Business

Ad giant sees social media as biggest revenue growth engine

By Yu Tianyu (China Daily)
Updated: 2010-10-26 08:01

Omnicom Media Group (OMG), a leading global advertising and marketing company, has bolstered its business in China to meet demand from the country's booming ad and media market.

The country's sheer size and growth provide opportunities to everybody, said Barry Cupples, CEO of OMG Asia Pacific.

"Due to its huge consumer base, China is a priority for our business - our expectations have been always very high," said Cupples. "I also have a plan to grow the company in significantly for the next three years."

He added that China is also a focus globally for OMG because many of its clients in China are growing rapidly.

OMG has been operating in China for eight years, managing the operations of media communications agencies OMD, PHD and M2M with offices in Shanghai, Beijing and Guangzhou.

Under Cupples' leadership, OMD Asia Pacific was crowned Media Agency of the Year 2008, followed by PHD Asia Pacific in 2009.

"Our business category in China is fiercely competitive, which is why it is important for agencies to be good in what they do in order to stand out," he said.

"In terms of the planning, execution, insights and research we provide, when we stand out in these, we just keep growing," he said. "In our industry, everything is measurable and everything is defined by how good the work is, no matter how tough the market environment is or how fierce the market competition is."

"Every year, we carry out considerable research and work out a separate wish list in every market to specify which clients we think fit our philosophy."

"We do have a lots of new client targets in China," he said. "Currently, we have a significant number of international clients which seems to be our greatest triumph."

Focusing on locals

But in the next two years, the company should be looking at the volume of its business from local Chinese clients, because they have become a major driver of the market, according to Cupples.

In 2010, the recovery of the Chinese economy helped to create a stable environment for growth in the advertising market, and the robust consumer market has directly strengthened industry confidence.

The latest survey on advertisers by market consulting firm CTR showed that they are generally optimistic about China's economy, industrial growth and their own operating performance. Two-thirds report that their advertising costs in 2010 will increase and another 27 percent say their spending on advertisement will be kept at least at the same level as the previous year.

The total ad placement in China during the first half of this year exceeded $41 billion, up 17 percent from the previous year, the highest growth rate in four years.

"In the post-financial crisis period, we witnessed a lot of organic growth in China and we are talking about a market evolution due to the emerging millions of new consumers ," said Cupples.

Driving forces

The "Post-80 Generation" - people born between 1980 and 1989 - have become a major force driving consumption in China's urban areas, , a CTR report said.

The development and globalization of the Chinese economy are also driving the growth of China's wealthy.

Statistics show that in 2008 there were 1.6 million urban families with annual income surpassing 250,000 yuan. The number is expected to reach 4 million in 2015, when China is expected to be No 4 in the number of wealthy families, following the US, Japan and the UK.

Cupples said the norm for the marketing and advertising industry is "participating instead of preaching".

Consumer endorsement is the hot new advertising mode as some 86 percent of people trust consumer endorsements.

This year, Unilever cooperated with OMG on the drama series Unbeatable that aired on six major provincial TV channels and six online video sites in China to promote Unilever's Clear shampoo.

Social media

Couples said OMG will highlight social media - mainly Internet and mobile phone websites - as a new growth engine for the advertising industry.

There are 1.73 billion Internet users and more than 4 billion mobile phone users in the world. Next-generation telephony will enable connection for the next billion Internet users, according to OMG's research.

"We will continue our efforts and expecting more growth in social media-connected advertising revenues," he said.

Also in this year, OMG cooperated with Yahoo! to create a parenting channel in non-English speaking countries in Asia.

The Yahoo! Babytalk is a the portal for online moms, serving baby care content, social networking opportunities and product recommendations for mothers.

About 80 percent of online Chinese use Baidu, as search revenue is the fastest growing of all advertising revenue in Asia, seven times faster than display advertising.

As the opening of the Asian Games in Guangzhou and the ongoing Shanghai World Expo contributing to growth the regional economies in China, Cupples said he is optimistic about OMG in China.