March 18, 2016

Ten Things You Need to Know About China's Media Market

GroupM China Issues 2016 China Media Forecasts

GroupM China today issued its latest This Year, Next Year report, forecasting that China’s advertising investments will reach CNY 545 billion in 2016, a 9.3% increase over 2015.

The study is part of GroupM's media and marketing forecasting series drawn from data supplied mainly by parent company WPP's worldwide resources in advertising, public relations, market research, and specialist communications.

The report is upbeat at the outlook of China’s advertising expenditures market. The overall media market is blessed with many factors in favor of the advertising market despite the slowing macro-economic growth. From a macro view, there is an unwaveringly upward media trend driven by the bloating daily consumer demand from China’s 1.4 billion population, stable consumer confidence, and the growing demand for consumption upgrade, the vigorously promoted urbanization and the Internet+ media fusion strategy. At a micro level, 2016 will be a big year for sports with the 31st summer Olympic Games in Brazil, and the 15th European Football Championship in France. In view of the closer bonding between sports activities and marketing, the world’s two top games are guaranteed to attract a larger audience.

The report also said that the change in policies may have impacts such as the “One Drama up to Two PSTVs” which intensified “Matthew Effect” in market competition and brought about the prosperity of online video advertising market; the new Chinese Advertising Law strengthening mass media advertising rules as well as regulations on Internet advertising, and the online publishing service management rules effective March 10th strengthening the regulations of online content, etc. Advertisers and agencies are bound to take policy risks into account for online media strategy and content planning.

Patrick Xu, GroupM China CEO said, “The media landscape has radically transformed due to evolutions in the business world and new technology applications in the past year. Every marketer is now facing challenges associated with innovation and ever-enhancing market trends aiming for success in the new world. This report tries to draw a full picture of the China media market for brands and media to help them seize real opportunities. “

The following highlights of the GroupM reports demonstrate China’s changing media landscape for marketers:

1. Internet ad spend is taking nearly half of the total, while mobile advertising will become the most popular online media advertising type. Internet ad spending in China has surpassed television spending for the first time in 2015, and it’s forecasted to take up 49.7% of the total ad spend. Mobile screen has become the first screen of consumers and mobile internet ad is expected to grow twice as fast as that of the overall internet ad spend.

2. Programmatic purchase will see deepening development. Despite their ever increasing budgets on programmatic purchase, big advertisers are focusing not only on efficiency and effectiveness but also the quality of advertising resources and advertising environment. A combo of PDB + RTB purchase of advertisements has become the mainstream model.

3. Television continues to play a dominant role in terms of coverage and influence despite lowering market share. The further development of the new interactive approaches via television such as “WeChat Shake” and “Watch and Shop” is anticipated to accelerate the fusion of new media and traditional media. The organic combination of “Wechat + Television” is more of a “new volume entrance” plus a “new advertising platform” than just a mere shaking to obtain free cash red packets. The combination has created added value of television by gradually transforming the latter from content display media to content interactive media.

4. Subtle product placements in variety shows are favorites. In 2015, the most expensive advertising endorsement in one variety show was as much as CNY 500 million, arriving at a new level. However, recent years have detected a pervasive bottleneck in ad volume and price because of restrictions on advertising. Media and advertising companies started to diversify how they promote brands through more dimensions with more subtlety. There are more interactions with fans and more crossover marketing for the sake of speedy integration of multi-screen interaction and television-Internet linkage.

5. Variety shows are one of CCTV’s top priorities in 2016, while dramas and sports event broadcasting rights are unparalleled advantages. 2016 is surely a big year for sports event. The exclusive television rights and new media broadcasting rights now enjoyed by CCTV in China mainland and Macau have helped CCTV in winning the favor of advertisers. This could be seen in the competition of title sponsorship for the Olympic programs and the Olympic medal tally.

6. PSTVs remain a key driver for TV expenditure growth as LTVs group together. The ad spend in PSTVs increased 13.8% in 2015, and 6.0% this year. Hunan PSTV, Zhejiang PSTV, Jiangsu PSTV and Dragon TV firmly held the top 4 spots. Meanwhile, LTVs were riding on the advantage of local coverage by ground channels and nationwide coverage of online video network to build up their core competitiveness through alliancing themselves. This innovative model provided new options for advertisers.

7. The online video market has increased by 61.2% year-on-year. In future, online video websites’ current business model of solely relying on advertising revenue will be replaced by a series of Eco models. These will range from content investment, big data, systematic purchase, video-based e-commerce, Internet finance and online payment. Brand owners need to understand that brand advertising is to provide premium entertainment content to the audience instead of creating disturbance for them.

8. ‘Scenario will be the emperor’ in OOH. The huge market potential and broad prospects for development indicate that investing extensively in OOH advertising in Tier-3 and Tier-4 cities, is a useful proposition. Nowadays as consumers spend an increasing amount of time outdoors, it is critical for outdoor advertisers to strengthen interactions and increase convergence of new technologies. Technologies such as augmented reality, beacons and virtual reality are set to reshape the outlook of outdoor advertising.

9. Printed media’s “transformation and upgradation” and media integration elevated to a “national strategy” level. While focusing on developing own content and converging media platforms, “transformation and upgradation” have become the new concept in content innovation and value enhancement.

10. Growth of radio ad spend entered the negative territory in 2015 for the first time. But it is expected to be the pioneer media for many advertisers’ advertising channels in lower-tier cities. Despite attracting a large number of listeners last year, the competitiveness of mobile radio stations for a sustainable future will mainly lie in three aspects: enhancement of self-generated content to increase listeners’ adhesiveness, diversification of connections among different end devices to cover more scenarios and improvement in accuracy and localization of platform advertising through big data + LBS (Location Based Services).

About GroupM
GroupM is the leading global media investment management company serving as the parent to WPP media agencies including Mindshare, MEC, MediaCom, Maxus, as well as the programmatic digital media platform, Xaxis, each global operations in their own right with leading market positions. GroupM’s primary purpose is to maximize performance of WPP’s media agencies by operating as leader and collaborator in trading, content creation, sports, digital, finance, proprietary tool development and other business-critical capabilities. GroupM’s focus is to deliver unrivalled marketplace advantage to its clients, stakeholders and people.