China's Internet Advertising Market Survey by Nielsen

You can find my previous article on the survey of China's Internet advertising market here:

http://chinese-net-gaming-stock.blogspot.com/2009/04/1q2009-internet-advertising-month-to.html

I guess it that time of the season where all the survey shops come out with their survey result for the 1^st quarter. Nielsen and ChinaRank jointly conducted the survey for China's Internet Advertising Market. One can find the article below:

http://tech.sina.com.cn/i/2009-04-28/18093046575.shtml

I like this survey because it breaks out the month by month survey results. It can clearly show the trend. For March 2009, China's Internet Advertising market has revenue of $1.14B. That number is an increase of 61.6% year over year (YoY).

The following plot has the revenue by month from January 2008 to March 2009:

I will tabulate the data below:

Month	2/08	3/08	4/08	5/08	6/08	7/08	8/08	9/08	10/08	11/08	12/08	1/09	2/09	3/09
Revenue	.6	.78	1.02	.96	1.18	1.14	1.22	1.36	1.14	1.24	1.73	.85	.71	1.14
YoY												2.4%	18%	46%

It is a little hard to believe the survey result for December 2008. I think that was too strong. But still, it is clear that there is a very drastic decline from 4Q2008 to 1Q2009. Within the three months of the 1Q2009, February 2009 was so weak you have to go all the way to a year ago to find one weaker. In addition, the data also showed that there is a very strong pick up in March 2009. There is an amazing 61% pick up from February 2009 to March 2009.

This survey results pretty much confirmed the other three surveys conducted by three other survey houses. We are probably going to see pretty nasty 1^st quarter results.

On the other hand, even though it is still too early to tell, but tt will probably follows by a very strong V-shaped pick up in the 2^nd quarter.

Addendum: Somebody mentioned that I interpreted the data incorrectly. The weakness of the 1^st quarter was due to seasonality factor (i.e. Chinese New Years). Note that Chinese New Years occurs in February in 2008 and January in 2009. The logical conclusion shall be that the weakest one shall be on January 2009 because of Chinese New Year. But that is not the case.

He has a point. Seasonality has more of an effect than general economic conditions. If we use the year over year comparison, we will have an increase of +2.4% in January 2009, +18% in February 2009, and 46% in March 2009. I don't have the year over year number for the 4^th quarter 2008. Therefore, it is possible that February 2009 is not the lowest point. It is possible that the lowest point was some month in the 4^th quarter 2008.

Personally I still think February 2009 is the lowest point. But I don't have enough data to verify that.

But regardless whether the low point is on 4Q2008 or February 2009, what is not debated is that the March survey result indicated the start of an acceleration of revenue growth.

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:

http://chinese-net-gaming-stock.blogspot.com/2009/02/chinas-2008-internet-advertising-market.html

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:

http://it.sohu.com/20090326/n263027249.shtml

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 1^st quarter of 2009.

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

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