astronomical chinese outdoor

With Mr Dolison onboard who has direct exposure to the Outdoor Advertising Industry in Hong Kong and China, Lumacom has huge opportunities to get into the lucrative Chinese outdoor business.
SP within 3 weeks (1.8 - 4+c)
Advertising seems to be making a leap to better times on the Chinese mainland. According to figures from the State Administration for Industry and Commerce, there were over 125,000 advertising agencies on the Chinese mainland in 2005, employing 940,000 people, with revenues amounting to Rmb141.6 billion (HK$137 billion), up 18% from 2004. Total advertising revenue is expected to increase at an annual rate of between 17% and 18% in the two years to 2008.

Morgan Stanley recently published a research report saying that advertising on the Chinese mainland has soared nearly six times over the past 10 years, as opposed to only twice in the US. Over one billion Chinese consumers are gradually shifting the weight of personal consumption from food and housing to information and entertainment. Monthly ad spend per-capita in China is US$1, only between 2% and 3% that in the US.

In 2005, the ad revenues of traditional media such as TV, newspapers and radio continued to grow steadily. TV ads still remain the top money spinners, with national billing totalling Rmb35.5 billion (HK$34.08 billion), accounting for 25.6% of the country's total ad revenue.
Outdoor advertising has received relatively little attention on the Chinese mainland and it is only in recent years that people have begun to see its potential. Last year, outdoor advertising grossed Rmb14.4 billion (HK$13 billion), some Rmb2.8 billion (HK$2 billion) more than in 2004, up 24.9%.

Advertising outdoors now has a 15% share of total ad revenue, far exceeding the level that of some other countries. It has a much broader scope for development because it involves fewer monitoring risks and lower maintenance and operating costs than other forms of media advertising.

Currently there are some 19.4 billion outdoor advertisements on the mainland. These include neon lights, billboards, electronic displays, ads on public transport, three-dimensional models and lightboxes.
urban commercial districts where population density is high and the transport system is well-developed, outdoor advertising shows momentum for rapid growth. In Beijing, there are more outdoor ads on congested roads than those characterised by smooth traffic. Outdoor advertising also owes its prosperity to the emergence of new media such as LCD TVs on buildings and in shopping centres.

On the other hand, Internet advertising is also rapidly expanding. With 100 million Internet users, China has become a country with the second largest Internet population in the world after the US.

Users provide the advertising market with a solid foundation. The profit-taking rate of Internet advertising in China is between 30% and 40%, with Internet advertising expected to gross Rmb4 billion (HK$3.8 billion) in 2006.

Most Internet ads are for digital products, real estate, automobiles, cosmetics, video games and jobs. People in the trade predict that new network media will keep advancing ad figures, including digital TV, mobile phone TV and satellite TV. With its strong growth potential and high efficiency, network advertising is squeezing into the market share occupied by traditional media. The share of network ads in China's total spend had already increased from 1% in 2002 to 3% in 2005.

In spite of this, people in the trade point out that the two traditional media - TV and newspapers - will continue to dominate China's advertising market.

Alliances between local and overseas advertising firms

China's advertising industry started in the 1970s. However, there are only about 110 companies with first-class credentials, after more than 20 years in the trade. They are very much "pacesetters" for the industry.

At present, China's advertising sector has a shortage of personnel, particularly for people who have an understanding of the international market, with experience and communication skills.
There is particular demand for senior management capable of analysing and making use of the mainland market, while all-rounders with marketing, communication and planning skills are in short supply. Additionally, creative and designing people and senior advertising producers capable of making movie and TV ads are high on the list of advertising companies entering the market.

In accordance with its WTO commitment, China has been liberalising its advertising market and allowed the establishment of wholly foreign-owned advertising agencies since the end of 2005. Multinational advertising companies began forming alliances with domestic companies in mid-2005 and co-operating in corporate and market operations.

There is a growing trend among international companies to localise and make themselves relevant in the marketplace. With their strong corporate backgrounds, professionalism and management expertise, foreign companies have become a dominant force in China's advertising market, and leaders where it comes to market competition. They contribute to 12% of the sector's total turnover.

People in the trade believe that the Beijing Olympics 2008 will bring a new round of growth and increased competition for China's advertising industry. Both domestic and international companies will seize this opportunity to step up their advertising and publicity activities, establish an international image and enhance their product exposure.
Shrewd advertising agencies are likely to fully prepare themselves for new market demands during the lead up to the Olympic Games.

Street advertising is a case in point. All advertising media have adjusted their rates upwards for the Olympics. At the second, third and fourth ring roads in Beijing and on the road leading to Beijing International Airport, ads in many prime locations have been replaced, with advertisements for foreign products comprising 70% of the total. Many enterprises are said to have signed advertising contracts running until 2009.

Due to a change in newspaper advertising policy, real estate and drugs companies began to lose their importance as the top advertisers last year. With growing private cars ownership and sales of personal consumer electronics items like MP3s, more people are now tuning in to radios, attracting the attention of big companies to radio stations once again.

In light of these trends, national and local radio stations are broadcasting programmes based on motoring themes, while joint venture carmakers have also achieved commendable results while advertising on the radio.

For example, top rated traffic report and auto repairs programmes are aired every day at peak hours on Radio Beijing's traffic channel, generating steadily growing advertising revenues.
With lifestyles moving ever higher for disposables, products such as financial investment products and luxury goods are set to become future hot spots in the advertising market.

According to the latest research report on China's advertising market published by CTR Market Research Co, there is a rapid growth in advertising for products enhancing lifestyles. For example, advertising expenses for credit cards and wines are up 80% and 156% respectively year-on-year. More and more foreign banks and card-issuing institutions are earmarking large sums for advertising, in the hope of grasping a share of China's credit card market.
Cosmetics/bathroom products, certain consumer drugs and commercial and service industries remained among the top advertisers in 2005, while financial investment and insurance, personal products and beverages continue to grow.

People in the trade point out that the advertising market in first-tier cities like Beijing, Shanghai and Guangzhou is becoming saturated and, with competition intensifying, most advertisers for fast-moving consumer goods could begin to shift their priorities to second- and third-tier cities and to the western region.

Multinational companies are also joining the march to the west. Advertisers provide opportunies for companies keen on opening up the western China market, while lifting the curtain to a new round of market expansion.