2008 - Online Advertising in China and Considerations for US Market Entry

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The executive presentation to accompany the market entry analysis white paper

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2008 - Online Advertising in China and Considerations for US Market Entry

  1. 1. 6 C H A L L E N G E S U S W E B F I R M S M U S T M E E T T O S U C C E E D I N C H I N A Going .CN
  2. 2. What This Is A Report for US Senior Executives at Web Firms trying to leverage  The largest Internet audience in the World  The largest commercial market  BUT an immature online advertising environment Whose Revenue Model is based on Online Advertising
  3. 3. What We Did
  4. 4. What We Found  Six Unique Challenges  US Firms Are Unaware or Ignoring these issues  Bottom Line: No US Web Publisher Is Leading In China Today  They have no natural advantage in China
  5. 5. Overcome Fear of Labor  China has a lot of people who need jobs  Brute force labor in lieu of infrastructure  Government likes massive headcounts  Cultural expectations mean face to face is important  Automation is not a virtue  Contrary to typical US firm focus on labor cost saving
  6. 6. The Government – Obey, Lobby but Move Ahead  Multiple government (national and provincial) authorities and influence  Multiple, often conflicting, rules and regulations  Close ties can be beneficial  Get over the uncertainty and move ahead  Ask forgiveness if questioned  But See the Great Firewall
  7. 7. China Has the Largest Online Audience. So What?  China Internet Audience is 100+% of US Audience  But China Ad Spend is 5% of US  And 80% of that goes to 6 players  Ad Models are unsophisticated  Ad Buyers are different  Focusing on brand awareness  Users Aren’t Transacting  Set Your Expectations Accordingly
  8. 8. Start at Zero – Build Up to What Makes Sense  No US Based, Cookie Cutter Solutions  Rethink Everything for China  Offering  Brand  Model  Systems  Local Leadership And Autonomy Is KEY
  9. 9. Deals Are Person to Person, Bargained For, and You Buy What You Can See  Even Online, Guanxi Matters  Everything Must Be Negotiable  Advertisers Don’t See Value Unless They See the Ad
  10. 10. The Chinese Internet Will Not Become the US Internet  Clutter Is Expected  Entertainment  Youth  Community  Provincial  Mobile  Café
  11. 11. Final Thoughts  IF Your Goal Is to Compete in China’s Online Ad Space, Don’t Wait…  Don’t Wait Because of These Challenges  Chinese Internet Is Moving Even Faster than U.S.  Don’t Wait Because of Ethical Issues  Ethical Issues Surrounding Media Especially Difficult  But Not Going to Fundamentally Change; Make Go/No-Go Decision  Compete Now
  12. 12. http://jamiemba.wordpress.com/

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