According to Morgan Stanley Vice-president Richard Ji, thanks to a giant boost from the upcoming Summer Olympics, China's advertising market is expected to grow by 15% this year to reach 200 billion Yuan (US$25 billion), and by 25% to 245 billion Yuan (US$30 billion) in 2008.  Internet and outdoor advertising remain the fastest growing media.

Traditional advertising media will continue to diversify towards new media forms.  iAdChoice projects that the global advertising market will grow as much as 28.2% in 2007, which is 3.9% above the average growth rate of any other media.  Analysys International said in its "China Online Advertising Market Annual Report 2006" that China's online advertising market will reach 4.39 billion Yuan (US$548.75 million) for the full year of 2006, up 35.9% from the year before.  Search engine advertising will account for 32.37% of the total market.  According to Analysys International's projections, China's Internet advertising market will hit 6.87 billion Yuan (US$858.75 million) in 2008, stimulated by the Summer Olympics.

Currently, China's outdoor advertising accounts for between 14% and 15% of the industry's total revenues.  "Outdoor advertising and Internet advertising will become the fastest growing media in terms of revenues," said Richard Ji.  "Outdoor advertising faces lower regulatory risks, but enjoys a greater geographical monopoly."

Cao Chen, general manager of Ignite Advertising, a subsidiary of JWT Group,  added that, unlike countries such as the US with low population densities, China's high population density--especially in urban cities--creates a favorable climate for outdoor advertising.

The Beijing Olympics will be an enormous boon for outdoor advertising.  "During the Olympic Games in Athens, the world's biggest outdoor advertiser, Clear Channel, increased its advertising fees by 50%.  Considering that the Beijing Olympics will be held in the summer, when Chinese tend to engage in outdoor activities, outdoor advertising will likely see considerable growth as well," said Ji.

Indeed, outdoor advertising's positive prospects have stimulated industry attention.  TOM Group said that the company intends to strengthen its outdoor advertising business, especially in second-tier cities, starting in 2007.  White Horse Outdoor Advertising, JC Decaux, and Dahe Group all plan to consolidate their outdoor resources.

Relying on merely on form of advertising no longer acheives satisfactory results in the new media industry.  Cho commented that advertising is shifting its focus from large-scale mass coverage to smaller market segments that require varied advertising strategies.

"Advertising firms now place more emphasis on practical valuation of project results--whether their advertisements can reach their target group, and how," Ji said.  "But this doesn't mean that traditional meia, such as television and newspapers, would be completely replaced.  For brand advertisers, mainstream media like Sina and CCTV are still useful because of their wide coverage."

Cho added that, boosted by China's developing consumer market, retail outlets will likely become new channels of communication.  Hypermarkets and discount and convenient stores would serve as new outlets for advertisers.

Shanghai Securities Journal