The rise of advertising in China
At the time when the People’s Republic of China was founded, the old advertising industry had undergone a robust development. Various forms of advertising such as posters, placards, billboards, signs and windows displays were prominently featured in China’s cities. With a strong background in advertising management, many advertising techniques were further used as an important tool for social ideological and economic propaganda. However, during the Cultural Revolution, advertising was prohibited and attacked as “feng zixiu” (i.e. feudalism, capitalism, revisionism).
Advertising agencies were disbanded, leaving China’s industry to stagnate at a time when advertising was undergoing rapid development elsewhere in the world. The situation improved with the end of the Cultural Revolution in 1978.
After the Third Plenary Session, planned economy transitioned to market adjustment. Many new products needed help developing new markets and expanding sales, providing an opportunity for the advertising industry to recover and develop. The year 1978 is regarded as the beginning of the advertising industry recovery in China. Advertising in terms of quantity, form, management and other aspects has since improved by leaps and bounds, but its long hiatus and subsequent boom has created a parallel development that separates Chinese advertising from the rest of the world in a few key ways.
Online advertising in China continues to grow
Online advertising in China is growing at a shocking rate, playing an increasingly important role in the advertising industry. It even surpassed billboard advertising to become the fifth largest media after the four traditional mediums (television, radio, newspapers, magazines). Notice that China still relies heavily on these traditional advertising channels while online advertising in China is innovating at a very rapid rate. This is one of the curious factors that define China’s advertising space. In response, numerous international advertising agencies have set up a special online media division in order to capitalize on the huge potential for online advertising in China.
In 2014, the advertising market in China continued its steady expansion with a growth rate of 9.7%, higher than the GDP growth rate of 7.7%.
According to Tsinghua University School of Journalism and Communication’s Media Blue Book: China Media Industry Development Report (2015), online advertising revenue in 2014 exceeded television advertising revenue for the first time, with more than 150 billion RMB.
Online advertising will continue to take more share from the traditional advertising market and come to support the majority of growth for the whole advertising market in China. As more companies realize that the downward trend of print media is difficult if not impossible to reverse, they will seek to pivot into online advertising.
Why brands should care about online advertising
In July 2015, the CNNIC (China Internet Network Information Center) announced that the number of Chinese netizens reached 668 million, with an internet penetration rate of 48.8%.
Among them, the number of mobile phone users reached 594 million, about 88.9% of the total internet population. With the trend towards larger screens and the continuous improvement of mobile applications experience, mobile phones are likely to become the main internet terminal for a majority of internet users. In addition, the overall diversity of internet users has greatly improved.
Internet users in rural areas are experiencing a rapid growth as well. More and more industries are now suitable for online advertising, which will undoubtedly become a long-term growth momentum for online advertising in China.
The unprecedented trend in online advertising
The online advertising market boom not only encourages traditional advertising agencies to pivot towards online advertising but has also spawned a growing number of advertising agencies entering the online advertising market. In addition, user service providers, firms that offer services to measure advertising effectiveness, and many other companies have also entered the online advertising market.
At the same time, facing huge profit space, the online advertising market has become a major source of income for many websites.
The competition between websites is becoming more intense. A lot of websites are constantly adjusting their ads, revising the original ads and improving their layout.
Three tips for advertisers to achieve success in China
• Specify advertising purposes and target
Advertising purposes can be brand promotion, product promotion or online business. Advertisers should choose different types of online ads corresponding to their different purposes. If it is to promote the brand, advertisers should put their advertisements on a website which has a significant amount of traffic, a high reputation and an audience in line with target consumers. One ideal venue for this is the densely populated and highly active Chinese blogosphere.
Finding a blog that matches the target demographic requires local expertise, but it’s often more successful (and less expensive) than advertising in more traditional outlets.
If it is to promote a product or channel construction, suitable for industry portal advertising, and if it is to promote an online business, then one should engage in Baidu SEM, making bids on keyword rankings in China’s dominant search engine.
• Creative advertising production
Media forms of online advertising includes text, pictures, animation, and other rich media, all of which are especially popular in China, where consumers react positively to creative, delicately designed and accurate positioning of advertising. Viral campaigns are particularly effective as their populist nature overcomes some of the initial skepticism that is growing in China following several highly publicized scandals regarding false advertising.
However, China’s netizens are extremely discerning, and in a country where verified user reviews rate higher than any other form of recommendation, false advertising can backfire quickly and catastrophically.
• Specify the budget
The cost gap between different types of online advertising and web platforms is significant. The advertising costs on Sina, QQ and other big sites range into the tens and hundreds of thousands of RMB. Small professional gateways charge in the tens of thousands typically. The price is relatively cheap for advertising networks, but mostly personal websites are comparatively low. As previously mentioned, identifying smaller (by Chinese standards, they may still have monthly traffic of a hundred thousand unique visitors or more) websites which attract readers close to a product’s target consumer is a sure way to keep costs low and simultaneously make sure the message reaches those most likely to buy.
Daxue Consulting Expertise
Daxue Consulting can provide you support in understanding online advertising in China. We conduct all the market research and consulting services you may need, such as potential analysis, cost analysis, implementation feasibility etc. To know more about online advertising in China, do not hesitate to contact our dedicated project managers by email at dx@daxueconsulting.com.
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