Chinese online ad market will grow 14.3 percent in 2017, driven by a strong growth of online video
LONDON – By 2020, more than three-quarters of all online display advertising revenue will come from mobile, according to new analysis released by IHS Markit (Nasdaq: INFO), a world leader in critical information, analytics and solutions.
“As Chinese companies go global, investments in nearby countries will increase”
“Mobile advertising has grown stronger than any other medium in the last four years, and now accounts for a significant proportion of online advertising revenue,” said Qingzhen Chen, senior analyst at IHS Markit.
Global mobile display advertising surged 72 percent in 2015 compared to the previous year, and accounted for 45 percent of all online display advertising revenue, with a total of €29 billion.
In 2016, worldwide mobile advertising will grow 42 percent, to $41 billion and for the first time will generate more than half—55 percent—of all online display advertising revenue, said the latest IHS Markit white paper.
Regional highlights: China
China has maintained its growth momentum despite economic restructuring, but the real growth engine comes from online. With roughly $33 billion in revenue for 2016, the Chinese online advertising market is the second largest in the world. Online grew 17.5 percent in 2016 and will grow 14 percent in 2017, driven by a strong growth of online video (51 percent and 32 percent growth, respectively).
“In 2016, the Chinese online ad market went through some turbulence and reshuffling,” Chen said. “China introduced its first set of online advertising regulations, which in the short term had reduced online advertising revenue, but in the long term, we expect to see a more sustainable online ad ecosystem from this development.”
On the other hand, after a period of rapid growth, TV has entered a third year of consecutive decline with a single-digit contraction. Many people are switching to online for content consumption and seeking wider range of content, from foreign content to user-generated content by popular vloggers. TV in China declined 2.7 percent in 2016, and IHS Markit expects a 3 percent drop in 2017.
Baidu, Alibaba and Tencent — known collectively as the B.A.T. in China –own 36.5 percent of the total ad market with a total of CNY 160 billion ($24 billion) in 2016. “The trio has absorbed large TV brand budgets and online ad budgets, and continues to expand aggressively into digital,” Chen said.
The trio made a total of 262 investments, 27 acquisitions and one joint venture between 2009 and 2016. Mobile app companies received most investments from the trio for that period.
“As Chinese companies go global, investments in nearby countries will increase,” Chen said. “Regions like Southeast Asia are benefiting from the rise of a middle class, consumerism, and a mobile-first young population. The emerging Asian markets present a huge business opportunity for the trio to export its video content, games and e-commerce abroad.”
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About IHS Markit (www.ihsmarkit.com)
IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 key business and government customers, including 85 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.
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