US

Top agencies move to tap online advertising market

By Kelly Chung Dawson
Updated: 2010-08-10 16:34

The Chinese new media market is still in its infancy.Liu Junfeng /for China Daily

NEW YORK - Two top international advertising agencies, with strong presence in China, are planning to move into the country's online advertising market, with their strategy being shaped by the success of local companies.

Publicis Groupe and Interpublic Group will focus on Internet advertising, a market that's still relatively new.

Jean-Yves Naouri, group chief operating officer of Publicis, told China Daily it's critical "we do everything necessary to have a leading position in China", which he describes as the second largest advertising market in the world.

Jimmy Poon, CEO of Mediabrands Ventures, a division of Interpublic, believes that US companies are no longer guaranteed success in China.

"In China, recent history has told us that new media companies in China are likely to be homegrown," Poon said.

Mediabrands Ventures will focus on identifying existing new media companies to fund and develop.

Both companies say China's market is unique in that local companies have leading positions, while in most other countries US brands have led.

Poon cited the success of companies such as Baidu and Youku as indication that Chinese audiences prefer local brands.

Naouri said the Chinese market has a "huge scale and local players have been smart enough to take advantage of that".

"We see that in the confrontation with Google, which was already having major problems before its issues with the government," Naouri said.

Poon cited Japan as another market that also has seen partnerships between US companies and local brands, but in Yahoo's case, for example, the American company's branding was still used in the Japanese market.

The Chinese market is different in this respect, he said.

Mediabrands is also working with US companies such as Cadreon, which is developing technology to further profile online audiences for targeted advertising, Poon said. Mediabrands will take this technology to its Chinese partners.

Publicis is also working to develop technology that will "deliver the right ad at the right time", Naouri said. "You want to touch specific audiences, and we have the tools to do that."

He said Publicis has an agreement with eight out of the 10 top video sites in China, which will utilize a new video format.

Publicis employs about 3,500 people in China, with offices in 35 cities.

"We probably have presence in more cities in China than we have in the US," Naouri said.

"We are going deep into the provinces and tier-2 and tier-3 cities, because this is what clients are looking for. They want to go deep into China."

Interpublic has about 750 employees in China, Poon said. Mediabrands Ventures, which opened earlier this year, employs 100 people, he said.

Naouri said the Chinese new media market is still in its infancy.

"All the business models for advertising, mobile and gaming are being built as we speak, by local companies," he said.

"Usually we try to pay attention to local differences and content, but in China especially we see something very specific and unique."

In the past, start-ups have generally approached the big advertising firms, but major companies are now seeking out smaller new media firms, and nowhere is this more evident than in China, Poon said.

"In China there are many different mobile companies, and a few of them will be the next Baidu," Poon said.

"We've turned the tables around and from a mature media standpoint, we're looking at what these small companies are developing and trying to discern what the future is.

"It's a big shift in thinking, a shift in recognizing the homegrown savvy of these Chinese companies.

"Rather than just following the scene, we need to participate in the market.It's really a revolutionary approach."

China Daily