Online Ads Heat Up As Olympics Approach
Great things have been forecast for the online advertising industry in China in the Olympic year. The Internet was the fastest growing ad market in 2007, thanks in part to rising Internet penetration rates. It grew 114% year-on-year to RMB10 million (US$1.47 million) by the end of December, according to an AdRelevance
report from Nielsen Online. This growth is only expected to accelerate in 2008.
Beijing 2008 is emerging as the first truly wired Olympics. For the first time in history, almost a third of the host country's population will tune into the Games online. The Internet beat print media hands down as the preferred medium for following the Olympics when CSM Media Research surveyed people aged 15 to 40 years in 10 key cities across China. A full 30% of respondents said they wanted to follow the Games over the Internet.
"For most advertisers, the Internet is the major battle field of Olympics promotions," the Data Center of the China Internet proclaimed in a report released on July 15.
This statement may be over-shooting the mark, as television still reigns supreme as the preferred medium for watching the Olympics in China. Indeed, 90% of the repondents to the CSM survey said they planned to watch the Games on TV.
Despite this, there is no doubt that the Internet presents a sizeable market for Olympics
advertisers. Around 253 million Chinese people were online by June
2008, more than any other country in the world.
The competition for a slice of the pie has grown more intense as the Olympics approach. Eight portals and websites – including Sina, Sohu, Tencent and Netease – have dug deep to pay CCTV.com for the right to webcast the games. Sina, Tencent and Netease threw the gauntlet down to main rival Sohu on July 17 when they announced they had formed an Olympics Reporting Alliance to strengthen the quality of their reportage and their advertising sales (see related story under New Media).
However, not all the major players are buying into the Olympic dream. One of China's leading video-sharing websites, Tudou.com, last week confirmed that it had not applied for an Olympics webcast license.
Huang Huiwen, Tudou.com Vice President, said he thought it would be difficult to recover the costs involved with purchasing a license, plus producing and hosting live webcasts. Most people will prefer to watch the Games on TV, he said. Websites will struggle to attract advertising dollars because most companies drew up their advertising plans a long time ago, months before the Olympics webcast licenses were allocated.
Estimates of just how high the “Olympics Effect” will push the online ad market up in China vary wildly, depending on how different agencies calculate their rates. Looking at the figures so far, Olympic sponsors spent RMB58 million (US$8.5 million) on online advertising in the month of June alone, according to the monthly Olympic online adspend report from iResearch (see story under Advertising).
Instead of smoothly growing as the Olympics draw near, the iResearch reports reveal that monthly online Olympic adspend has followed see-sawed dramatically from month to month since October 2007. For example, the total adspend from the Olympics sponsors surged 57.4% month-on-month in March, only to fall by 20.5% in April. It grew again by 27.6% in May, then dipped 2% in June. Spending so far has proved anything but predictable. So how will the figures swing for the rest of the year? Tune in to our advertising section to find out.