Shanghai-based Focus Media lives up to its name by hitting China's affluent consumers with advertisements when they can't avoid viewing them.
The firm has hit its stride in its core market of running live-motion ads in offices where China's professional elite watch commercials while waiting for elevators.
Now Focus Media is broadening its reach to target consumers as they make purchases. Led by its media-savvy chief executive and chairman, Jason Nanchun Jiang, a former executive with top Chinese ad firms, Focus Media is rolling out advertising screens in the aisles, escalator paths and checkout counters in China's supermarkets.
China's domestic giants and multinational consumer goods makers are lining up to run their ads on these in-store screens to hit shoppers as they sift through supermarket shelves or reach for their wallets at the cash register.
More Displays
For the first quarter of this year, Focus Media's displays in stores rose 26% to 34,000, spread through 5,200 supermarkets and convenience stores. Displays in commercial buildings jumped 60% to 71,000.
They're just reaching the critical mass of flat panels in stores to go to advertisers and offer a comprehensive solution.
With its potential market of 1.3 billion consumers, China has the sixth largest market in advertising expenditures. The market was worth $11.4 billion in 2005 and has grown at an annual rate of 32% over the last 15 years.
With China's emerging middle class and the run-up to the 2008 Olympics in Beijing and 2010 World Expo in Shanghai, the market is poised to grow at an annual rate of 21% through 2010.
Although the middle class remains a small percentage of China's total population, advertisers may benefit from pitching their products along narrow channels that target the emerging affluent.
Advertisers are responding to this logic. Focus Media's Q2 revenue surged 247% to $50.6 million. The number of ad spots that Focus Media sells is outpacing the rate at which the company creates them.
From the second quarter of 2005 to the second quarter of 2006, Focus Media added 78% more spots for displays in commercial buildings, while the number sold nearly doubled. What's more, the advertising cycle, which is the number of ads it runs on each display, has expanded to include 24 30-second spots, up from 20.
Over the same period, Focus Media's utilization rate increased from 45% to 47%. Within Focus Media's tier-one markets -- Shanghai, Beijing, Guangzhou and Shenzhen -- the utilization rate is running at nearly 93%. That means Focus Media almost always has an inventory of paying advertisements for every screen it turns on in a major market.
By the end of March, Focus Media had over 1,800 domestic and multinational clients. The top five advertisers include local telecom giant China Mobile and automaker Dong Feng Auto, which has joint ventures with Toyota and Peugeot. Focus Media's marquee multinational clients include Samsung, NEC and Motorola. Together these accounts bring in 18% of Focus Media's revenue.
The company's client roster also includes consumer goods makers such as Procter & Gamble and L'Oreal.
With new drivers popping up, Honda and General Motors are using Focus Media to make sure their ads appear in front of China's middle-class shoppers.
The consumer in China has no debt and is less affected by interest rate and currency policies that impact businesses.
As a stand-alone business, Focus Media's in-store advertising business saw revenue rise 24% to $6.5 million, or 12% of total revenue.
This share will rise to 20% by 2007 as annual revenue from in-store ads jumps nearly 90% to $71 million during fiscal 2007.
This growth rate widely outpaces growth in Focus Media's core commercial buildings market and its other growth engine, static posters in high-end residential complexes.
Given the demand for ad space, Focus Media has raised prices 10% to 12% every half-year. In tier-one cities, average advertising revenue per 30-second time slot increased 5% to $12,320 in the second quarter from the first quarter.
Source:佚名