China Online Advertising Market Jumps in a New Growth Stage

Revenue of China online advertising market in Q1 2003 reached nearly 20 billion Yuan, and the overall market entered a new period of growth.

According to latest core data of China online advertising in Q1 2013 released by iResearch, China’s online advertising market revenue in this quarter reached 19.84 billion Yuan, declining 10.0% compared with Q4 2012 and increasing 38.9% over Q1 2012. After the seasonal decline in Q1, the markets are expected to usher in a spectacular rebound and enjoy rapid development.

Influenced by holidays and festivals like Spring Festival, UV of overall online media in Q1 2013 decreased and hit bottom in February. Attention for all online services such as search, community, video, news, home page of media, etc. was reduced in different degrees, but began to rebound in early March, among which online video and financial websites experienced a sharp increase. In terms of enterprises, from early January to the end of March, UV per day of Baidu, Sina, Sohu, Phoenix New Media, Sogou and iQIYI are relatively high, showing a significant rise and driving industry’s growth greatly.

In Q1 2013, online advertising industry had following obvious characteristics.

Firstly, the whole industry witnessed slow growth and entered a new period of growth. The first quarter of 2013 was first time for YoY growth below 40% in past three first quarters. It’s expected that, online advertising’s growth in 2013 will be below 40% and enter a relative slow increasing period after rapid development. iResearch analyzes that low growth rate of the advertising industry is due to the following two reasons: On the one hand, with the rapid development of mobile internet, PC traffic inevitably declined; On the other hand, though online media advertising has better monetization and higher marketing value, its overall growth potential is lower.

Secondly, portal websites and display advertising were recovered. The revenue growth of major portals regained its perch with over 50% YoY growth in Q1 2013, while the growth in Q1 2012 was about 30%。Most portal advertising are display advertising and they will embrace new growth.

Thirdly, core enterprises need explore new growth points. Among core enterprises, YoY growth of Baidu kept below 50% since Q3 2012, 41.6% in Q4 2012 and 40.1% in Q1 2013. iResearch forecast that Baidu will meet an annual growth of about 40% in 2013. The core enterprises including Baidu, need to seek new online advertising revenue growth point.

Search advertising and navigation advertising keep growth, video advertising maintain stable.

In the total online advertisings revenue in Q1 2013, share of search engine advertising revenue increased to 34.4% from 1.6%, still occupying the first place in the market, because search engine ads were less affected by Spring Festival and long-tail clients occupied the majority of search engine advertisers. The share of video advertising revenue remained 5.4% in Q1 2013, iResearch analyzes that, with growth of online popular TV series, high-quality variety and sports shows, the media attribute of video sites will be further highlighted and there will be huge room for video advertising growth.

Share of other online ads revenue increased to 6.9% from 4.5% of Q4. Advertising on navigation sites, represented by hao.360.cn, 123.sogou.com, hao123.com and 2345.com, had a sound growth and became a major impetus for rise of the share.

Letv and Qihoo 360 saw sharp QoQ growth, Taobao, Soufun and Tencent experienced the quickest YoY growth.

Due to seasonal factors, advertising revenue of many large and mid-sized Internet media slipped down in Q1 2013. But Letv’s and Qihoo’s advertisng revenue increase over 40% and 10% respectively compared with Q4 2012. Tencent and Yiche also maintained positive growth and had good performance. From the perspective of these enterprises’ YoY growth, advertising revenue of Taobao, Soufun, Tencent and Qihoo 360 increased over 50% compared with Q1 2012.

 

 

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