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Digital media ad revenues grow

By Ding Qingfen and Li Jiabao (China Daily)
Updated: 2009-08-03 07:58

   

Chinese in-taxi interactive media company Touchmedia's interactive screen is seen in this file photo. Touchmedia is becoming a favourite for venture capitalists, helped by the bright prospects of China's digital media industry.

As traditional media outlets like newspapers and television struggle over declining advertising revenues, new digital media advertising platforms are rapidly expanding.

More advertisers are turning to digital out-of-home media platforms displayed on television monitors inside taxis, buses, subways and public transit stations.

After raising 150 million yuan by the end of 2008, Shanghai-based Touchmedia absorbed a third round of investments totaling 100 million yuan in May.

With operations in Beijing, Shanghai, Guangzhou and Shenzhen, Touchmedia is China's largest in-taxi interactive media company.

"Touchmedia has absolutely outperformed our original business target set three years ago," said Gary Rieschel, founder of Qiming Venture Partners.

Qiming invested in Touchmedia in May and made earlier investments in the company in 2006 and 2008.

Touchmedia now is considering an initial public offering, probably next year if the economy recovers, said Michael Fung, the founder and CEO of Touchmedia.

"Our advertising sales have grown 1,000 percent for two consecutive years, and there is no sign of a slowdown in growth," Fung said.

Fast growth

Other digital media companies are growing fast, too.

In February, subway digital media operator Digital Media Group, or DMG, attracted $30 million in investments from the Shanghai-based Gobi Fund and the international investment group Oaktree Capital Management LLC.

In April, ToWoNa, the country's largest bus digital media operator, successfully attracted a third round of investments from private equity firms.

Zenith Optimedia, an international media planning and buying agency, predicts that expenditures on advertising worldwide will drop by 7 percent to $453 billion this year.

Related readings:  Digital dreams  China's digital publishing sector to maintain high growth rate  Touchmedia's big plans for taxi ad  Slump to squeeze ad spending

However, in China, the advertising market grew by 15 percent in January following double-digit growth in the last quarter of 2008, Chinese market research firm CTR reported.

"The Chinese advertising market has sustained growth, rather than declines, since last November. The momentum is still strong," said Huang Shengmin, director of the Institute of Advertising at Communication University of China.

Cui Bin, vice-president of ToWoNa, said the digital media sector will help drive that growth.

"Newspapers will see continuing declines in their share of the Chinese advertising market, and the new media's share will be growing at high speed," Cui said.

Analysts estimate that the digital media market in China will grow 30 percent to 40 percent during each of the next three years to surpass 300 billion yuan.

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