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| Review of China's Print Publication Market in 2007 |
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Print publication advertisements entered a steady period
China's newspaper advertisement continued to grow steadily in 2007. According to publication pricing statistics collected by HC360.com, a market research company in China, China's newspaper and magazine advertisement market reached$10.5 billion in 2007, up 7.64% from 2006. This has been the industry's third consecutive year of growing below the GDP growth rate, indicating print media advertisement has passed its high growth era and entered into a steady development period.
Improvement in magazine advertising market share
Since the marketisation of China's print publication industry many years ago, the advertising market size has now reached billions of dollars. But when we look at it in more detail, we can see that the market is unbalanced, with great differences between publications and market segments. Although the market is growing as a whole, there have been winners and losers.
Among the $10.5 billion print publication advertisement market in 2007, more than $9.9 billion belonged to newspaper advertisements, while only $1 billion was for magazines. Back in 2004, the newspaper / magazine ad ratio was even higher, at 11.3:1. Therefore we may conclude that although magazine ads are still very small compared to newspaper ads, its market share has been improving in the past few years.
In terms of growth in 2007, newspaper ads had increased 6.82% from pcp, and magazine ads had increased 15.73% in the same period, doubling the growth rate of newspaper's. |
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Compared to newspaper, magazines are usually "narrow audience" media, with higher class, more segmented and more specific readers. As the development of new media and change in readers' demand, magazine as a media should be more and more favoured by advertisers, and magazines are expected to have more development room ahead.
Consumer hotspot related media became growth spot
From observation on advertisement placements on various publication types, we can see that there is a correlation between segment market ad growth and consumer hotspots. For newspapers, advertisement on financial, social news, automobile and lifestyle newspapers has seen healthy growth. As China's car market is booming, automobile has become the top advertising source for financial, social news and automobile newspapers. On the other hand, the primary ad sources for lifestyle newspapers are clothing, cosmetics and hygienic products, which are also consumer hotspots.
For magazines, the largest year-on-year growth categories are magazines for automobile, sporting and recreation, social news, leisure and travelling, motherhood and infancy, lifestyle, health and finance. Advertisement growth rates for these magazine categories are all above 15%, as they are closely related to social and consumer hotspots in China.
Industry advertisement ranking
In terms of advertising industries, real estate ads are still in the top position, with $20 billion ad expenditure in 2007. The second to fifth industries are automobiles, entertainment (travelling, hospitality and leisure), home appliances and education. The top ten industries accounted for $68 billion ad expenditure in total, equal to 62.92% of all print publication ads.
Advertisement from education industry had grown significantly in a year, up from the tenth to the fifth. In recent years, the education and training industry in China has developed rapidly, and it is viewed by the market as a sun rising and most profitable industry, due to its high margin and low technical and capital barriers. As a typical service industry, student recruitment is the key for an educational provider's profitability, and large advertising placement is an important means for expanding its reach. Under the booming prospect, advertisement from the education industry should continue to grow substantially.
Communications, the computer industry remains in the doldrums, year-on-year decline of serious advertising and communications industries from the last pillar industries slipped to sixth in the eighth, the computer industry is a pillar industry or before 10.
There were four industries that had experienced negative growth, namely medical service institutions, medical devices, telecommunication and computers. As the government further tightened its control over the healthcare and pharmaceutical industry in 2007, especially medicine price cutting policies and more stringent scrutiny on medical product advertising, advertisements from related industries had seen significant drop.
On the other hand, computers and telecommunication industries in China are now entering a maturing phase. In terms of telecommunications, mobile phone advertisements are the main income sources from this industry. But as local mobile phone brands are now in a difficult period, with declining market shares against foreign brands, it has therefore become an important reason for the sluggishness in telecommunication advertisements.
Although there are declining ad spending trends for the above four major industries, more advertisement growth are coming from other industries, such as finance and insurance, apparel, automobile, education, lifestyle services, food and beverage, home renovation and home appliances, whose growth rates were all above 18%. The extremely bullish Chinese sharemarket in 2007 had significantly stimulated people's investment demand, so it is not surprising to see growth in finance advertisements.
Advertisement from the apparel industry also captured a spot in the top-ten list. Rapid advertisement growth from this industry had well started in 2006, as improving living standards in China would naturally lead to more consumption on clothing, hence high growth in advertising placements.
A steady and more segmented market in 2008
From the current macro control measures by the government on China's real estate and pharmaceutical industries, it is reasonable to predict that their ad spending would be impacted. But those industries which are less affected by macro control initiatives should continue to grow healthily, there for the print publication advertisement market should be able to grow steadily in 2008.
The fast development of new media in China has presented great challenges for print publications. But on the positive side, fierce competition in the industry may cause newspapers and magazines to become more specialised and finer and improve brand awareness, hence better developments. One of the important reasons for print publications to gain growth in recent years, amid the sluggishness in the whole "old" media sector, is exactly because of their adaptive efforts on market segmentations and audience targeting. History has shown that a successful media company would dynamically satisfy readers' demand, while those lacking directions would eventually be eliminated.
Source: www.hc360.com
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