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China Advertising Industry Report, 2006-2007

Published: Jan/2007

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China has grown to be one of the world largest advertising markets under the drive of continued economic growth. During 1981-2004 periods, the annual turnover growth exceeded 1000 times, and the ratio of ad-rate against GDP rose from 0.024% to 0.93%. China will be expected to become the world second largest advertising market next to U.S.A. within three years.

In the first half of 2006, China advertising revenue climbed to RMB 155.5 billion, increased by 18% over the same period of 2005. Moreover, cosmetics/bathroom accessories industry continued to top the advertising thrown-in list with RMB 25.6 billion spent on advertising, followed by drug, business/service, food and beverage. And beverage industry showed a speediest growth with an increase of 55%.
Furthermore, spurred by Torino Winter Olympics, Germany World Cup and Super-girl Show, first-half year of 2006 witnessed a more competitive advertising market in China. As a result, more advertisements were thrown into market but the growth slowed down compared to 21% of the same period of 2005, and which will be expected to reach 19% by 2007.

Advertisements Thrown in Media, Sep 2006
 

China advertising market has been remaining a rapid growth, but China local advertising industry is now not that promising based on the following reasons: on one hand, being scattered and weak, local advertising companies are not so capable of R & D that they can't offer high quality services, and moreover, they failed to build up their own brands; on the other hand, big advertising consumers are more willing to choose those foreign-owned companies, who are strong in design and R & D. Especially, some multinational advertising or media groups have been doubling their presence in China and taken action to purchase some local companies since the complete opening of advertising market at the end of 2005.   
 
The statistics show that top five world advertising groups have established 38 branches via joint venture in China by May 2006, of which, 19 are under WPP Group, 5 under Omnicom Group, 6 under IPG, 5 under Publicis Group and 3 under Dentsu Group. In 2005-2006 alone, WPP Group established 4 joint-venture companies including Mindshare Chengdu, Grey Global, Neo@Ogilvy and Beijing Hua Yang Lian Zhong Advertising Co. Therefore, more frequent M & A by foreign capital will bring fiercer competition to China advertising market for the future.

Apart from the drive from sustainable and steady economic growth, advertising industry will also benefit a great from 2008 Olympics, 2010 World Expo, so it is supposed to have a brilliant prospect.



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