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