Outdoor media in tough straits

Only the most innovative of China's outdoor media advertising businesses will survive the current recession. The industry gained skyrocketing growth between 2005 and 2007. Now, many of China's 70,000 outdoor media advertisers expect hard times ahead.

"The ongoing economic recession has popped the outdoor media advertising industry bubble," Wang Mingtan, chairman of Shanghai Synergy Advertising Co, told China Daily. Wang, one of China's early entrants in the field of interactive and direct marketing, said advertisers nowadays are adopting a multi-level strategy with more focus on special consumer groups that they want to target.

Analysis International, an advisor of technology, media and telecom industries in China, forecasts that China's outdoor LCD advertising sector will only see 36.04 percent growth in 2009, compared to 71.3 percent in 2008. It foresees even slower growth in 2010 of only 23.7 percent and in 2011 of 17.5 percent.

In 2007, a total of $347 million in venture capital was raised for financing 26 outdoor media businesses. In the second quarter of last year, overall investment in the sector registered a year-over-year drop of 70 percent, in sharp contrast to the 40 percent rise registered in the first quarter of 2008, according to ChinaVenture statistics.

In December last year, China's largest portal website Sina Corp announced that it acquired the outdoor digital advertising business from China's outdoor media sector leader, Focus Media, for $1.37 billion, making Sina one of China's biggest advertising conglomerates.

Focus Media, which launched a $171 million IPO on Nasdaq in 2005, has been followed by small rivals copying its business model in hotels, airports, gyms and golf clubs, hoping to attract venture capital.

(China Daily 03/23/2009 page12)