DIGITAL media has a huge market potential over the next few years, with Chinese and foreign companies finding effective ways to market online, industry insiders and market watchers said.
Web portals, TV stations as well as social network sites are vying for a position to win big brand names' advertising budgets as global advertising spending rebound this years and digital spending is expected to grow above average.
At WPP, the world's largest advertising group, around 27 percent of its revenue comes from digital divisions. As for China, it is expecting the proportion will grow to around 25 to 30 percent in the next few years from only 9 to 10 percent at the moment, according to Chief Executive Officer Sir Martin Sorrell.
WPP hopes the region will become its third-largest market in the next few years, with US$1 billion of revenue coming from China's mainland, Taiwan and Hong Kong.
WPP's agencies include Ogilvy & Mather Worldwide, JWT and public relations firm Hill & Knowlton.
"In terms of scale and size, China is the most important media market at the moment while it has a very different model compared with more mature but slow-growing Western market," Sorrell said.
Speaking of the transition from digital media from traditional print media, he noted that the only way for traditional media to absorb and develop their online capabilities is for consumers to pay for content that they value.
During a press conference ahead of the China Digital Media Summit in Shanghai yesterday, he referred to Google and Yahoo as "media owners" instead of technology companies, as their efforts obviously now lies in providing integrated service for news distribution.
News Corp Chief Digital Officer Jonathan Miller also said that the group may charge for all the content it provides in the future, without giving a timetable, but added that the popularity of devices such as iPad had surpassed his expectations.
The launch of iPad provides a "good opportunity" to start charging users for content, he said.
The Wall Street Journal, owned by News Corp, has more than 1 million paying subscribers for its online edition in the United Stated, the largest for a single newspaper, according to Miller.
However, income from the group's digital division accounts for only a single-digit proportion of News Corp's total revenue at the moment.
Chinese TV operators are also trying to work out new ways to monetize on their TV programs as the State Council has encouraged the convergence of the TV network, mobile and telecommunications network.
Phoenix New Media, the digital branch of Phoenix Satellite TV, is also stepping into the latest trend of wireless Internet to provide users with a wide range of channels to get access their news content.
Revenues from its Internet advertising sector and wireless network video and news service will more than double from that of last year, according to chief operating officer and chief financial officer Li Ya.
Profit of the company is expected to exceed US$10 million this year, Li said at the sidelines of the summit.
"The number of users logging in our web portal from wireless devices will exceed the number of users viewing from computers by the end of this year," Li added.
"Users are more likely to pay for content through wireless handsets as payment channels through mobile operators may be easier compared with broadband users, and these may become new revenue streams."
With investment from Intel, China Mobile and News Corp, Phoenix New Media hopes to target more high-end users of the Internet and integrate different channels of news content distribution.
Unlike online video sites that spend huge amount of money to buy TV series and movies, Phoenix TV's news programs and talk shows are ready for its use and redistribution.
It also launched the iPad application in May, which keeps users updated with hundreds of videos everyday through their handsets.
About 66 percent of the total net user base in China, or 277 million people, connect to the web through mobile devices, according to statistics from China Internet Network Information Center released yesterday.
Market research firm eMarketer said in its latest research report that 2010 will see a return to double-digit online ad growth, with global spending set to reach U$61.8 billion. Growth will continue at rates of over 10 percent each year through 2014.
Pan Jing, general manager for advertising network operations of AdChina, noted that advertising models on the Internet are still not efficient with rather limited ways of tracking advertising distribution.
"As more and more advertisers are shifting part of their budgets to the Internet from TV commercials, the traditional ways of measuring efficiency are no longer effective," she added.
China's search engine leader Baidu also said it will focus on improvement of its search services and display advertising in the next few years as well as speed up development of service on the mobile network.
The Chinese market still provides huge growth potential for Baidu's search service although it has seen strong growth in the past few years, said Shen Haoyu, Baidu's senior vice president.
Baidu also attempts to tap the growing market by exploring better display advertising models with research agencies and partners.