Consumers don't seem to be landing fists in Focus Media Holding Limited's (FMCN) ubiquitous flat-screen LCD advertising panels. On the contrary, many consumers seem to enjoy the added entertainment in their office lobby or elevator of choice.
Despite the lack of conclusive data to prove or disprove the efficacy of the new flat-panel screens that populate the lobbies of many thousands of Chinese apartment buildings, advertisers are taking advantage of the networks' perceived ability to target China's fast-emerging professional middle class. A few major advertisers have told us about their creative efforts to track the effectiveness of their Focus Media campaigns, and increased spending will eventually follow.
In the area of competition, Focus is still far and away the largest operator of LCD ad networks in China, with significant operations (and several de facto monopolies) among China's top cities covering the lion's share of middle class consumers.
But there are many smaller networks that threaten Focus on a regional basis, especially in the mobile LCD advertising sector. One of these is Beijing All Media & Culture Group, perhaps best known as the operator of the "CityTV" subsidiary that is currently limited to small flat-panel screens installed in taxis. But CityTV has goodguanxi, is expanding fast in several cities (including into Focus Media's office lobby domain) and also plans to have a big presence at the Beijing Olympic Games in 2008.
LCD networks in taxis, subways and other transport systems are difficult to maintain, not least because taxi drivers (or passengers like me) disconnect the audio feeds or otherwise temporarily disable the screaming screens. Many of the flat-panel ad displays on subways are difficult to see when trains get crowded, and they have a tendency to flash the "blue screen of death" when they enter certain stations.
The good news for Focus Media shareholders is that the company was an early mover in the fast-growing out-of-home advertising space and is working to leverage its significant head start through its mobile subsidiary and other initiatives. And they can gobble up other good companies to accelerate expansion, as they have shown.
Some may say that Focus Media is simply buying earnings, with a slew of acquisitions during the first half of 2006. But any company that aims to dominate an unpredictable new industry like China's out-of-home LCD advertising market needs to move fast and Focus still retains a nice war chest from which to fund additional acquisitions.
Even without dominating the LCD advertising sector (as it currently does), a company with Focus' experience and sales network can make some serious hay in China's chaotic advertising industry. Focus Media is doing some smart things in China's advertising industry.
Source:佚名