GroupM Sees Gains in China Ad Spend

SHANGHAI: GroupM’s revised This Year, Next Year forecast for China sees ad spend increasing by 5.8 percent this year and then 9.8 percent in 2010, with Internet advertising leading the way.

This year, Chinese media spending is expected to hit RMB254.5 billion ($37.3 billion), rising to RMB279.4 billion ($40.9 billion) in 2010. GroupM’s previous forecasts had seen a rise of just 3.2 percent this year and 8.9 percent in 2010. The change follows improved projections from the World Bank and Goldman Sachs, among others, for Chinese GDP growth.

“The pessimism that surrounded the outlook for the Chinese economy as we entered 2009 appears to be passing," says Bessie Lee, the CEO of GroupM China. "Confidence and revenue have returned to the broader marketplace in the second quarter as key sectors increased spending patterns."

The Internet is expected to be the fastest-growing advertising medium in both 2009 and 2010. China currently has an estimated 338 million Internet users and the number of online homes is growing by nearly 88 million every 12 months. GroupM sees Internet advertising rising 20.3 percent this year and 35 percent next year. TV ad spend, meanwhile, will grow 5.8 percent in 2009 and 6.4 percent in 2010.

“In 2009, advertisers’ options have multiplied correspondingly, especially in digital, events, video, sponsorship and other branded content opportunities, all offering new ways to reach and interact with consumers," said Lucy Zhang, futures director at GroupM Knowledge in China. "How agencies and advertisers capitalize now on this change and manage the balance of traditional and contemporary media will be key to moving forward."