Advertising on the mainland is big business nowadays. Total advertising on the mainland in 2003 was 108 billion yuan (US$13 billion), fully five times the total of 1994.

And over the last 10 years, ad-spending growth at 35 per cent, based on the Compound Annual Growth Rate (CAGR) calculation, exceeded the growth of GDP (a CAGR of 17.3 per cent).

Meanwhile, with the mainland's accession to the WTO, the increasing wealth and disposable income of its urban population and one-off events such as the 2008 Beijing Olympics, pressure on agencies to find more space for advertising is only likely to grow. TV advertising still constitutes the bulk of overall spending on advertising on the mainland.

Outdoor ad-vertising, however, has now moved to third place, making up 15.8 per cent of the total market.

As the mainland's thirst for advertising matures and deepens, alternatives to TV advertising have emerged.

A hike in rates for TV commercials has also made cheaper options much more attractive propositions. Better quality magazines now offer certain brands a viable alternative for the first time. Similarly, outdoor advertising is widely viewed as a central component to any advertising campaign.

"TV advertising is very expensive and not every client can afford it," says Francis Chu, chief executive officer and executive director of MediaNation.

Hong Kong-listed MediaNation was founded in 1991 as a direct response to this untapped potential for outdoor advertising in both Hong Kong and on the mainland.

The company built its business by specializing in advertising on public transport networks in Hong Kong and on the mainland. Deals with these networks now include exclusive rights to advertising on 20,000 buses in Hong Kong and likewise, in 15 of the mainland's biggest cities, as well as the metro systems in Shanghai and Beijing.

From 1998, the company's growing institutional shareholder base grew quickly, its turnover reaching HK$370 million by 2002.

"Different clients naturally choose different media. Some clients see outdoor advertising as a first and only media for advertising," he says.

Outdoor advertising has both strengths and weaknesses as a medium, according to Chu, who counts both domestic and multinational clients as part of the company's portfolio.

"Bus advertising can be very flexible. It doesn't matter if the products are luxury goods or FMCG (fast moving consumer goods)," he says. A bus campaign might typically cost anything from HK$100,000 to HK$1 million, but this may be money well spent, considering surveys have shown that more than 90 per cent of passenger journeys on the mainland are made on buses.

And in a separate survey carried out in 2001, it was found that bus advertising reaches 63 per cent of the population on the mainland and 83 per cent in Hong Kong.

However, unlike TV commercials, which are capable of transmitting relatively complicated and sophisticated messages, outdoor advertising is largely limited to simple snapshot images.

"It can be very impactful as long as the message is a simple one," he says. Chu distinguishes between outdoor advertising which is "active", and other key advertising media, such as TV and print advertising which are, by comparison, "passive".

In order for these passive forms to be effective, someone has to actively switch on the TV or open a magazine.

By contrast, buses are traveling all over the city at all times, reaching all socio-demographic groups and are an inescapable part of city life. It is almost impossible to go out in the city without encountering them, says Chu.

Adverts in the CBD are the most expensive to purchase, more so now after mainland authorities cracked down on unlicensed, chaotic and unsightly advertising in the central areas of the nation's cities.

These so-called "uni-poles" - defined as unlicensed advertisements which have no function other than for advertising - exploded on the scene in mainland cities and have only recently been clamped down on.

Chu welcomes the move. With as many as 50,000 outdoor advertising companies now operating and four major players - including MediaNation - all competing for a slice of the market, licensing and closer monitoring of the situation is necessary.

This has helped the more responsible agencies by removing the clutter and ensuring that "uni-poles" do not impact on functional ads.

"MediaNation only uses functional 'purpose ads'," says Chu.

"In the past the government did not pay much attention to environmental concerns and outdoor advertising in the past was very disorganized."

But outdoor advertising has its own limitations. Once "uni-poles" are removed as an option, new opportunities for mass advertising are few and far between.

Buses and underground railway networks are finite in number and although new MTR networks will emerge in more and more mainland cities, day-to-day opportunities are limited.

While mass market outdoor advertising, like that on buses, has already reached maturity, niche markets still offer interesting opportunities for those companies with enough imagination.

"There are limited new opportunities for the outdoor market, which is pretty much saturated," says Chu, "but niche market potential still exists."

Instead, a company must diversify into such niche markets if it is to continue to develop, he says.

Such niche markets include what the ad industry calls "street furniture". These are functional everyday features found on any urban street, which nevertheless hold the possibility of hosting advertising.

In an industry which grows through innovation, MediaNation's Shanghai operations expanded from public transport into 700 newspaper kiosks in 2001, as a way of developing new opportunities.

Another example of niche market advertising is MediaNation's latest project under development.

This brand new project will see red cross first-aid boxes being rolled out in stages in schools and universities in major cities like Shanghai, Beijing, Guangzhou and Shenzhen.

(HK Edition 08/30/2004 page15)