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China's ad sector on the fast track

By CHRIS MAIER (China Daily) Updated: 2015-01-27 11:08

ZenithOptimedia forecasts that advertising expenditure on the Chinese mainland will grow 10.5 percent in 2015 to 311 billion yuan ($50.7 billion).

The growth rate will be 2.1 percentage points lower than we forecast last September, with small downward revisions recorded across many regions of the world.

The Chinese government continues policy implementation to drive inward growth, although key global economic factors-coupled with cautiousness about local economic considerations such as slowing manufacturing and weaker property investment-are lowering expectations for 2015.

These factors resonate with minor but widespread declines in advertiser confidence related to the conflict in Ukraine, the destabilizing Russian currency, falling oil prices and weak economic growth at the heart of the eurozone.

According to ZenithOptimedia's global advertising forecasts, the Chinese mainland is classified as being in the "Fast-track Asia" region, which also includes India, Indonesia, Malaysia, Pakistan, the Philippines, Taiwan, Thailand and Vietnam. These economies are growing rapidly and continue to do so as the inflow of funds continues from investors hoping to tap into this growth.

"Fast-track Asia" barely noticed the 2009 downturn (advertising expenditure grew by 7.4 percent that year) and has strengthened since then. This trend is expected to continue, with 2014 growth at 9.9 percent and annual growth of 9 percent to 11 percent forecast from 2015 to 2017.

China leads the charge for the "Fast-track Asia" region and, indeed, overtook Japan to become the world's second-largest ad market in 2014.

The Internet remains the fastest-growing medium. ZenithOptimedia estimates this segment grew 37 percent in 2014, with an expected average annual growth of 28.7 percent from 2015 to 2017.

Video display, which provides a valuable platform for cross-channeling TV advertising, continues to be the fastest-growing sub-category, with 35 percent annual growth forecast through 2017.

The trend can be seen moving beyond online video to multi-screen coverage including elevators, buses, outdoor public transportation shelters, cinemas and other venues.

This is followed closely by e-commerce search, anticipated to grow at an average annual rate of 34 percent through 2017. This segment is being driven by innovation at the top digital retailers such as Alibaba Group Holding Ltd and JD.com.

The rise of mobile advertising juxtaposes the rise in online product purchasing, and the impact in advertising spending on this medium is predicted to continue. Average growth is forecast at 108 percent from 2015 to 2017.

The author is head of research and analytics for ZenithOptimedia China. The views do not necessarily reflect those of China Daily.

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