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The purpose of this blog is for my personal use. It serves as my personal diary as I investigate Chinese internet/gaming companies for investment purpose. If you have any comments or disagreement, please give me feedbacks.

Monday, March 30, 2009

China's Internet advertising market survey for January and February 2009

My last article on the survey on China』s internet advertising market can be found here:


On 3/26/2009, Nielsen and ChinaRank together published a survey on China』s internet advertising market for the months of January and February 2009. Their survey can be found below:


The main data from their survey can be found in the following plot:

The above plot indicated that advertisers spend $850 million in January 2009 and $710 million in February 2009 for China. It represents a 2.6% year over year increase from January 2008 to January 2009 and 19.2% year over year increase from February 2008 to February 2009.

This survey indicated a decrease from January to February 2009 due to seasonal factor. But excluding seasonality, the rate of increase has increased from 2.6% in January to 19.2% in February.

Nielsen also surveys the internet advertising by sectors. I will provide their data below:

% of total advertising by sectors in February, 2008:

Auto – 20.8%

Electronics – 16.1%

Entertainment – 9.8%

Fashion – 9.1%

Fast Moving Consuming Goods – 7.1%

Finance – 6.6%

Media – 5.3%

Service – 4.7%

Sales – 3.3%

Real Estate – 3.3%

Others – 14%

% of total advertising by sectors in February 2009:

Auto – 16.4%

Fashion – 14.3%

Friendships – 11% (this could be dating, community, etc.)

Real Estate – 8.7%

Finance – 8.2%

Entertainment – 7.7%

Electronics – 7.1%

Fast Moving Consuming Goods – 5.2%

Jobs recruitment – 5.1%

Media – 3.8%

Others – 12.5%

From the company's quarterly earning call conference, we can find out the top advertising sectors. They are as follow:

Sina's top advertising sectors: Auto, Finance, Real Estate, Telecom Service and FMCG

Sohu's top advertising sectors: Auto, Online Games, Real Estate, FMCG

Ntes's top advertising sectors: Auto, IT, Internet

For Sina, there is a little decrease in Auto and FMCG. There are also some increases in Finance and Real Estate. But telecom service is a big problem. According to the survey, electronics sector had a severe decrease from 16.1% to 7.1%. One would expect Sina would suffer due to its exposure to the Telecom service sector.

For Sohu, there are some decreases in the Auto and FMCG sector. There is increase in Real Estate. I don't know where I shall classify Online Games.

For Ntes, there is decrease in the Auto sector. IT sector might be troublesome. IT is probably part of Electronics sector and there is significant degradation in the Electronics sector. The internet sector however is growing very well. I believe both the recruitment and friendship sectors probably count as internet sector. Both those sectors improve greatly.

Finally, for the overall internet advertising market in China, the survey has YoY (year over year) increase of 2.6% in January and 19.2% in February. One would think the YoY increase shall accelerate in March.

If we assume March would have a YoY increase of 25% (your guess is as good as mine), we shall have a year over year of (2.6+19.2+25)/3 = 15.6% increase for the 1st quarter of 2009.

For Sina, its 1st quarter increase is probably below 15.6% due to its reliance on Telecom service.

For Sohu, its 1st quarter increase is probably around 15.6%. For Ntes, its 1st quarter increase is probably a little above 15.6%.

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