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OMD Transcend 2016

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OMD China's media outlook for the next 12 months

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OMD Transcend 2016

  1. 1. NATIONAL TAKEOVERS NationalTV and provincialsatellite channels resurgeto gain share fromlocalchannels INVENTORY WARS With more advertisers movingto buy online TV, premiumPC OTV inventoryis facing shortages A DIMINISHING DISPLAY Bannersfalloutof favor as videoadstriumph The Trends MASS MOMENTS WeChatmoments becomes volume reach tool THE DATAOLIGARCHY BAT continue to hoard data curtailing bigdata dreams INCREMENTAL PROGRAMMATIC Digital buyingmoves closer to pureprogrammatic by implementingad-servingtechnology CURRENCY EXCHANGE Digital mediapropelsnew media currencies forward OUTDOORPROGRESSION Out-of-Homeevolvesintothedigital ageto develop better formatsandmeasurements VERTICAL COMMERCE ExplosiveE-Commerce growth meansthere is now roomfor sites cateringto nichesegments
  2. 2. National Takeovers Consumers no longer care where they get content, but are drawn to wherever the hottest content is. While overall time spent on TV has decreased, banner shows like Running Man and I’m a Singer, are still capable of pulling in audiences. However, Local TV (LTV) channels with limited budgets and relatively low content creation capabilities are seeing their audiences dwindle even further. For clients that still rely on TV to reach their audiences, National TV (NTV) and vital Provincial Satellite TV (PSTV) now play an even more important role. The entry price for premium position on national channels has reached a historical high, with bids of over RMB 500 million per sponsorship. 0 100,000 200,000 300,000 400,000 500,000 LTV NTV TV Spending 2013 2014 2015 -3% +5% RMB Million’ Advertisers will continue to rely on the powerful influence of NTV and key PSTV. With new content restrictions potentially crippling some of their star shows and OTV channels attempting to create their hit shows, NTV, and PSTV channels will need to up their content game. Advertisers will need to balance their need for brand-building channel presence on NTV and efficient buys on Local TV.
  3. 3. Inventory Wars With consumers spending more time watching online video, Online TV (OTV) inventory is increasingly sought after by advertisers. Its hottest battlefield is in premium inventory for Tier 1 and 2 markets: average prices there have risen to levels on par with TV. Despite mobile OTV’s proven efficacy over PC OTV ads and equitable pricing on both mobile and PC, advertisers continue to prefer buying PC inventory, exacerbating an already squeezed marketplace. Advertisers should take advantage of cheap mobile inventory in Tier 1 and 2 while they can. For OTV platforms, it will be necessary to create new formats to increase inventory. Source: MMMS 2014-2015; 2015 China Digital Audio and Visual Consumption Development Report 24% 15% 76% 85% 2014 2015 OTV Timespent Mobile Timespent % PC Timespent % 49% 62% 72% 77% 96% 79% 71% 54% 2012 2013 2014 2015 OTV Reach Mobile Reach % PC Reach %
  4. 4. A Diminishing DisplayDisplay banner ads have steadily fallen out of favor with advertisers. The average click-through rate of display advertising is merely 0.04%, making this measure irrelevant for campaigns. The traditional display banner is not coming back. Its share of spending on digital will only decrease as other formats such as video ads increasingly take up more shares. The importance of display as a medium has diminished, but with programmatic buying will live on as a long tail means to target specific consumer groups with higher accuracy. Advertisers should leverage programmatic buying to make display investment more efficient and divert investment into video and other creative formats on digital to drive effectiveness. 20% 27% 32% 41% 67% 62% 54% 46% 13% 11% 14% 13% 0% 20% 40% 60% 80% 100% 2013 2014 2015 2016 Spending Percentageby Format Video ads % Banner ads % Other format % Source: iResearch Ad spending monitoring 2013-2015; Double Click Display Benchmark
  5. 5. Mass MomentsSince launching last year, WeChat advertising has opened up its Moments advertising space to the wider market through a self-service platform. With 697 million monthly active users on the platform, a WeChat Moments ad can not only reach a wide audience, but a targeted one. Using Tencent’s data bank of user behavior, not only can advertisers target via typical demographics filters, but also people who have purchased products on their platforms, or by their in-app game purchases. WeChat is moving towards a Facebook-like model, pursuing smaller advertising dollar per ad but with a bigger base. With CPMs as low as 50RMB, WeChat advertising is now not only a viable media for many SMEs but a cost efficient and effective way to reach their audiences. Advertisers should include WeChat video ads as part of their mass communication strategy to build reach and awareness given the ability to target and retarget users.
  6. 6. The Data Oligarchy Last year, we finally saw advertisers and marketers make some strides forward regarding implementing Big Data into their marketing plans. Most of their dreams of Big Data driven decisions have proven unattainable. In a world in which data is meant to be ubiquitous, the data flow seems to have been dammed up. The reality is that the oligarchs of data: Baidu, Alibaba and Tencent are still very cautious about sharing any consumer data with advertisers or agencies. Advertisers have yet to reap the benefit of the data BAT posses. However, with more and more strategic partnerships being signed with BAT, this year may finally be the year the data floodgates open enabling us to have more precise and targeted buying. With the opening up of data walls, DMPs will become critical. Advertisers need to ensure they have data strategies and systems in place to best utilize the flood of data available to them. BRANDS
  7. 7. An estimated 60% of digital buying in China is said to be programmatic. Programmatic buying in China is often a poorer cousin of its Western counterpart, often hampered by the lack of transparency, data availability which crucially lead to difficulties in building DMPs. In the past year, to combat this, the industry has moved from purely using ad-tracking to buy ads to ad-serving—a step towards pure programmatic. Prior to this, digital buying relied on post-campaign tracking to deliver campaign performance. Today, with better technology, advertisers can plan ad-serving ahead and maximize efficiency in the delivery process by collaborating with media publishers such as BAT. The ability to target specific cookies through ad- serving takes us a step closer to pure programmatic buying. Incremental Programmatic Advertisers need to leverage the cookie information including demographics, browsing behavior and even purchase behavior to plan ad-serving ahead of the campaign. This will minimize campaign wastage and achieve the highest efficiency.
  8. 8. Currency Exchange Advertisers need to balance a fine line between measuring everything and understanding which currencies track to business results. Data may not always translate to knowledge to make better buying decisions. Last year, Nielsen joined the online ad tracking race and began to offer digital tracking and multi-screen planning services. Inevitably, as more digital tracking vendors and digital measurement agencies enter the market, new measurement currencies will come into play as they try to differentiate themselves. KPIs such CPVM (cost per viewed thousand, which tracks viewable and fraud free impressions) and TA click through rates aim to help us measure performance better. Perhaps the question should be instead, which of the many new currencies available will remain after the dust has settled. After all, 50 years later, TV is still being bought and measured by GRPs. Marketers already inundated with data may be looking for that single measure to help them make decisions.
  9. 9. Outdoor Progression Advertisers need to be prepared for the digitalization of OOH by exploring new technologies such as AR, NFC, and iBeacon to enhance creative impact, achieve better targeting and tracking. Out of Home is experiencing a resurgence as they attempt to bring their media into the digital world. No longer static, OOH can now mean mega digital screens paired with advanced technologies such as augmented reality that allow advertisers to have in-depth interaction and engagement with consumers. Out of Home accountability is also improving, with enhanced targeting through better data on demographic profiles by the site. We are already able to monitor the reach of OOH displays by using NFC to identify mobile phones passing by. With audience recognition either by facial recognition or via mobiles already possible, shortly, OOH buying will become programmatic: introducing automation and optimization into the OOH buying process.
  10. 10. Vertical Commerce In addition to being present on the largest E-commerce platforms in the world, advertisers should not ignore the power of smaller E- commerce verticals, which offer more precise targeting and engagement opportunities. Predicted to reach $911 billion USD in 2016, the Chinese e-Commerce landscape is shifting towards its third phase development. In the past decade we’ve moved from an auction-based model to large-scaleB2C and now customized sites for particular interests. Attracted to niche sites and apps because of customized choices, in- depth content, and a sense of community, we’ve seen a rapid growth of vertical E-commerce sites which are a combination of online community and shopping platforms. These shopping platforms include platforms like Jiyoujia.com—a site for homewares with 576,000 visitors per day and Benlai.com—a healthy grocery shopping site with 275,000 visitors per day, have increased in popularity. SpecializedE-commerce platforms will mushroom to satisfy the unique needs of their audiences, which are now often overlooked on big platforms. Source: iResearch iUsertracker Mar 2016, eMarketer Retail Ecommerce Sales in China
  11. 11. OMD Copyright 2016 CONTACT US Jeanette Phang DIRECTOR Jeanette.Phang@omd.com Bhasker Jaiswal MANAGING PARTNER Bhasker.Jaiswal@omd.com Rachel Fan MANAGER Rachel.fan@omd.com

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