CREATION - China online advertising revenue leading the way

<p>When the going gets tough, China's dotcoms get going - or so the </p><p>story goes. </p><p><BR><BR> </p><p>While news of failing dotcoms abound, China can be counted on for some </p><p>refreshing news. </p><p><BR><BR> </p><p>Half-year online advertising revenue shows a healthy year on year </p><p>increase, according to State Administration of Industry and Commerce </p><p>(SAIC) figures. </p><p><BR><BR> </p><p>A significant increase in online advertising revenue to RMB171 million </p><p>(US$20.6 million) for the first half of 2000 was reported for a </p><p>total of 27 monitored Internet companies issued with "advertising trade </p><p>licenses". </p><p><BR><BR> </p><p>In 1999, online advertising revenue was estimated at a mere US$12 </p><p>million in comparison. </p><p><BR><BR> </p><p>Industry experts were more reluctant to rejoice at the news. </p><p><BR><BR> </p><p>Rex Mai, 24/7 Media China managing director estimates that a total </p><p>turnover for 2000 will more likely come in at US$25-30 </p><p>million. </p><p><BR><BR> </p><p>However, a lack of accurate monitoring services makes it hard to say </p><p>what the actual figures are, says another executive. </p><p><BR><BR> </p><p>Double Click country manager for China, Mr Kelvin Cheng, also believes </p><p>that the latest figures might be too optimistic but that online </p><p>advertising revenue has great potential. </p><p><BR><BR> </p><p>"The Internet user population is doubling every six months and the </p><p>market is changing quickly," says Mr Cheng, "but there is a need for </p><p>more sophisticated advertising delivery systems and planning skills to </p><p>convince traditional advertisers to use the new medium." </p><p><BR><BR> </p><p>While low click through rates are even making dotcoms themselves turn to </p><p>traditional media, 24/7's Mr Mai believes several problems plague the </p><p>industry. </p><p><BR><BR> </p><p>Lack of creativity, slow Internet speeds and a lack of Internet user </p><p>loyalty are problems that need to be addressed, believes Mr Mai. </p><p><BR><BR> </p><p>China's most popular websites Sina.com, Netease and Sohu.com rank in top </p><p>positions as revenue earners amongst the 27 companies, which were issued </p><p>trade licences last May by the State Administration of Industry and </p><p>Commerce (SAIC) in order to strengthen management of the industry. </p><p><BR><BR> </p><p>The top performers have a market share of 60 per cent says Mr Mai, while </p><p>Internet companies, telecoms, computer and finance are the main online </p><p>advertisers. </p><p><BR><BR> </p><p>Strong online advertisers at present are IBM, Intel, Legend and Founder </p><p>for the computer industry, Nokia, Siemens and Motorola in the telecom </p><p>sector and Visa, Moneylink and Great Wall in the finance industry. </p><p><BR><BR> </p><p>"So far many of the online advertisers have been multinational </p><p>companies," says Mr Mai. "In the future we want to focus more on Chinese </p><p>companies which are spending a lot on traditional advertising and we </p><p>have already had some success in this respect." </p><p><BR><BR> </p><p>While China's online advertising revenue so far falls short of </p><p>expectations, total advertising turnover in 1999 topped US$7.4 </p><p>billion according to SAIC figures. </p><p><BR><BR> </p><p>As one executive believes, "it is realistic that online advertising can </p><p>achieve a one per cent share of total advertising turnover in the next </p><p>one to two years, which would bring revenue up to US$100 million </p><p>by 2001." </p><p><BR><BR> </p><p>Source: CMM Intelligence. </p><p><BR><BR> </p>