Double-Digit Growth Forecasted For Chinese Ad Market In 2010

Researchers Expect Advertising Market In China To Grow Between 12-16% As Ad Budgets Shrink In Developed Markets

Last year, Tiffany & Co. invested heavily in its online "Tiffany Keys" campaign in China.

Last year, Tiffany & Co. invested heavily in its online "Tiffany Keys" campaign in China.

Recently, Jing Daily looked at luxury companies investing more in digital and television advertising in the China market to reach younger — specifically female — consumers. As we said at that time, one of the growing trends in advertising in China is an increased focus on social media and online ads:

[R]eports by HSBC and others have confirmed that while men are the luxury buyers of today in China, women are the luxury buyers of tomorrow. With women becoming increasingly fiscally independent year by year in China, this only makes sense. But while researchers are virtually unanimous in crowning the female luxury buyer the future queen of luxury consumption, ideas about how to best reach these shoppers is as fragmented as China is populous. While some companies think the future is digital outreach — and they’ve already shifted their efforts online — others stick with traditional print advertising.

Last week, AdAge looked at China’s rapidly growing advertising market, noting that the Chinese advertising market is projected to grow anywhere from 12-16% this year, as global ad spending as a whole sees a far slower, more gradual recovery. As the article points out, China is set to surpass Germany to become the world’s third-largest advertising market by 2011.

According to new forecasts by ZenithOptimedia and Carat, China’s ad market will grow by 12.1% this year (ZenithOptimedia) or up to 16% (Carat). Previously, ZenithOptimedia was predicting 9.5% growth in ad spending this year in China, and Carat expected 9%.

Seth Grossman, Carat China’s managing director, outlined three key reasons for China’s fast-paced growth:

The global headquarters of major advertisers are focusing more on China, and how much they need to invest to succeed there. Some of the biggest budget increases are coming from multinational advertisers funneling additional money into China, even at the expense of other markets.

Advertisers are accelerating efforts to grow sales beyond China’s first- and second-tier cities into less-developed markets, and that expansion into lower-tier cities requires bigger media investment…

Finally, media inflation is rampant thanks to new rules limiting access to prime-time TV spots from China’s broadcast regulator, the State Administration of Radio, Film & Television (SARFT), and restrictions on outdoor inventory in Shanghai, home of the 2010 World Expo.

Although these figures are for the entire ad industry in China, it’s important to note that luxury brands are among the most active — and adventurous — advertisers in the Chinese market. Last year, we saw companies like Coach, Tiffany, and others taking advantage of homegrown Chinese social media networks and dedicated China-only websites for digital advertising, and we can only expect to see more of this in coming years. Just last week, Jing Daily noticed one of the newest examples of this type of advertising — MINI China’s “The Chinese Job” nationwide stunt driving competition. In areas in which China is becoming a global leader — such as luxury and the auto market — it’s likely that ad spending will sustain significant (if not double-digit) growth for some time.

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