China's media set to benefit from lift in ad spend

by Arif Durrani, mediaweek.co.uk 09-Sep-09, 13:59

LONDON - China's media industry is set to benefit from a stronger than anticipated lift in national advertising expenditure this year, after its economy has proved more resilient to the global downturn than previously predicted, according to a GroupM report out today.

Revised forecasts by GroupM, the parent investment company to WPP agencies MediaCom, Mediaedge:cia and Mindshare, tip China's media spend to increase 5.8% to RMB 254.5bn this year, and by 9.8% to RMB 279.4bn in 2010.

It represents a significant improvement on the group's previous growth forecast in June of 3.2% in 2009 and 8.9% in 2010.

Internet spend is "expected to lead the way" as the fastest growing medium, generating RMB 20.5bn in 2009.

China has an estimated 338 million internet users, easily surpassing the US as the world's largest online community.

The report follows many global economists, including those from the World Bank and Goldman Sachs, raising their forecasts for Chinese GDP by about 1.5% to peg growth around 8% in 2009.

Furthermore, double-digit growth in GDP is expected to return to the Asian giant as early as next year.

Bessie Lee, chief executive of GroupM China, confirmed any pessimism that surrounded the outlook for the Chinese economy at the start of year "appears to be passing" and noted "key sectors increased spending patterns" in the second quarter.

Television remains the largest medium by ad spend, with forecasts of RMB 159.2bn in 2009. This compares to RMB 26.2bn for newspapers

Unlike Western markets, outdoor is the second largest media sector in China and is forecast to command RMB 30.2bn in 2009. But out-of-home media owners are expected to be hit by government restrictions on advertising in Shanghai ahead of the World Expo next year.

The improved outlook follows a bumper 22.6% increase in media spend in 2008, driven by a strong economic performance and additional impetus derived from the Beijing Olympics.

Comments

Dr ASJ Johan - 12/09/2009

A well written piece. Interesting to note that unlike Western markets, outdoor is the second largest media sector in China and is forecast to command RMB 30.2bn in 2009. One interesting area that's just developing offers advertisers a cost effective outdoor \(but effectively multimedia) branding outlet. That's through sponsorship and advertising at horse racing events which are being developed on a China-Wide basis by Richman's Racing. For more information please contact me Dr A S Johan at asjallmail@gmail.com