Skip to main content

Growth of Online Advertising Market in China

According to IDC, China's online advertising market maintained its rapid growth in 2006 and is poised to become one of the most promising businesses for portals, search engines and even online game operators in the country.

IDC found that the online advertising market revenue reached RMB5.11 billion (US$0.64 billion) in China in 2006, which is an increase of 42.1 percent over 2005. Of this, the brand-based online advertising revenue was estimated at RMB3.34 billion (US$0.42 billion), and search engine advertising revenue RMB1.77 billion (US$0.22 billion), accounting for 65.3 percent and 34.7 percent of the total, respectively. IDC forecasts the market to reach RMB34.71 billion (US$4.33 billion) by 2010, with a 5-year (2006-2011) CAGR of 46.7 percent.

Grace Zheng, Senior Analyst at IDC's China Cross Products Research team, predicted the development of China’s online advertising market as follows:

Fierce Competition Breaks Oligopoly

While web portals Sina and Sohu accounted for a combined 55 percent of the 2005 China online advertising market, this market oligopoly was reduced in 2006. As competition intensifies with new entrants, not only will Sina and Sohu, and search engines like Baidu and Sogou, compete among themselves, foreign Internet giants Google and Yahoo! will also participate more aggressively in the market. IDC predicts that market concentration in the online advertising market will change and market power will be dispersed.

The Rise of Online Advertising Agencies

A robust online advertising market not only encourages existing ad agencies to increase focus to online advertising, it also acts as a catalyst to attract new ad agencies seeking to make a fortune in the rising market. The new players include both leading global ad agencies and local Chinese online advertising agencies. IDC predicts that there will be further specialization in the ad agency business, and online advertising will further improve in terms of design and content.

New Forms of Online Advertising Gaining Popularity

Traditional forms of online advertising, such as banner ads, remain the primary choice of advertisers. However, with the development of Internet and progress in broadband technology, different and newer forms of online advertising are emerging. IDC predicts that rich media ads, in-game ads and other new forms of advertising will gain popularity with these advertisers in the future.

Advertisers Increasing Online Advertising Over Conventional Ads

As more and newer means of market promotion become available, advertisers will find it increasingly difficult to achieve the same level of promotional results by advertising via conventional media. Advertising budgets will therefore be redistributed from conventional media, such as TV, radio and publications, to newer forms like outdoor promotional activities, TV advertising in commercial buildings, and online ads. IDC predicts that advertisers will increase their online advertising budget in the long run while reducing their investments in conventional ad media.

New Payment Models Emerging to Challenge Conventional Methods

The rapid development of online advertising also poses a challenge to the conventional models of online advertising payment. The widely adopted cost per thousand impressions (CPM) approach, used to monitor advertising results, is now considered ineffective due to click fraud. With paid search engine advertising becoming popular, Cost Per Thousand Click-Through (CPC) and time-based billing are being used as these are more effective in addressing the interests of both advertisers and website owners. In the online brand advertising market, most of the advertisers pay using the time-based billing model, but measure the results by applying the CPC model because CPC provides a more immediate explanation about the effectiveness of online advertisement than CPM. Led by online advertising giants Google, Amazon and eBay, yet another payment model, the cost per action (CPA) approach, has emerged. IDC predicts that online advertising payment models will continue to evolve as advertisers strive to associate cost with advertising results.

Popular posts from this blog

Industrial and Manufacturing Technology Growth

In an evolving era of rapid advancement, market demand for innovative technology in the industrial and manufacturing sectors is skyrocketing. Leaders are recognizing the immense potential of digital transformation and are driving initiatives to integrate technologies into their business operations.  These initiatives aim to enhance efficiency, reduce costs, and ultimately drive growth and competitiveness in an increasingly digital business upward trajectory. The industrial and manufacturing sectors have been the backbone of the Global Networked Economy, contributing $16 trillion in value in 2021. Industrial and Manufacturing Tech Market Development   This growth represents a 20 percent increase from 2020, highlighting the resilience and adaptability of these sectors in the face of unprecedented challenges, according to the latest worldwide market study by ABI Research . The five largest manufacturing verticals -- automotive, computer and electronic, primary metal, food, and machinery -

Rise of AI-Enabled Smart Traffic Management

The demand for smart traffic management systems has grown due to rising urban populations and increasing vehicle ownership. With more people and cars concentrated in cities, problems like traffic congestion, air pollution, and greenhouse gas emissions are pressing issues. Since the early 2000s, government leaders have been exploring ways to leverage advances in IoT connectivity, sensors, artificial intelligence (AI), and data analytics to address these transportation challenges. The concept of a Smart City emerged in the 2010s, with smart mobility and intelligent traffic management as key components.  Smart Traffic Management Market Development Concerns about continued climate change, as well as cost savings from improved traffic flow, have further motivated local government investment in these advanced systems. According to the latest worldwide market study by Juniper Research, they found that by 2028, smart traffic management investment will be up by 75 percent from a 2023 figure of

GenAI Revolution: The Future of B2B Sales Apps

When B2B buyers consider a purchase they spend just 17 percent of that time meeting with vendors. When they are comparing multiple suppliers‚ time spent with any one salesperson is 5 or 6 percent. Self-directed B2B buyer online research has already changed procurement. IT vendors are less likely to be involved in solution assessment. Now, more disruptive changes are on the horizon. By 2028, 60 percent of B2B seller work will be executed through conversational user interfaces via Generative Artificial Intelligence sales technologies -- that's up from less than 5 percent in 2023, according to Gartner. Generative AI Market Development "Sales operations leaders and their technology teams must prepare for the convergence of new forms of artificial intelligence, dynamic process automation, and reinvented deal-planning activities that will transform the sales function," said Adnan Zijadic, director analyst at Gartner . According to the Gartner assessment, Generative AI (GenAI) s