramatically in 2012, driven by: 1. higher speed and lower price of broadband; 2. the Bureau of Radio & TV’s administrative order to limit certain entertainment content on TV.
Advertisers will shift significant advertising budget from TV to internet video. However the online video sites may not be able to absorb all the additional budget because most advertisers only command the traffic from tier 1 and 2 cities, which only accounts for 30%** of the total online video sites’ traffic. 3rd party display advertising platforms which are able to offer solid cross-channel media planning and data solutions will thrive with the opportunity
Online video to take the lead in digital advertising Social media and online video are not yet saturated Social media coverage Online video coverage US data source: comScore Nov. 2011 China data source: CNNIC29th China Internet Statistics Jan. 2012 * Weixin is the mobile instant messaging application offered by Tencent weixin.qq.com ** AdChina platform data, Jan. 2012
Winning on internet = winning current & future consumers China’s netizens spend almost as much time on internet as on TV Newspaper avg. time spent hours/day Magazine CMMS Summer 2007 – Summer 2011 TV Internet Broadcast CNNIC 29th China Internet Statistics Report Jan 2012 StarcomMediaVest Group “China Yangtze Study: Oct. 2011 avg. time spent hours/day (age:13-45) TV Internet Younger users (age: 13-45) spend more time on internet than on TV, especially in Tier 3 & 4 cities 28% of internet users are below 20 years; 30% are 20-30
Internet advertising is under-invested in China
Most Chinese advertisers think that internet marketing is a high priority. Their investment decision is held back by the fact that there are not enough reliable digital marketing partners who can offer measurable services as on TV.
The mature internet advertisers are increasing their budget significantly in 2012 to occupy resources and build customer assets on internet before more competition comes in.
The London Olympics, proliferation of smart phones, and internet’s expansion to the smaller cities and rural areas will bring new opportunities to internet marketing in 2012.
China data source ： GroupM “This Year, Next Year, China Media Forecasters” , Sep. 2010; U.S. data source ： eMarketer 2010 data, published in Mar. 2011 China’s internet ad spending as % of the total media budget is ½ of that in the US
[ PART 1 ] 2011-2012 Digital Media Outlook [ 1.1 ] General [ 1.2 ] Display Advertising ： Ad placement through 3 rd party platforms to become mainstream [ 1.3 ] Mobile internet [ 1.4 ] Video [ 1.5 ] Social Media [ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5 ， Augmented Reality, NFC, QRcode, Open Platform, Interest Graph
Google to increase investment in display advertising, especially in 4 areas:
- Technology to simplify media buying and ad placement
- Ad space engagement capabilities
- Advertising evaluation mechanism
- Advertising operations system for media owners to effectively manage traffic monetization and media planning
After the rise and fall of eCommerce fever in 2011, advertisers now have a clearer perception on budget allocation and KPI setting for brand advertising and performance-based advertising.
After trial and testing, the Chinese advertisers have become used to looking beyond PV and clicks to evaluate digital advertising. Branding lift and target audience coverage efficiency are to become standard metrics.
Advertisers request display ads to be better combined with social media marketing.
eMarketer Nov. 2011 Display ads to become highest priority for Chinese advertisers China display ad as % to total digital spending will grow to 43% in 2014
Ad placement through 3 rd party platforms is a top choice for US advertisers
US advertisers widely recognize the value of ad networks, DSPs*, and ad exchanges for delivering better results and saving budget.
The generally low economic outlook further promoted advertisers’ adoption of 3 rd party platforms.
*A DSP(Demand Side Platform) is a system that allows digital advertisers to manage multiple ads through one interface. Utilizing a DSP, marketers can manage their bids for the ad space, the pricing, and the data that they are layering on to target their audiences. AdChina platform ad placement is widely recognized by Chinese advertisers
On average, every client has placed more than 4 ads with AdChina.
We estimate that at least 20% of the internet ads will be placed through 3 rd party platforms in China by 2014.
ValueClick “Advertiser Survey 2011” based on 400+ senior U.S. advertiser Feb. 2011 43% advertisers plan to spend more than 25% of their digital budgets in / through? ad networks 25% of advertisers planned to increase their ad network budget
DSP is still in its starting stage in China.
AdChina DSP is probably the only DSP developed for China market with world-class standards.
4 of the top 6 international 4A media agencies in China adopted AdChina DSP to manage their advertising operations in the past 2 years. We estimate significant growth in China’s DSP business in 2012.
The Chinese advertisers need the platforms to deliver ads to massive audiences and across hundreds of websites easily. Publisher quality is a high priority.
Chinese advertisers utilize 3 rd party display ad platforms mainly for branding The Harvard Business School research students provided the following POV:
It’s a massive offline market in China. Advertisers recognize 3rd party platforms’ abilities to maximize the reach to consumers, collect data and conduct eCRM to drive offline sales
The Chinese digital market is sophisticated but not complex. Advertisers are good at prioritization. That’s why it’s hard for the market space to support multiple types of 3rd party platforms to develop. Chinese advertisers prefer platforms that can provide to them practical solutions and proven track records.
Harvard Business School“China’s Technology-driven Advertising Study”, Dec. 2011 China branding ad network market will double every year till 2013 iResearch 2010-2011China ad network development report May. 2011
The top 3 factors in choosing a media partner: US advertisers value data-driven advertising capabilities
The ROI from behavioral targeting may vary significantly depending on the technological capabilities to process large-scale data and conduct multi-dimensional analysis
ValueClick “Advertiser Survey 2011” Based on 400+ senior US advertiser Feb. 2011 The top factors in choosing a media partner Behavioral targeting (66%) is believed to be one of the most important types of audience targeting Harvard Business School“China’s Technology-driven Advertising Study”, Dec. 2011
[ PART 1 ] 2011-2012 Digital Media Outlook [ 1.1 ] General [ 1.2 ] Display Advertising [ 1.3 ] Mobile internet ： It’s a war. And it’s starting now. [ 1.4 ] Video [ 1.5 ] Social Media [ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5 ， Augmented Reality, NFC, QRcode, Open Platform, Interest Graph
Mobile advertising has great potential. Tablets are the future stars
Mobile internet user growth CAGR is much higher than PC internet in the comparable period. Smart phone proliferation and decrease in telecom fees are the main drivers.
Tablet computer growth was significant in 2011 and provides new marketing opportunities in the next few years.
1% of the AdChina online platform visitation (non-search and eCommerce) are from mobile devices at the end of 2011. While the according number from the previous year was only 0.04%. 44.5% of the mobile devices’ traffic are from iPads at the end of 2011.
AdChina research indicates that 58% of the mobile users are using smart phones.
74% of mobile internet users access internet everyday using smart phone and 87% use installed mobile internet applications
2007 50MM Smart phone changing the world CNNIC 29th China Internet Statistics Report Jan. 2012 End of 2011 356MM CAGR 48% *Base: mobile internet users AdChina “2011China mobile internet research report” Jul. 2011
APPs are already among the most important consumer touch points APPs are highly fragmented
Consumers use APPs as time fillers and on a frequent basis
55% of app users use apps longer than 1 hour/day 9% heavy users use apps more than 5 hours/day 55% mobile users use more than 5 apps, up by 31% YOY AdChina “2011China mobile internet research report” Jul. 2011 App Store & Android Market Dec. 2011
Number of apps on the global market :
LBS might be the next killer marketing application
In 2011a lot of major digital media owners (Sina, Jiepang, Shanda, Tencent, Dianping, etc.) upgraded their LBS services. New applications include:
Location-based social networking
Quick response (QR) code scanning
LBS: it’s beyond check-in and sharing
As user needs change, new marketing opportunities around LBS will emerge.
42% of mobile users use LBS* because of convenience Convenience Social needs Fashion Coupons Enfodesk Dec. 2011 *A location-based service (LBS) is an information or entertainment service which is accessible with mobile devices through the mobile network and which uses information on the geographical position of the mobile device.
Chinese mobile internet users are more willing to receive mobile ads than the US counterparts
61% of Chinese mobile users are willing to receive ads for rewards or freebies.
53% of the Chinese mobile users used a mobile coupon to purchase a product offline.
Google/IPSOS/MMA (Mobile Marketing Association) Our Mobile Planet Nov.2011 *Base: smart phone owners who have noticed advertising on their smartphones *Base: smart phone owners Awareness of mobile ads Statements Actions after noticing a mobile ad
[ PART 1 ] 2011-2012 Digital Media Outlook [ 1.1 ] General [ 1.2 ] Display Advertising [ 1.3 ] Mobile internet [ 1.4 ] Video ： Cross-screen is the gold mine for digital marketing [ 1.5 ] Social Media [ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5 ， Augmented Reality, NFC, QRcode, Open Platform, Interest Graph
User composition of online video is much younger than the general internet.
Online video is an addictive medium
According to data from Youku.com (the largest online video website in China), the online video users’ time spent on TV decreased by 63.3%, frequency dropped by 56.4% after they started to watch video online.
The longer a user uses online video, the more the media behavior changes.
End of 2011 325MM CAGR 15% 67% online video users are below 30 Jan-Nov. 2011 Online video monthly time spent increased 57% CNNIC 29th China Internet Statistics Report Jan.2012 iResearch iUserTracker Jan-Nov. 2011 2007 160MM CNNIC 29th China Internet Statistics Report Jan. 2012
Cross-screen usage increases year by year TV and internet complement each other well in terms of reach Internet complements TV reach during day time TV complements internet reach during the night time CMMS2009A~CMMS2010A China National Resident Survey, 2008-2010 60 top Chinese cities, sample age: 15-60 TV & internet user overlap is above 50% TV only users decreased year on year TV & internet overlap reached 63% in tier 1 cities CC11SUAC Mar. 2011
Interactive pre-roll works well with long video content and to engage young audiences.
Interactive pre-roll is a hot new format on the US market in 2011. AdChina introduced the format to China in Q4 2011 after collecting enough data to prove its value to Chinese advertisers.
Pre-roll Interactive pre-roll comScore Data for in-stream Video Advertising Jul. 2011
[ PART 1 ] 2011-2012Digital Media Outlook [ 1.1 ] General [ 1.2 ] Display Advertising [ 1.3 ] Mobile internet [ 1.4 ] Video [ 1.5 ] Social Media ： The market is looking for a practical social media marketing book [ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5 ， Augmented Reality, NFC, QRcode, Open Platform, Interest Graph
Mobile social networking is reaching its critical mass. Weixin active users reached 30 million.
Social media marketing is at its early stage in China
Less than half of the advertisers use social media for marketing purposes in China while 80% do so in the US.
Social media marketing is heavily under-invested in China.
reason of social media marketing usage of social media marketing Booz &Co Buddy Media Campaigns to Capabilities Social Media &Marketing Oct. 2011 iResearch iUserTracker Jan-Nov. 2011 Grant Thornton “ International Business Report” Nov. 2011 2011.10 350MM Nov. 2011 390MM
Limited by the availability of technology and tools, social media marketing is mainly evaluated by the number of followers and forwards currently
Chinese advertisers’ urging question: How to effectively do micro-blog marketing Social media marketing metrics US advertisers are most concerned about Chief Marketer “ 2011 Social Marketing Survey” Oct. 2011 Coming soon: AdChina “ Micro-blog Marketing Manual: Today and Future”
Planning out of the box to unleash the power of social media marketing
Advertisers need to build the strategy and working process to utilize social media to engage with customers, conduct CRM, building word-of-mouth, and collect market insights
Booz & Co Buddy Media Campaigns to Capabilities Social Media & Marketing Oct. 2011 US advertisers widely use social media for brand building
[ PART 1 ] 2011-2012Digital Media Outlook [ 1.1 ] General [ 1.2 ] Display Advertising [ 1.3 ] Mobile internet [ 1.4 ] Video [ 1.5 ] Social Media [ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5 ， Augmented Reality, NFC, QRcode, Open Platform, Interest Graph
NEAR FIELD COMMUNICATION INTEREST GRAPH OPEN PLATFORM AUGMENTED REALITY QUICK RESPONSE CODE Social Mobile
So-Mo: Connecting with the consumers at real time Mo-Lo: driving consumers to the stores Lo-So: creating word-of-mouth LBS to direct consumers to the nearby stores and outdoor. More and more consumers are using mobile devices accessing social media, checking out micro-blogs and checking in to share their thoughts and activities with friends. Consumers today are eager to express themselves. Social media is their stage. Posting pictures and checking-in to share shopping experiences are common activities. O2O SoLoMo: connecting the digital and real world Mobile Connecting online with offline Social Where word-of-mouth and viral content fly Local Generating sales and shopping experiences
Two-dimensional code/quick response code: scan it, and you’ll know Consumers are scanning every code they can access Newspapers Product packaging Webpages Fliers Outdoor TV Postcards QR code scan enables Mobile payment Accessing product information Online/Mobile Shopping Sharing on social media Check-in Please try and scan the QR code above : ) APP download Coupon download
Augmented reality: adding new possibilities to marketing ideas Combining with QR codes: bringing life to the creative Combining QR scanning with LBS - Through scanning the QR codes on magazines, packages or other media, the users will be presented with animated content. - Through scanning the QR code at the store front or outdoor ads, users can see virtual content added to the environment they are in. - There are limited mobile applications in China with augmented reality functions. - The market is expecting the big fanfare event. AdChina targets to be the clients’ technology enabler. Augmented reality marketing is not widely adopted yet in China
Near Field Communication: the future star Fast and safe data exchange without touch or connection line
The latest Android 4.0 system includes the Near Field Communication (NFC) technology named Android Beam. Users can easily exchange webpages, maps, and game data at near range with each other.
- The NFC technology creates new creative possibilities to APP marketing and enables new interactive experiences for consumers.
HTML5: an upgrade to user experiences HTML5 will dramatically enhance mobile experiences: faster, bringing more powerful functions, and better compatibility - According to AT&T, 85% of all smart phones being sold in 2016 will support HTML5 - HTML5 can help marketers to deploy the same creative or campaign easily on mobile devices with different operating systems
Open platform: integration & fragmentation Integration - Through open platform, the user can utilize multiple services through one single platform, i.e. sharing video content to social media, and doing shopping on social media. Fragmentation - Open platform decreased the entry barrier for developing applications, services, and websites. A lot of new players will come into the market and provide more choices to the users.
Interest graph: the next hot thing Vertical social networking: based on interest - Through interest graph, users can get to know people beyond “6 degrees of separation” Augmented social networking: stronger media influence - Media based on interest graph push content to users according to their interest. Such content could be highly valuable and attract loyal users. - Fashion industry could be the first one to adopt this technology for marketing.
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-CEO, Double Click
President, Google Display Ads
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Michael Galgon -Principal Advertising Strategist, Microsoft -Founder, aQuantive Rick Thompson -Founder, Playdom -CEO, Adify &Flycast William A. Sahlman -Senior Associate Dean, Harvard Business School