GroupM, an arm of the world's leading communications company WPP Group Plc, has teamed up with a Beijing firm to boost its share of China's online advertising market.

Beijing Huang Yang Lian Zhong Advertising Corp (HYLZ) and GroupM signed a joint venture deal yesterday.

HYLZ will have a controlling 51 per cent stake in the new venture, which will be called GroupM Interaction, with GroupM holding the remaining 49 per cent.

"The reason for the joint venture is to better integrate online media resources and serve our clients," said Li Qianling, CEO of GroupM.

According to her, the new venture has emerged due to the rapid growth of China's online advertising market.

Statistics show the number of Internet subscribers in China rose 18 per cent last year to 111 million, which makes China the world's second-largest market after the United States.

Online advertising has grown rapidly as a result.

The market was worth 3.1 billion yuan (US$387.5 million) last year, an increase of 1.2 billion yuan (US$150 million) over 2004, according to online market research firm iResearch.

"Co-operation with HYLZ will put us in an even stronger position in the country," said Martin Sorrel, WPP's chief executive officer.

Currently, HYLZ holds almost 10 per cent of the online advertising market, while GroupM has about 5 per cent.

"It is a strategic move for WPP's long-term development here," said Sorrel.

China, as one of the fastest growing advertising markets in the world, is already the fifth-largest market for WPP.

"We anticipate it will become our third-largest market by the Beijing Olympics in 2008," he said.

The group's total revenue in China is about US$500 million, with GroupM accounting for one-third of that.

But, according to Li Qianling, online advertising contributes only a small part of WPP's total revenue.

"With the establishment of the new venture, we will combine GroupM's expertise and its broader range of international clients with HYLZ's local experience," said Su Tong, chairman of HYLZ and the president of the new venture.

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