New growth for the China Online Advertising Market

If we analyze the figures of the online advertising market in China we see that for the Q1 of 2013, the revenues are close to 20 billion yuans that is to say 3,4 billion dollars, so it’s really positive and it’s a proof of the good health of this market.

China Online Advertising Market Revenue

These figures were published by the chinese market-research website iResearch. This figure of 19,84 billion yuans for the Q1 of 2013 is better than the one for the Q1 2012 (+ 38,5%) and the Q1 2011 (+115,5%) but less good than the Q4 of 2012 (-10%). But like the previous year, analysts predict than the figure will go up for Q2, Q3 and Q4.

The main reason of the decreased of unique visitors is because of the different holidays and festivals that happened in China during the month of February. Different services were impact such as news, search or video. But in March, it started again to grow boosted for example with financial websites and online video. Concerning the actors the main ones (Sina, Baidu, Sohu etc.) have seen their Unique Visitors per day rise, which is a good sign for the market.

Different characteristics for the online advertising industry

At first, concerning this Q1 of 2013 of the online advertising industry, we can see that it was the first time that the growth year over year is below 40% in the past three first quarters. The growth is slow but it is here, indeed after a rapid development we will enter into a slow increasing period. As we said the future will be different than these first figures for 2013. If we try to find reasons of this slow growth, we can think about two main reasons.

The first one is that the online media advertising has a good marketing value and a better monetization, that’s why it’s overall growth potential is lower.
The second one concerns the fast development of the Internet trough the smartphones. It logically means that the traffic for PC declined.

In a second step, it is interesting to see the relation between portals and display advertising. Indeed, for the Q1 of 2013, the revenue growth is 50% year over year and it was 30% for the Q1 2012. So we can see that they will embrace new growth.

Finally, if you look closely to big player such as Baidu for example, we will see that they need to find new ways to find growth. The figures for Baidu show that year over year, its growth kept below 50%. Analysts think that for 2013, this annual growth of Baidu will be around 40%.

Analysis by segments : growth for search and navigation, stability for video advertising

Market Share China Online Advertising Segments

Apart from the general figures, it is also good to look what are the main trends concerning the different sectors of advertising. For example the first place is occupied for the Q1 of 2013 by search engine advertising with 34,4%. The main reasons are that the long-tail clients are the main part of search engine advertisers and festivals don’t affect so much that sector.

The vertical search advertising is second with 23,5% followed by the brand graphics advertising which decreased. The interesting point is to look about video advertising. It’s stable (5,4% for Q1 of 2013) compared with the Q4 of 2012. But the analysts said that thanks to different elements (high-quality variety and sports shows and growth of online popular TV series for example) there will be a huge space for growth concerning video advertising.

The other categories are rich media advertising, classified advertising, fixed text link advertising, email advertising and other advertising.

Analysis by actors: Baidu and Taobao first in terms of numbers, Taobao, Soufun and Tencent in percentage of evolution

Actors Online Advertising Revenue

If you look now at the different actors, you will see that Baidu and Taobao are far away at the top with respectively 5,963 million and 5071 million yuans. The podium finish with Google China with 1070 million yuan.

Now considering the growth year over year, Taobao is still here with 90% of growth. It is followed by Soufun with a good score of 87,3% and Tencent with 77,6% compared with Q1 2012.


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