Big Growth Ahead For Chinese Online Ad Spending

Thu, Apr 2, 2009 | Asia | Print This Post

While China boasts the world’s largest Internet population, having overtaken the United States in early 2008, it still has a lot of ground to make up in online ad spending. According to a study conducted by MAGNA, ZenithOptimedia and Bernstein Research, Internet ad spending in China will reach $1.7 billion in 2009 and grow to almost $3.5 billion by 2012.

Compared to the U.S., the Chinese market is still in its infancy. The U.S. expects to spend $25.7 billion in 2009 and grow to $37 billion by 2012. In terms of where China is in its ad market development, the US grew from to $4.6 billion back in 1999, a year-over-year growth of 141%. us-online-ad-spendingThe Chinese market on the other hand is projected to grow at a 24% CAGR from 2007 through 2012.

Another interesting comparison between China’s online ad spending and the U.S. is in the ad channels that predominate. In China traditional display and rich media ads represented over 50% of total spending in 2008 compared to only 27% in the US. On the other hand, search advertising in China is expected to grow from 44% of total spending in 2008 to 52% over-representing the channel compared to the US which will have peaked at 49% of total spending in 2011.

The real difference between China and the US is related to other channels such as video, classifieds and e-mail. Those channels are expected to remain steady in China at 6% per year while in the US they will remain fairly fixed between 25% and 27%. It seems that China has yet to discover the alternative advertising channels that are experiencing such strong growth in the US.

In particular, video advertising doesn’t look like it is going to achieve the heights in China that it has here. According to eMarketer, online video in the US will experience annual growth of over 40% for the next several years.