Technology | Media | Telecommunications

Saturday, August 13, 2011

China Will Lead Online Ads in Asia-Pacific by 2015



The market potential for advertising in China -- while still developing,  compared to mature markets like the U.S. and Japan -- is beginning to catch up to the demand of consumer-facing companies looking to expand their reach among the world's largest population and its growing buying power.

According to the latest market study by eMarketer, by the end of 2011, advertising spending in China will increase enough to make the country the second-largest advertising market in the world.

In 2010, the number two spot was held by Japan, where total media ad spending last year reached $34 billion. But after slow, 0.4 percent growth in spending last year, the effect of the tsunami and continuing economic difficulties this year will cause ad spending in Japan to drop by 3.7 percent, to $32.7 billion.

Meanwhile, spending in China is forecast to increase by 14 percent in 2011 -- rising to $38.3 billion. The U.S. will remain the leading country -- in terms of total media ad spending -- with a projected $157.4 billion in ad sales this year.

"One key reason for Asia-Pacific's growth in ad spending is that the region's two most populous countries -- India and China -- also boast two of the world's fastest-growing economies," said Kris Oser, eMarketer director of strategic communications.

In 2010, China surpassed Japan as the second-biggest economy in the world. And, this year marks another major milestone for the ongoing Chinese economic growth story. That being said, regarding the online advertising market potential, China still has some catching up to do.

eMarketer estimates that in 2011 advertisers will spend $4.6 billion on digital in China -- far short of Japan's projected $7.2 billion in spending. But by 2014, China's higher growth trajectory will bring the two countries even with each other -- at $9.5 billion in spending. In 2015, however, China will become the largest online ad market in Asia-Pacific.

Due to the anticipated Chinese population growth, even these spending levels are low on a per-person basis. This year, Chinese total media advertising spending will reach $28.68 per person -- compared to $258.88 in the Japan and $502.49 in the U.S. markets.

In 2015 that figure will still be far below the worldwide average. Online, advertisers will spend $8.68 per internet user in China this year, vs. $76.80 in Japan and $134.87 in the U.S. market. Even as estimated spending per internet user in China nearly doubles by 2015, online spending will remain below average.