Focus Media unswayed by first-quarter loss

Ji Hairong, vice-president of the Shanghai-based company, said the loss was a one-time occurrence following the reorganisation of Focus Wireless, the branch responsible for its short messaging service (SMS) business.

Focus Wireless, which holds more than 50 per cent of China’s wireless advertising market, came under fire earlier this year when its SMS advertisements were labelled as spam.

The multimillion-dollar deficit is a blow to the Shanghai-based company - one of China’s largest media networks - which had posted net earnings of $16.3 million for the same quarter last year.

Hairong said that, instead of focusing on the SMS business, the company plans to employ mobile phone WAP site advertising, wireless instant messaging and other wireless advertising technology.

Lawrence Wan, general manager of OMD Digital in China, says Focus’ loss is “in reality, a very good thing” because it allows the company to redefine itself with new marketing tactics and make a clean break from its now-stigmatised SMS division.

“Its loss is financially negative for the moment, but it’s not a massive hit to its revenue, and it’ll be fine because the greater lesson is learned,” Wan said. “China is a bit of the Wild West for marketing, so hopefully this is a wake-up call for those who aren’t operating ethically - people who are playing dirty will hopefully clean up.”

Shaun Rein, managing director of Chinese market research firm CMR, said that Focus will continue to be a major mobile marketing player in China and will use this opportunity to explore alternative marketing avenues.

“Its big issue is not so much that it is doing anything wrong, but that expectation was so high. It had the right strategy of getting its messages to as many eyeballs as it could,” he said. “Focus Media is one of the better advertising companies in China, and its clients are very happy with it overall. It’s a good brand in the long term.”