ZenithOptimedia - China Media & Digital Scene 2014

CHINA ECONOMIC OVERVIEW

CHINA GDP STEADIES UNDER RE-BALANCING

While GDP growth has decelerated as expected, it has tracked neatly to the official target of 7.5%

Source: National Bureau of Statistics – July 2014

Less dependence on investment in infrastructure and capital-intensive industries means a greater focus on domestic consumption.

FROM BUILDINGS,

INFRASTRUCTURE,

& MANUFACTURING…

…TO CONSUMPTION

AND SERVICES

9.5%9.1% 8.9%

8.1%7.6% 7.4%

7.9%7.7% 7.5%

7.8% 7.7%7.4% 7.5%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

Q22011

Q3 Q4 Q12012

Q2 Q3 Q4 Q12013

Q2 Q3 Q4 Q12014

Q2

CHINA'S GDP GROWTH YEAR-ON-YEAR

2

GDP PER CAPITA

GDP per capita rises, but plenty of room to grow at just 29% of the global average.

Source: National Bureau of Statistics - 2014 Q2

Household consumption rate* is ultra-low at roughly 34%. Some economists think that China’s consumption rate is lower than the U.S.’s ever was in its entire history.

*Household final consumption expenditure (formerly private consumption) is the market value of all goods and services, including durable products (such as cars, washing machines, and home computers), purchased by households. It excludes purchases of dwellings but includes imputed rent for owner-occupied dwellings. It also includes payments and fees to governments to obtain permits and licenses.

Source: World Bank National Accounts data and OECD National Accounts data files - 2014

RMB 22,077 (USD $3583)2014 GDP Per Capita - China

USD$12,3562014 GDP Per Capita – Global Average

1,5651,731

1,9402,203

2,4032,611

2,8703,122

3,3453,583

0.0

500.0

1000.0

1500.0

2000.0

2500.0

3000.0

3500.0

4000.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

GDP PER CAPITA (USD) +7% YOY

VS.

34%

69%58%52%

3

CONSUMER SENTIMENT RECOVERY

Source: BCG China Consumer Sentiment Survey 2011-2014

36% 38% 33%25%

40%29% 40%

44%

24%33%

27% 31%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012 2013 2014

MIDDLE-CLASS AND AFFLUENT CONSUMER INTENTION TO SPEND - COMPARED TO LAST YEAR

Plan to spend more

Plan to spend about the same

Plan to spend less

Compared to the performance of the past two years, consumer sentiment has made a recovery, with 75% planning to spend at least as much as last year.

75%67%62%64%

4

LOWER-TIER GROWTH DRIVERS

However, it’s not upper tier consumers, but rather lower tier consumers, who are responsible for the overall improvement in consumer sentiment.

Source: BCG China Consumer Sentiment Survey 2011-2014

35% 36%

31%

26%28%

34%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Big Cities Small Cities

% OF MIDDLE-CLASS AND AFFLUENT CONSUMERS WHO PLAN TO SPEND MORE THAN LAST YEAR

2012 2013 2014

-3% PY

-7% P2Y

+8% PY

5

SIX MEGATRENDS DRIVING CHINA

1. URBANIZING A BILLION PEOPLE 2. HUGE MANUFACTURING SCALE 3. RISING CHINESE CONSUMERS

Source: McKinsey April 2014

300 million have moved to cities already and 350 million more are on the way.

The manufacturing base has increased more than 18-fold in the past 30 years and is worth $2.2 trillion annually in value added.

An additional 200 million people will enter the middle class by 2026, joining 300 million who have done so in the past 30 years.

4. MONEY – AND LOTS OF IT 5. THE BRAINPOWER BEHEMOTH 6. THE CHINESE INTERNET

The country has more than $15 trillion in bank deposits, growing by $2 trillion a year.

Spending on education has doubled, and the number of college graduates has increased more than 7-fold since 1998.

Even though penetration is comparatively low, China still has more internet users than other country and it’s still exploding.

6

CHINA ADVERTISING OVERVIEW

TOTAL MONITORED AD INVESTMENT

Media: TV/Radio/Newspaper/Magazine/Outdoor/internet, exclude all no-cost items & Hong Kong TV Media, (Total monitoring Ad Investment include new added media, while growth rate exclude new added media)

8.0%

6.5% 6.4%

5.2%

6.6%

10.9%9.9%

2.7%

-1.3%

0.6%

3.0%

5.8%

-0.2%

-2%

0%

2%

4%

6%

8%

10%

12%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Jun. 2013 Jul Aug Sep Oct Nov Dec Jan. 2014 Feb Mar Apr May Jun

Ad Investment YOY Growth

TOTAL MONITORED AD INVESTMENT (JUN YTD 2014): RMB 554,963 MILLION

RMB: Million

Source: CTR AdEx Power 2013-2014; iResearch 2014

Growth in monitored advertising spend for this year has not been as aggressive, averaging in at just 2% for YTD 2014 compared to 7.6% in the second half 2013.

June YTD 20142.0% YOY Growth

H2 20137.6% YOY Growth

8

ZENITHOPTIMEDIA ADFORECAST

4% 4% 4% 4% 4% 4%2% 2% 2% 2% 1% 1%

13% 14% 14% 15% 14% 14%

22% 19% 16% 12% 10% 8%

43%41%

39%36%

33%30%

14%19%

25%31%

37%43%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012 2013 2014e 2015e 2016e

ZENITHOPTIMEDIA AD FORECAST

Radio Magazine Outdoor Newspaper TV Internet

Source: ZenithOptimedia AdForecast - Q2 2014

Digital continues to draw advertising investment on TV and Newspaper, hitting nearly one-third of total spending for 2014.

+6 pts.

-3 pts.

-4% pts.

9

TOTAL MONITORED AD INVESTMENT BY SECTORS (JUNE 2014 YTD)RMB: Million

-4%

5%

-1%

10% 8%10%

-1% -3%

-24%-21%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

Food and Drink Business and Service Toiletries Pharmaceuticals Automobiles Real Estate &Construction

Industry

Leisure Post &Communication

Finance &Investment

Personal Items


Media: TV/Radio/Newspaper/Magazine/Outdoor/internet, exclude all no-cost items & Hong Kong TV Media, (Total monitoring Ad Investment include new added media, while growth rate exclude new added media)

Source: CTR AdEx Power 2013-2014; iResearch 2014

MONITORED AD INVESTMENT BY CATEGORY

Key drivers of growth come mainly from Pharmaceuticals, Automobile, and the Real Estate & Construction industries.

10

OVERALL MEDIA LANDSCAPE

MEDIA SHARE OF TIME SPENT

Digital will soon reach half of all time spent on media, up from just a third of time spent two years ago.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 2014

Radio

Newspaper

Magazine

TV

Internet

Mobile Internet

32%digital 37%

digital 44%digital68%

traditional 63%traditional 56%

traditional

SHARE OF TIME SPENT 2012-2014

Source: CMMS Summer 2014

12

DIFFERENT TIERS ANALYSIS

0.3 0.2 0.2 0.2 0.2 0.1 0.2 0.2 0.2

0.6 0.5 0.5 0.4 0.4 0.4 0.4 0.4 0.4

0.10.1 0.1 0.0 0.0 0.0

0.1 0.1 0.1

3.23.0 3.0

2.7 2.62.4 2.3 2.3 2.2

1.92.1

2.6

1.3 1.4 1.8 1.5 1.5 1.7

0.2 0.3

0.6

0.1 0.30.5

0.4 0.4 0.6

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

2012 2013 2014 2012 2013 2014 2012 2013 2014

Tier 1 Tier 2 Tier 3

TIME SPENT ON MEDIA PER DAY, BY CITY TIER 2012-2014

Mobile Internet

Internet

TV

Magazine

Newspaper

Radio

Source: CMMS Summer 2012-2014

34%digital

39%digital

45%digital

30%digital

34%digital

43%digital

38%digital

40%digital

45%digital

While lower tiers spend slightly less time overall on media, the trend of increasing time spent on digital is true across all tiers.

13

MEDIA CONSUMPTION BY AGE

0.2 0.1 0.1 0.2 0.2 0.2 0.20.4

0.2 0.3 0.4 0.4 0.4 0.50.1

0.1 0.10.1 0.1 0.1 0.0

2.5

1.9 1.92.1 2.3 2.4

3.1

2.0

2.1

3.03.1 2.8 2.4 0.8

0.5

0.7

1.00.9 0.7

0.5

0.1

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Total Population 15-19 20-24 25-29 30-34 35-39 40+

Mobile Internet

Internet

TV

Magazine

Newspaper

Radio

56%digital

62%digital

59%digital

54%digital

48%digital 20%

digital

TIME SPENT ON MEDIA PER DAY, BY AGE GROUP 2014

Digital has in fact already become dominant for the post-80s and post-90s generation at nearly 60% of all time spent.

44%digital


14

CHINA DIGITAL LANDSCAPE

TOTAL POPULATION

28%72% OF NETIZENS

URBAN RURAL

INTERNET PENETRATION7% YOY

46% OF TOTAL POPULATION632,000,000NETIZENS

527,000,000 83% OF NETIZENS

MOBILE WEBMOBILE NETIZENS 18% YOY

Nearly half the population has internet access, a 7% increase YOY.

Sources: National Bureau of Statistics of China July 2013; CNNIC July 2014

DIGITAL LANDSCAPE

1,364,655,000

16

TOTAL INTERNET POPULATION 2010-2014

DIGITAL AD SPENDING BY FORMAT

13%21%

29% 31% 34% 35% 35%

28%

28%27% 26% 26% 26% 26%

37%30% 24% 23% 21% 21% 20%

5% 6% 7% 8% 8% 9% 9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012 2013 2014e 2015e 2016e 2017e

Other

Email

Classifieds

Text Link

Rich Media

Video

Display/Banner

Search

Vertical Search

Source: 2014 China Online Advertising Report - iResearch - May 2014

SHARE OF DIGITAL AD SPENDING IN CHINA BY FORMAT

Search and E-commerce take the lion’s share of digital spending, while video maintains its growth and display is in steady decline

88%87%85%83%

17

(e-commerce sites, travel sites etc.)

DIGITAL CHANNELS SPENDING GROWTH

Search Advertising

WeChat Industry Verticals

Microblogs Video Advertising

Mobile Advertising

(Mobile Phone)

Social Networks

Real-Time Bidding (RTB)

Mobile Advertising

(Tablet)

Portal

89% 70% 59% 52% 43% 41% 35% 29% 22% 22%Large/Slight Increase

Source: 2014 China Digital Media Survey – R3 Worldwide and Admaster

72%

50% 48% 41% 43% 41%24% 22% 15% 22%

17%

20%11%

11% 0% 0%

11% 7%7% 0%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

ADVERTISER’S DIGITAL MEDIA SPENDING CHANGE FOR 2014

Growth for Search and WeChat advertising are claimed to have the biggest gains, despite limited advertising possibilities still in WeChat.

18

TOTAL INTERNET POPULATION 2010-2014

338384

420457

485

538564

591618 632

233277

303 318356

388420

464500

527

0

100

200

300

400

500

600

700

Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14

Total Internet Mobile

Million Users

Source: CNNIC 2010-Jul 2014

Growth of total internet users is correlated with the growth of mobile netizens.

MOBILE NETIZENS

19

MEDIA CONSUMPTION ON PC

On PC, most categories remained stable, with the exception of social platforms dropping in both coverage and time spent.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

MONTHLY COVERAGE BY CATEGORY

Jun-13 Jun-14

-4.4% reach

Source: iUserTracker Jun 2013-2014, coverage don’t include software on PC (might affect video category)

34% 35%

18% 14%

10%10%

8%8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jun-13 Jun-14

SHARE OF TIME SPENT

Video Social Search

E-commerce News Game

Entertaining Finance Others

-4 pts.

20

MEDIA CONSUMPTION ON MOBILE

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

MONTHLY COVERAGE BY CATEGORY

Jun-13 Jun-14-11%

Source: mUserTracker Jun 2013-2014, mobile applications only, does not include mobile sites

+18% -12%-13% -11%

+9%

10%23%

20%

22%12%

10%12%

10%7%

5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jun-13 Jun-14

SHARE OF TIME SPENT

Video Instant Messaging E-Reading

Browser Game Social

E-commerce Music Others

+13 pts.

-3 pts.

VIDEO

SOCIAL

On mobile, consumer attention has shifted away from traditional social, game and even music, towards video, IM and payments.

21

MOBILE

INTERNET PENETRATION BY DEVICE 2010-2014

83%80% 82%

79% 78%

71% 71%70% 70% 70%69%

72% 72%70% 73%

72% 74% 79%81%

83%

35%40%

50% 49% 49%45% 46% 47%

44% 44%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14

Desktop Mobile Laptop

-0.1%

-3%

+5% reach

Source: CNNIC 2010-Jul 2014

Mobile internet reach continues to grow while older devices of desktop and laptop begin to dip.

REACH BY DEVICE

23

SHARE OF MOBILE ADVERTISING

Sources: PWC Mobile Advertising in China – May 2014

Mobile continues to gain share within digital ad investment.

4,710 6,500 9,294 12,563 16,761 21,021 25,750

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2011 2012 2013 2014e 2015e 2016e 2017e

MOBILE AND NON-MOBILE DIGITAL ADVERTISING (MILLION RMB)

Mobile Internet Advertising Non-Mobile Internet Advertising

10% 9% 11% 12% 13% 14% 16%

24

2.0 2.1

3.0 3.12.8

2.4

0.8

0.50.7

1.0 0.9

0.7

0.5

0.1

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Total Population 15-19 20-24 25-29 30-34 35-39 40+

Internet Mobile Internet

TIME SPENT ON MOBILE VS. DESKTOP

TIME SPENT ON MOBILE INTERNET VS. DESKTOP INTERNET

Sources: CMMS Summer 2014

25% of a user’s time on digital is now directly on mobile phone.

25

SMARTPHONE PENETRATION

Source: eMarketer June 2014

353

446.8

521.7574.1

621.8666.5

709.9

69%

27%

17%

10% 8% 7% 7%

26%

33%39%

42%46%

49%52%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0

100

200

300

400

500

600

700

800

2012 2013 2014e 2015e 2016e 2017e 2018e

SMARTPHONE USERS (MILLIONS)

Smartphone Owners % Change % of Population

Smartphone growth continues, while at a slower pace than previous years given that 39% of the population are already owners.

26

TABLET PENETRATION

Tablet ownership in China among netizens ranks among the highest in the entire world, ahead of more developed nations such as the UK and the US.

Source: eMarketer, Global WebIndex – July 2014

41% 41%

39%

36% 36%

33%

34%

35%

36%

37%

38%

39%

40%

41%

42%

Singapore China United Kingdom United States Hong Kong

% PENETRATION AMONG NETIZENS

27

Note: It is likely that China numbers are inflated due to sample bias towards more affluent consumers

MOBILE CARRIERS

41% of all mobile netizens have high speed mobile access, with some 20 million early adopters already making the move to 4G (still limited in geographical access).

760.1

532.2

152.675.3

488.9

240.9

143.3

104.7

20.4

20.4

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

Total China Mobile China Unicom China Telecom

MOBILE SUBSCRIBERS BY CARRIER (MILLIONS)

Other Subscribers 3G users 4G users

4787

128181

234

325

417

489

20

0

100

200

300

400

500

600

Dec

-10

Mar

-11

Jun

-11

Sep

-11

Dec

-11

Mar

-12

Jun

-12

Sep

-12

Dec

-12

Mar

-13

Jun

-13

Sep

-13

Dec

-13

Mar

-14

Jun

-14

TOTAL 3G AND 4G SUBSCRIBERS IN CHINA (MILLIONS)

3G Subscribers 4G Subscribers

Source: Mobile Provider Claimed Data

28

Xiaomi and Samsung together make up nearly half of all new phones sold through May 2014.

Source: Kantar Worldpanel - July 2014

30%

13%

16%

17%

20%

5%

XIAOMI BUYERS PREVIOUS PHONES OWNEDYTD 2014

First Time Smartphone Buyer

Repeat Buyer of Xiaomi

Switch from Samsung

Switch from Nokia

Switch from Domestic Brands (Huawaei, Lenovo, OPPO, ZTE, Coolpad)

iPhone

Xiaomi rakes in a significant number of first-time smartphone buyers.

23%

21%

16%

10%

6% 6%

3%2%

1%

11%

0%

5%

10%

15%

20%

25%

% OF SMARTPHONES SOLD YTD 2014

% of Smartphones Sold

SMARTPHONE MANUFACTURERS

Other

29

SMARTPHONE OS

Source: Baidu – Q2 2014 Report

13%

79%

3%5%

2014 Q2 SMARTPHONE SALES

iPhone Android Windows Others

Android continues to dominate new phone sales, with Apple and Windows phones trailing.

30

HOUSEHOLD INCOME BY SMARTPHONE OPERATING SYSTEM

MEDIAN HOUSEHOLD INCOME BY SMARTPHONE OPERATING SYSTEM

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Android iOS Windows Phone Other OS

7,508 RMB

14,217 RMB

7,229 RMB 6580 RMB


iPhone users have significantly higher income than other phone users.

31

DIGITAL USAGE BY OS

2.5

3.1

2.3

1.3

0.8

1.0

0.7

0.3

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Android iOS Windows Phone Other OS

Mobile Internet

Internet


iOS users spend 20% more time on mobile and 25% more time on other digital channels.

SMARTPHONE USERS TIME SPENT ON DIGITAL MEDIA

32

ADVERTISING FORMATS ON MOBILE

46%

26%

20%

8%

MOBILE ADS ON TABLET 2013

Video Ads Banner/display Ads Interactive Ads Text Link Ads

Source: eMarketer 2014

48%

39%

7%6%

MOBILE ADS 2013

Search Banner/display Ads Video Ads Other

Mobile advertising, while dominated by banner and search overall, skews heavily to video ads, especially on tablets.

33

FORMATS & CASES

MOBILE ADS FORMAT

VIDEO ADS IMPACT DISPLAY

PLACEMENT/IMPLANTATION

REGULAR DISPLAY

INTERACTIVE DISPLAY

CONTENT COOPERATION

35

TWO WAYS OF BUYING ADS IN MOBILE

AD NETWORKS HERO APP COOPERATION

36

MOBILE BANNERS TARGET PHONE COMPETITORS

LG G2 mobile banner ad campaign deftly pokes fun at the competitor phones on which they appear, using device recognition.

“Tired of charging your HTC One?” “Hard to read this on your iPhone?” “Waiting for your Galaxy to catch up?”

The banners gained a click rate up to 830% higher than average. After only five days, the banners had been picked up by 7,130 blogs, tech forums and newspapers worldwide, earning an estimated 184 million impressions from earned PR value alone.

37

VIEWPOINT ON MOBILE

Mobile advertising should be at least 10% of a brand’s digital presence. Display ad network and video sites are now wide reaching enough to effectively complement awareness driven campaigns.

1.

Of all targeting options, iOS device targeting remains one of the safest way to focus on higher spending consumers; at the same time, don’t forget to include more expensive devices from Android platforms.

2.

Tablet advertising is reaching maturity, especially for higher tier cities and proves valuable for premium brands. Beware however of current inflation rates, that value is being priced by video sites and costs per reach are highest of all.

3.

Beware of focusing only on WeChat. Advertising options are still limited and WoM can be harder to generate than on traditional Weibo platforms, especially if you don’t provide a WeChat tailored experience.

4.

38

TV & OTV

TV & OTV COVERAGE

Source: CMMS, IMMS Summer 2014

48% watch OTV

95% watch TV

37% 39% 41% 40% 37% 35% 32%

63% 61% 59% 60% 63% 65% 68%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Total Age 15-19 Age 20-24 Age 25-29 Age 30-34 Age 35-39 Age 40+

SHARE OF TIME SPENT ACROSS OTV AND TVFOR OTV VIEWERS

OTV Percentage TV Percentage

On average, TV makes up two-thirds of video viewing time.

43% watch both

5% watch OTV only

Of the total population:

52% watch TV only

44

Impression per episode('000)

TV* OTV

我是歌手第二季I’m a Singer 31,837 44,623

最强大脑The Brain 12,245 41,333

笑傲江湖Laughing 4,898 31,747

花儿与少年Divas Hit the Road 13,470 31,355

PROGRAMIMPRESSIONS PER SEASON (‘000)

TV* Online Video

HIT SHOWS ON OTV

Especially for some hit shows, the OTV audience easily rivals or surpasses that of TV.

Source: TV from CSM national rating & TV population, OTV from top 11 sites 1ST AIR RATING 1ST WEEK VIEWS

41

FIGHT FOR COPYRIGHT

The fight goes beyond video sites, as TV stations feel the pressure to likewise make some significant rights acquisitions.

…

HNTV: exclusive

broadcasting right for own site imgo.tv

CCTV: exclusive

broadcasting right for own

site CNTV

46

2014 OTV EXCLUSIVE COPYRIGHT FOR ENTERTAINMENT PROGRAMS

China’s Got Talent 5th season

中国达人秀第五季The Voice of China 3rd season

中国好声音第三季

I’m the Singer 3rd Season

我是歌手第三季

Happy Camp

快乐大本营Day Day up

天天向上Your Face Sounds Familiar

百变大咖秀Where are we going,

Dad? 2nd season

爸爸去哪儿第二季

Kangxi

康熙来了

You Are The One

非诚勿扰

43

DEVICES FOR VIDEO

LETV C1S

LETV SUPER TV x60

PPTV AND SUNING

IQIYI AND SKYWORTH

MEDIA PC LAPTOP PHONE TV BOX SMART TV

YOUKU √ √ √ √ -

TUDOU √ √ √ - -

IQIYI √ √ √ √ √

PPS √ √ √ - -

PPTV √ √ √ √ -

SOHU VIDEO √ √ √ √ -

TENCENT VIDEO √ √ √ - -

LETV √ √ √ √ √

FUSHION √ √ √ - -

XUNLEI √ √ √ √ -

BAOFENG √ √ √ - -

At the same time, video players are all building their multi-screen strategy with devices expanding to TV.

IQIYI AND TCL

48

MONITORED TV ADVERTISING

Media: TV, exclude all no-cost items & Hong Kong TV Media, (Total monitoring Ad Investment include new added media, while growth rate exclude new added media) Source: CTR AdEx Power 2013-2014

RMB: Million

TOTAL MONITORED TV AD INVESTMENT (JAN – JUN.2014): RMB 466,142 MILLION

1.1%

9.1% 8.7%

5.4%

8.0%

12.6% 12.9%

1.3%

-1.3%

0.5%

2.9%

5.6%

-1.3%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

0

20,000

40,000

60,000

80,000

100,000

120,000





TV growth slowed down to just 1.7%, compared to the highs of the secondhalf of 2013.

46

PRIME TIME TV AD INVESTMENT

RMB: Million


TOTAL MONITORED TV IN PRIME TIME (17:00-24:00)AD INVESTMENT (JAN - JUN.2014): RMB 302,301 MILLION

12.5%

6.3%

9.5%

4.0%

5.7%

10.6% 10.1%

2.6%

-0.1%

2.7%

4.8%5.7%

0.5%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

0

10,000

20,000

30,000

40,000

50,000

60,000



Prime time ad investment was similar, at 2.7% YOY for the first half of this year.



47

TV AD INVESTMENT BY CATEGORY


RMB: Million

TV MONITORED AD INVESTMENT BY SECTORS (JUN.2014)

4.5%

-19.3%

22.0%

67.3%

8.6%-7.1%

-18.7%0.2%

26.1%

-27.6%

58.9%

3.1%

22.5%

-54.2%

-6.2%

-69.1%

-35.0%

-13.7%

-44.6%

-10.1%

-79.8%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000


Some key categories pushed strongly on TV advertising, particularly pharmaceuticals and household at over 50% growth.

48

SPENDING SHARE FOR CCTV/SATELLITE/LTV

21% 18% 21%

25% 35% 36%

54% 47% 43%

0%

20%

40%

60%

80%

100%

Y 2012 Y 2013 2014 YTD

CCTV Satellite TV Local TV

Source: Vivaki Exchange

SHARE OF SPEND ACROSS TV PLATFORMS

*CCTV’s exclusive broadcast rights of the 2014 World Cup were a key reason behind the 3% share of spend increase on CCTV this year.+3%*

+1%

-4%

The spending share of Local TV continues to drop as pressure mounts primarily from Satellite TV.

49

China BlueZhejiang PSTV

2013：387 mil RMB

2014：497 mil RMB

Jinying Drama Hunan PSTV

2013：239 mil RMB

2014：523 mil RMB

I’m a SingerHunan PSTV

2014：636 mil RMB

Happy CampHunan PSTV

2014：286 mil RMB

Day Day Up

Hunan PSTV

2014：35 mil RMB

Dad, where are we

goingHunan PSTV

2014：1,005 mil RMB

Chinese IdolDragon PSTV

2014：235 mil RMB

Voice of ChinaZhejiang PSTV

2013：1,040 mil RMB

2014：1,273 mil RMB

BIDDING WARS ON PSTV

Note：Y2013<Happy Camp>+<Day Day UP>239 mil RMB

PSTV vie for top media properties by ramping up bidding in 2014.

50

THE LARGEST SPONSORSHIPS FROM HUNAN & ZHEJIANG SATELLITE TV

SPONSORSHIP: YILI 310 MILLION

SPONSORSHIP: LIBY 230 MILLION

SPONSORSHIP: JDB 250 MILLION

Source: Publicly Available Bidding Result

51

BIG SHOWS IN Q4

Channel: Dragon Satellite TV

On air time: Saturday2100, Nov.1, 2014

Program type: Outdoor Reality Show

Channel: Zhejiang Satellite TV

On air time: Friday2100, Oct.10, 2014

Program type: Reality Show

Channel: Jiangsu Satellite TV

On air time: Friday2100, Sep, 2014

Program type: Star Reality Show

52

SARFT REGULATION

Drama Limitations On Satellite Channels in 2015:

Channel• Drama cannot be on more

than two satellite channels during prime time

Drama series

• The same drama on must not exceed 2 episodes in the prime time slot on each specific satellite channel

OUR VIEWPOINT

1. Expect increase in cost of drama

2. The gap between each satellite channel’s coverage will widen

3. Video websites will benefit the most from the policy, though themselves also subject to ongoing updates to regulations

53

SARFT REGULATION

Online TV BOX

•Installing unaudited online TV boxes is forbidden in Shanghai & Zhejiang.

Wasu,

BesTV

•Required to rectify their content – cannot continue using other video providers’ content such as Youku or IQIYI

OUR VIEW1. Online TV box can continue to supply

the content from Wasu/BesTV, but not from other unaudited content.

2. Wasu/BesTV are required rectify their current offering, which will reduce their content significantly.

3. iQiyi/LeTV/PPTV continue to operate their boxes products in cooperation with their licensed partners.

4. Potential effect on those boxes that own no copyright content of their own, such as Millet box.

Tightening policy for video via TV boxes since late June 2014

54

438* MILLION USERS

69% REACH AMONG ALL NETIZENS

9 DAYS PER MONTH

48 MINUTESPER USAGE DAY

PC MOBILE


11 DAYS PER MONTH


Source: Reach from CNNIC, days and time spent from iUserTracker & mUserTracker Jun 2014;Total user number only includes PC

ONLINE VIDEO OVERVIEW

56

MEDIA SHARE OF TIME SPENT ON PC AND MOBILE

32%

5%

20%

16%

8%

7%

5%5% 2%

15%

9%

13%

4%

12%11%

10%

10%

4%

3%

10%

IQIYI

PPS

YOUKU

TUDOU

PPTV

LETV

SOHU

TENCENT VIDEO

CNTV

FUSHION

Others

TIME SPENT BY MEDIA

Media evenly take share of consumers’ time on PC while top players are more dominant on mobile, especially for the two merged groups.

PC MOBILE

-4%

+4%

+5%

-7%

+7%

-7%

-3%

+3%

-3%

4%

Source: iUserTracker & mUserTracker Jun 2013-2014

61

Drama

• Japanese TV Series

• Korean TV series

Variety

• Kangxi Talk Show

（康熙来了）

Sport

• US Open Tennis Championships

Self-produced Program

EXCLUSIVE SHOWS IN IQIYI

IQIYI Exclusive shows

58

Source: Claimed Publisher Data

VIDEO VIEWS BY DEVICE

Mobile and Pad viewers make up as much as 55% of online video views depending on the platform.

65%53%

59% 57%45%

60% 65% 70%

90%

76%

28%

34%

35%33%

35%

25%27%

30%

10%

24%

7%13%

6% 10%20% 15%

8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Youku&Tudou Sohu Video iQiyi PPS PPTV LeTV Tencent Baofeng Xunlei Fengxing

VIDEO VIEW % BY DEVICE

PC PHONE PAD

59

ONLINE VIDEO ADVERTISING REVENUE

Source: iResearch – 2014 China Mobile Video Report

Mobile video advertising revenue takes up an increasing share of all video advertising, up from just 5% in 2013 to 19% in 2014.

0.19 0.482.51

5.329.06

13

6.49.1

11.0

12.7

13.9

15.2

2.9%

5.0%

18.6%

29.5%

39.5%

46.1%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

0

5

10

15

20

25

30

2012 2013 2014e 2015e 2016e 2017e

ADVERTISING REVENUE FOR ONLINE VIDEO (MOBILE AND PC) 2012-2017

Mobile Video Advertising Revenue (Billion RMB) Non-Mobile Advertising Revenue Share of Online Advertising Revenue

60

The Rise Of An Online Video Influencer

Meet Queenie, a self -taught creator whose first video was launched in October 2013. After reaching over one million views in January 2014, Queenie was approached by Tudou to launch a fresh show.

From that time to present, a total of 39 videos have been created, with the new concept hitting a record 8 million views for the month of August. Brands such as Green Tree Hotels and Huawei have partnered with and been directly featured in the show.

RISE OF VLOGGERS

232 536 624 1,104

553 457 689 751 1,217

4,698

8,337

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14

Monthly Views ('000s)

* 8M+ views per month (Aug 2014 est.)

contributed by Source: TMG Originals and Thoughtful Media Group

61

POPULAR UGC CONTENT

Wu Fei’s fairy trip100 thousand black humor Self written song “I’m legend”

1 mil views227 mil views on Youku 6.65 mil views

Humor Music Innovation

十万个冷笑话

62

SARFT REGULATION: OTV

In its latest rulings on video websites, SARFT has made it clear that overseas television programs will be restricted in both content and number. On Sept 5 SARFT announced that overseas movies and TV series that don't obtain a public screening and distribution license cannot be streamed on video websites.

Such sites are required to register details of their ongoing programs before March 312015; starting on April 1 all unregistered shows should be removed. The policy came after a series of progressive restriction policies regarding Internet-based programs.

OTV, formerly relatively free from the limitations of content on TV, has been under pressure to fall in line with regulation.

In March, the administration required that online content be examined by at least three government

trained specialists. Programs should be removed immediately if they include inappropriate

content, such as promoting superstition or glamorizing violence, sex or gambling.

In late April, it required four popularAmerican TV series, including The Good Wife

and The Big Bang Theory, be removed fromvideo websites without giving specific reasons.

63

FORMATS & CASES

NEW PAID ADVERTISING OPPORTUNITIES ON OTV

Youku, Tudou and Sohu provide mid-roll on PC

iQiYi offers up to 5 spots, 75 seconds pre-roll

LeTV seeks advertising potential on its branded TV sets with start picture ads

65

THE ROLE OF VIDEO & INVESTMENT

AWARENESS

FORMAT: PRE-ROLL, DISPLAY & SPECIALKPI: TA REACH (%), COST PER TA REACH

AWARENESS

FORMAT: SPONSORSED PROGRAMS/PAGEKPI: COST PER THOUSAND IMPRESSION, TA REACH(%)

PRE-ROLL

SPONSORSHIP

DISPLAY

SOMETIMES SPONSORSHIP MAY BE COUNTED

AS DISPLAY

66

请填写以下信息获取赠品机会

姓名

邮箱

手机号码

OTHER FORMAT SUGGESTION

BRANDED CONTENTINTERACTIVE PRE-ROLL & DISPLAY

HEALTH TEST

CLICK TO BUY

EXERCISE

SOCIAL TOPICS

(Nutrilite)

(Durex)

67

VIEWPOINT ON VIDEO & OTV

Sponsorship of hot shows, while wide reaching, is an increasingly expensive battlefield. And as TV stations try to reclaim ownership of online views, negotiations will likely be more centralized, increasing the chance of bidding wars for key shows.

1.

New regulations will likely drive up the cost of drama on TV and international content on OTV, possibly creating new dynamics for cross TV advertising.2.

The continuous increase of slot duration in OTV – now planned to expand to 90 seconds break – could impact ad effectiveness and needs to be closely monitored. 3.

UGC content begins to catch up with Western trends, and will grow as video sites implement revenue share policies for content creators. This can provide reach and authenticity to marketing efforts that want to become part of consumers’ conversations.

4.

68

SOCIAL

SOCIAL PLATFORMS ACROSS DEVICES

39.5%

16%11%

5%

5%

3%

2%1%

1%16%

Sina Weibo

Baidu Tieba

Qzone

Qiushi Baike

Momo

Renren

Tecent Weibo

Douban Group

Weishi

Others

-3.5%

+8.6%

+2%

-1.2%

Desktop/Laptop Mobile/Pad

1,424,677,000 hours

69% on Social (non IM)

653,593,638 hours

31% on Social (non IM)

91% reach 51% reach

+11% YTD

+68 % YTD

-11% YTD

-8 % YTD

While the vast majority of netizens still access social platforms via desktop and laptop, they have significantly shifted their use onto mobile devices.

SNS, WEIBO, OTHERS

33.8%

15.3%7.6%

3.1%

1.3%1.0%

37.8%

Qzone

Sina Weibo

Baidu Tieba

Sina Blog

Tecent Weibo

Douban

Others+1.3%

-7.1%+5.1%

+0.6%

Source: iUsertracker, mUsertracker – Jun 2014

-3.1%

-5.7%

+1.2%

70

SOCIAL PLATFORMS ON PC


DESKTOP/LAPTOP – SOCIAL WEBSITE REACH (%)

Sina Weibo is the only platform on desktop to maintain coverage.

0

10

20

30

40

50

60

70

80

90

100

Qzone

Renren

Sina Weibo

Tencent Weibo

On Mobile, Weibo and traditional SNS continue losing monthly users.

WEIBO AND SNS – SOCIAL APP REACH (%)

0%

10%

20%

30%

40%

50%

60%

70%

80%

Jun

-13

Jul-

13

Au

g-1

3

Sep

-13

Oct

-13

No

v-1

3

Dec

-13

Jan

-14

Feb

-14

Mar

-14

Ap

r-1

4

May

-14

Jun

-14

QZONE

Sina Weibo

Baidu Tieba

Sinal Blog

Tencent Weibo

Douban

Tianya

Renren

-5%

0%

-5%

-7%

-13%

-2%

-1%

-7%

CHANGE IN REACH

71

NICHE SOCIAL APPS

Source: mUsertracker – June 2014

0

1

2

3

4

5

6

7

8

9

10

Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14

Baidu Tieba Momo Qiushi Baike WeiShi Dianshi Chengjin Baihe Hunlian Instagram Zhihu

Outside the top four apps, the next most popular social apps individually have a limited following, with none reaching over 9% of mobile netizens.

SOCIAL COMMUNITIES MONTHLY REACH (%)

76

30%

40%

50%

60%

70%

80%

90%

REACH OF WECHAT AND SINA WEIBO, SINA WEIBO APP

Sina Weibo (site) Sina Weibo (app) WeChat

The decline of Sina Weibo on app can be directly tied to user’s migration to WeChat, where checking “Moments” has replaced Weibo feed on mobile.

Source: iUsertracker, mUsertracker – Jun 2014; CNNIC – Jun 2014

USERS SHIFTING SOCIAL PREFERENCES

77

77% OF WECHAT USERS ARE

ACTIVE ON MOMENTS

TOP INSTANT MESSAGING PLATFORMS

0

10

20

30

40

50

60

70

80

90

100

IM App Monthly Reach (%)

WeChat QQ Wangxin Yixin Laiwang QQ Light Line

IM ON DESKTOP IM ON MOBILE

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

IM Software Monthly Reach (%)

QQ Ali Wang Wang 阿里旺 Fetion 飞信

QT 语音 YY 语音 Sina Weibo 微博

RTXC 腾讯通 Skype

Outside the top 3 chat apps, other apps have less than 5% reach, QQ dominant. On Mobile WeChat eclipses QQ.


74

WECHAT BREAKING RECORDS

5.8 million WeChat public accounts

15,000 new public accounts every day

67,000 apps connected to WeChat

400 apps connect on average daily basis

Shopping Flight Check-In Movie Tickets

Xiami Music

Youku

Sina Weibo

One-Click LoginVideo Content

Youku

Meipai

75

EVOLUTION OF QR CODES

QR CODE INNOVATION

…even video…to animated gifs

+ =

QR Codes have evolved… …from pictures

77

Visual QR codes can be unique to each channel used by brands, thus giving channel-specific metrics on engagement for each campaign.

OfflineMagazines, Packages, Stickers

DigitalTV, Out-Of-Home

OnlineWebsite to Mobile, Online Video

CHANNEL SPECIFIC QR CODES

78

FORMATS & CASES

DISPLAY

ADVERTISING

ADVERTISING FORMATS

OPENING PAGE AD

UMS: Target IDs –

Fans & Competitive

Fans

3rd Post in feed

FANS HEADLINES:

Target Fans

1st Post in feed for

24 hrsBRAND EXPRESS:

Target based on

demographics

3rd Post in feed.

Shared to user

fanbase

DISPLAY ON MOBILE & PC IN-FEED ADVERTISING ON MOBILE & PC

80

NEW FORMATS & OPPORTUNITIES

HOT TOPICSmobile & pc

LOCATION BASED

ADVERTISING TO PUSH

OFFLINE EVENTS mobile only

E-COM VIA

ALIPAYmobile & pc

SUGGESTED

SEARCH (NOT

BRAND)mobile & pc

81

ADVERTISING FORMATS

TEXT & TAB ADVERTISING IN MESSAGES

FROM PUBLIC ACCOUNTS

WECHAT DAILY

NEWS DISPLAY

82

WECHAT ADDS CLICKABLE BANNER ADS

WeChat Ad Formats Text Link vs. Banner Image

Tencent’s WeChat launched its advertising platform in late June 2014 and started with text link ads, connecting WeChat Public Accounts with advertisers.

This update allows advertisers to use image banners of fixed width 582px and height of 166px, no bigger than 50K. Four image formats are supported including bmp, png, jpeg, jpg and gif.

In addition, the update of WeChat Ad Platform in August now allows advertisers to drive WeChat traffic to an external site.

To become a WeChat publisher sharing ad revenue with Public Accounts, the minimum required number of following users is 100,000.

83

BURBERRY PARTNERSHIP WITH TENCENT & WECHAT

“London in Shanghai” campaign launched on WeChat to win a ticket

to the offline SH Grand Opening.

Online - WeChat Interaction Offline - SH flagship store opening Online – Experience the Event

360 event scenes, including interactive hotspots to discover extra content.

PRE LAUNCH POST

Burberry has established a special partnership with Tencent at the highest levels of management which has yielded first-to-market experiences on WeChat.

84

INTEGRATING WECHAT INTO OFFLINE EXPERIENCES

Scan QR code at

the entryReceive

Gamification Follow the Guide

Receive present when finishing

the tour

TAG drives consumer engagement at La Maison Exhibition through WeChat functionality.

85

ESTEE LAUDER’S CRM APPROACH TO WECHAT

1. Skin test 2. Customize beauty plan 3. Collect personal sample set offline

Estee Lauder has a membership section in their WeChat Service account which provides users with latest skin care tips, personalized beauty plans, sampling etc.

86

MOMO ADVERTISING

Popular location-based dating app Momo lets users see nearby strangers filtered by distance – a mechanism that’s easily translatable to helping retail business attract traffic to their stores. This is particularly true for the post-90s generation with whom the app is more popular.

Purchasing a placement can even be completed without a computer, as ad buying is in fact fully executable via smartphone. The cost to reach each user starts at RMB 10 cents. Momo will estimate the total number of reached users and charge accordingly after retailers specify the geographic range and time period for the ad placement.

As of June 2014, Momo’s total number of registered users reached 148 million; with 52.43 million monthly active users.

Dating APP Momo leverages its location based competency to help drive traffic to retail stores.

87

VIEWPOINT ON SOCIAL

Whether planning your campaign on Wechat or Weibo, it has become the norm to think of social as a mobile channel. Any content that is not tailored for mobile has much less chance to spread through social media.1.

Don’t just think platforms, also think content creators. Working with talents who make the most of emerging social platforms is a powerful way to stay current without having to make heavy investments in your own social pages.

3.

Advanced WeChat brand tie-ins using interactivity and O2O – for example, in-store redemption of QR coupons –is becoming the standard4.

Value for the consumers is still mostly driven by lucky draws, competitions and special offers, making it even more important to tie your e-commerce activities with social media gratification. 5.

88

Recognize that different platforms are optimized for different user behaviors. For instance Weibo is shifting more toward users looking for information, and thus can serve as a broadcast platform to increase visibility. On the other hand WeChat is more about one-on-one interaction and rewarding the customer relationship.

2.

MAGAZINE AND NEWSPAPER

PRINT MEDIA OVERVIEW

34%

75%

61%

21% 19%

95%

31%

68%

63%

31%

16%

95%

30%

64%67%

46%

16%

96%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Magazine Reach NewspaperReach

Internet Reach Mobile InternetReach

Radio Reach TV Reach

2012-2014 Reach of Print Media

Series1 Series2 Series3


Print media has a steadily declining readership.

14.4 minutes on magazine

37.2 minutes on newspaper

However among the remaining readers, the average daily time spent has been stable.

90

NEWSPAPER AD INVESTMENT

Media: Newspaper, exclude all no-cost items & Hong Kong TV Media, (Total monitoring Ad Investment include new added media, while growth rate exclude new added media) Source: CTR AdEx Power 2013-2014

-15.4%

-11.1% -11.0% -10.8%

-3.1%-5.2% -4.8%

-13.7%

7.6%

-14.2%

-7.3%-6.0%

-7.5%

-20%

-15%

-10%

-5%

0%

5%

10%

0

2,000

4,000

6,000

8,000

10,000

12,000

Jun.2013

Jul Aug Sep Oct Nov Dec Jan.2014

Feb Mar Apr May Jun


Total Monitored NP Ad Investment (Jan - Jun.2014): RMB 38,246 Million

RMB: Million

Spending on newspaper continues to be the biggest loser among traditional media to digital, though it still has a seasonal role to play during Chinese New Year.

91

NEWSPAPER AD INVESTMENT BY INDUSTRY

Media: Newspaper, exclude all no-cost items & Hong Kong TV Media, (Total monitoring Ad Investment include new added media, while growth rate exclude new added media) Source: CTR AdEx Power 2013-2014

NP Monitored Ad Investment By Sectors (Jun.2014)

-19.0%-9.8% -2.0%22.5%

-40.6%-1.3%

244.8%

163.1%

7.4% 10.4%-8.5% -1.1%

-21.1%-21.9%-44.9%

43.9%

-3.9%-31.5%

20.4%38.3%37.5%

-100%

-50%

0%

50%

100%

150%

200%

250%

300%

0200400600800

1,0001,2001,4001,6001,8002,000


Real Estate & Construction and Business & Services dominate newspaper ad investment; Pharmaceuticals and Foodstuffs see a bit of a resurgence.

92

MAGAZINE AD INVESTMENT

Total Monitored MG Ad Investment (Jan - Jun. 2014): RMB 8,831 Million

-9.3%

-0.9%-2.2%

-5.8% -5.6%-4.6% -4.8%

12.0%

-1.1% -1.9%

-5.1%

-7.6%-6.2%

-15%

-10%

-5%

0%

5%

10%

15%

0

500

1,000

1,500

2,000

2,500

Jun. 2013 Jul Aug Sep Oct Nov Dec Jan. 2014 Feb Mar Apr May May

Ad Investment YOY GrowthRMB: Million

Media: Magazine, exclude all no-cost items & Hong Kong TV Media, (Total monitoring Ad Investment include new added media, while growth rate exclude new added media) Source: CTR AdEx Power 2013-2014

Magazine investment has steadily declined for nearly every month in the past year; Chinese New Year again is a key exception where spend on print persists.

93

Toiletries maintain the lead on magazine investment.

Media: Magazine, exclude all no-cost items & Hong Kong TV Media, (Total monitoring Ad Investment include new added media, while growth rate exclude new added media) Source: CTR AdEx Power 2013-2014

MG Monitored Ad Investment By Sectors (Jun.2014)

-6.9% -6.2% -10.4%-0.9%

16.7%

-8.1%

20.0%2.0%

-27.1%

35.1%

9.0%

-17.5%-16.4%-36.0%-41.8%

-5.7%

65.9%

-20.6%-35.1%

-76.6%

-100%-80%-60%-40%-20%0%20%40%60%80%

0

50

100

150

200

250

300

350

400


MAGAZINE AD INVESTMENT BY INDUSTRY

94

REALITY OF DECLINING PRINT MEDIA

People's reading habits are steadily changing, and era of traditional print titles is in the past. Publishers are faced with plummeting subscribers, falling advertising investment. Young people especially have migrated towards new digital media to access information; print readership is facing a huge loss.

Faced with the challenges of new technology and new media, many brands are implementing cross-media strategy and hastening the implementation of digital channels. Official websites that provides free online reading electronic newspapers, mobile phone value-added services are among the many avenues that are being pursued

The shift away from print toward digital media is inevitable, publishers must embrace multiple media channels and services to stay relevant in the market.

iPhone & AndroidiPad

Total Downloads: 7,395,310Daily Unique Visitors: 258,835

Total Downloads: 3,089,835Daily Unique Visitors: 163,143

＋Paper (11 Titles in Total) Digital (9 Apps in Total)

CROSS-MEDIA EXAMPLE WITH MODERN MEDIA

Example: Modern WeeklyTotal Circulation: 930,000

Example: iWeeklyTotal Downloads: 22 million

95

Many fashion titles have issued tablet platforms in recent years, many of which feature exclusive digital content on top of select print content.

DIGITAL MAGAZINE ADS WILL BECOME A NEW GROWTH POINT

Advertisers are generally more willing to pay the higher cost for Tablet than networks, due to the quality of the audience as well as high-end device interface.

Media IOS/Andriod Launch dateAverage monthly

download

Total Download

Content Difference Compare To Traditional

Cosmopolitan IOS 2011-07-21 1,227,384 30,836,450 60% selected from print

Bazaar Men IOS/Andriod 2014-06-01 800,000 / 60% selected from print

Esquire IOS/Andriod 2011-05-01 520,000 20,535,457 30% selected from print

Bazaar IOS 2011-07-28 495,642 23,375,456 Competely different content with print, weekly updated

Caijing IOS/Andriod 2011-08-01 300,000 1,606,819 No big difference with print

SELF IOS 2013-07-25 200,000 / No big difference with print

Elle China IOS/Andriod 2013-03-08 150,000 450,000 10% selected from print

Marie Claire IOS 2011-02-15 120,000 900,000 No big difference with print

GQ IOS 2012-12-15 110,000 510,000 No big difference with print

Elle Men IOS/Andriod 2011-03-01 82,800 467,000 60% selected from print

Rayli EF IOS 2011-09-01 50,000 1,350,000 No big difference with print

Men's Uno IOS 2013-01-01 20,000 240,000 60% selected from print

Grazia IOS 2013-02-06 9,900 72,000 No big difference with print

96

FORMATS & CASES

CROSS-MEDIA USING PRINT

Extending traditional print media exposure to digital

GQ

The Beijing News

Advertorial

Integration of newspaper ads and advertorial with radio

98

VIEWPOINT ON PRINT

For most industries print media’s relevance continues to decline; key exceptions for fashion and luxury brands for which magazine continues to be respected and influential.1.

Magazine investment has become more focused; focusing on fewer, higher quality titles to optimize advertiser’s spend on print.2.

Cross-media titles, often offering custom digital-only content on mobile and tablet, are a viable medium as they span across digital and traditional channels.3.

Building strategic partnerships in print can help straddle the balance between global and localized content for luxury brands, building and maintaining brand equity while optimizing content for local nuances.

4.

99

RADIO OVERVIEW


Despite the supposed decline of radio, it is actually growing listenership among car owners.

1 hour 5 minutes on radio

Daily listening among car owners is also steady compared to the total population.

-3.5% YOY

Car Owners Non Car-Owners19%

47%

16%16%

48%

13%16%

49%

10%

0%

10%

20%

30%

40%

50%

60%

Total Population Car Owners Car Non-Owners

REACH OF RADIO 2012-2014 BY CAR OWNERSHIP

2012 2013 2014

1 hour 4 minutes on radio 1 hour 7 minutes on radio

Total Population

unchanged YOY -3.5% YOY

101

RADIO AD INVESTMENT

Media: Radio, exclude all no-cost items & Hong Kong TV Media, (Total monitoring Ad Investment include new added media, while growth rate exclude new added media) Source: CTR AdEx Power 2013-2014

TOTAL MONITORED RD AD INVESTMENT (JAN - JUN.2014): RMB 15,986 MILLION

11.5%

18.6%20.6%

22.2%

26.8%29.3% 28.5%

25.9%

20.5%

25.8%28.1%

30.6% 29.9%

0%

5%

10%

15%

20%

25%

30%

35%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Jun. 2013 Jul Aug Sep Oct Nov Dec Jan. 2014 Feb Feb Apr May June


RMB: Million

In June, radio advertising grew by 29.9% YOY.

102

Media: Radio, exclude all no-cost items & Hong Kong TV Media, (Total monitoring Ad Investment include new added media, while growth rate exclude new added media) Source: CTR AdEx Power 2013-2014

RD MONITORED AD INVESTMENT BY SECTORS (JUN.2014)

29.9% 29.3%38.9%

45.6%

-4.8%

28.3%

109.6%

61.7%

-6.0%4.5%

79.3%67.4%

59.2%

-9.6%

22.6%

90.5%

-31.7%-27.0%

1.9% 2.6%

-26.3%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

0

50

100

150

200

250

300

350

400

450

500 Ad Investment YOY GrowthRMB: Million

Business & Services lead radio advertising, while Alcohol more than doubles.

RADIO AD INVESTMENT BY CATEGORY

103

FORMATS & CASES

RADIO INNOVATIONS

CASE: SH Oriental Broadcasting Center

Optimizing programming

FM101 targeting people aged at 15-35, whose commuting time are 7:30-9:30 16:30-19:30

FM103 targeting people aged at 35-45, whose commuting time are 9:00-11:00 20:00-22:00

Targeting Elite(25-44)

To better cater to elite’s lifestyle and taste, the station cut a third of medicine-related ads which were seen as an irritating addition to the radio program by listeners.

Integrate Online & Offline resources

Case: Bright Dairy Spring Outing

Execution: Produced different ads version respond to different TA and broadcast them in daily prime time intensively to boost the concept of health. Audience can win a outing ticket by interacting with the Radio program or scanning the QR code.

105

BUDWEISER HIT FM CASE STUDY

Broadcast road show features Top DJs from all over the world such as Armin ban Buuren, Tiesto, Nicky Romero and Paul Oakenfold. Hit FM Dance on Saturday is a special episode called ”Hit FM Dance Countdown” which features a selection of the best Electronic Dance Music that week.

CASE: Customized Programs for Budweiser—Hit FM Dance

(Starting May 24 2014 Mon.-Sat. 10pm-12pm)

Budweiser Integration into the program

Announcement of program holders

Announced as in hourly news report

Discussion about party topics and brand to

encourage interaction with audience

Broadcasting promotion clips

New Program Hit FM LIVE broadcasts live Budweiser’s live concert or events.

106

VIEWPOINT ON RADIO

Radio’s decline is misleading in the context of strong listenership among car owners, and therefore a worthwhile channel to reach China’s middle and upper classes.1.

Integration with live is a natural connection between new technology and radio audiences, and including radio in your brand activations can be a powerful way to boost awareness of your events.

3.

107

OOH AD INVESTMENT

Media: Outdoor, exclude all no-cost items & Hong Kong TV Media, (Total monitoring Ad Investment include new added media, while growth rate exclude new added media) Source: CTR AdEx Power 2013-2014

TOTAL MONITORED OOH AD INVESTMENT (JAN - JUN.2014): RMB 21,210 MILLION

7.4%

-9.4%-3.2% -4.1%

2.9%8.9% 7.5%

54.6%

3.0%8.3% 10.5%

17.0%11.4%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Jun.2013

Jul Aug Sep Oct Nov Dec Jan.2014

Feb Mar Apr May Jun


In June, OOH advertising increased by 11.4% YOY, again with a strong peak over the holiday season.

109

OOH AD INVESTMENT BY INDUSTRY

Media: Outdoor, exclude all no-cost items & Hong Kong TV Media, (Total monitoring Ad Investment include new added media, while growth rate exclude new added media) Source: CTR AdEx Power 2013-2014

OOH Monitored Ad Investment By Sectors (Jun.2014)

37.4%

5.4%

35.2%

19.1%

6.5%-4.9%

6.5%-1.9%

-18.0%

12.2%18.7%

-0.7%-6.9%

-21.4%

1.3%

17.9%

-11.2%-13.8%

7.9%

-49.6%

-27.9%

-60%-50%-40%-30%-20%-10%0%10%20%30%40%50%

0

100

200

300

400

500

600


Real Estate & Construction was the leader in OOH advertising, growing by 37.4% YOY.

110

OOH SPENDING

Except for conventional billboard and some low-end network media, most of OOH spending shows growth, especially from airport and metro.

Source：CODC 2004.01.01～2013.12.31

29,678

11,219 9,765

5,669 5,335 4,041

1,447 579 1,080

31,640

15,451

9,258 7,029 5,685

4,293

1,388 630

3,025

Screen OOH Metros Unipole Airport Bus Body Bus Shelter Netwrok Media Railway Metros Screen

2012 2013

180%

Description: Growth rate calculation is not include Metros Electronic Screen.

13,70016,440

20,550

26,715

34,730

39,939

49,924

59,909

67,733 68,634

0

10000

20000

30000

40000

50000

60000

70000

80000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

OOH SPEND (MILLION RMB)

7%

38%

-5%

24%

7% 6%

-4%

9%

3% 3%

-6%

10%

-5%-1%

-4%0%

Growth% Net Growth%

OOH SPEND BY TYPE (MILLION RMB)

111

OOH FORMATS % SHARE

Metros

20%

Unipole

12%

Airport

9%

Bus Body

7%

Bus Shelter

5%

Network

2%Railway

1%

Building LCD

20%

LED

12%

Metros Screen

4%

Metros TV

4%Bus LCD

4%

Video LCD

43%

Screen OOH takes up almost half of total OOH spending, followed by standard Metro OOH.

Sources：CODC 2004.01.01～2013.12.31

OOH SPEND BY TYPE (MILLION RMB)

112

VIDO LCD OOH

OOH Type 2012 2013 Growth% Net Growth%

Building LCDs 12,641 16,140 28% 19%

LEDs 7,349 9,674 32% -3%

Metros TVs 5,943 2,926 -51% -7%

Bus LCDs 3,745 2,900 -23% -10%

Metros LCDs 1,080 3,025 180% -

Total 30,758 34,665 13% 3%

Unit：RMB Million

Source：CODC 2004.01.01～2013.12.31

Amongst Screen OOH Media, only Building LCDs show big increases while others are in decline.

113

Measurement of OOH in China has faced the barrier of industry fragmentation and lack of measurement.

114

Vendors cannot invest in good data

Vendors use own data or use no data

Skeptical customers

Price pressure, slow growth

OOH industry is (still) fragmented,

many small vendors

OOH CHALLENGES

NEW TOOLS FOR OOH EVALUATION

Map API

Billboard GPS

Travel Paths

Transport choices

Daily OOH

contact data

Start point End point

Big data analysis can tap sample audience’s travel records via GPS opportunities to optimize OOH spots.

Start point

End point

115

APPLBOXTM MAP

Cross referencing travel routes against OOH spot locations provides tangible measurement of reach and frequency.

Sources: All Media Count and Ipsos, 2014

116

FORMATS & CASES

METRO OOH EXPANDS

More Metro OOH is directly tied to more cities with new metros and continued expansion of existing lines in major cities.

May Kunming Line 1, 2 (Shenzhen Press Group)Aug Harbin Line 1 (Local Metros Co.)Dec Zhengzhou Line 1 (Asiaray)Dec Guangzhou Line 6 (Fundamental Media)

NEW LINES IN 2013:

May Changsha Line 2 (Hunan Press Group)Jun Ningbo Line 2 (Asiaray)

NEW LINES IN 2014:

118

INNOVATIVE OOH FORMATS

Cadillac used an innovative OOH display for its CTS “ 凌波微步” campaign, giving the illusion of floating above water in Shanghai’s Xintiandi

Buzz on Sina Weibo>60,000 Shares>4,000 Comments

119

VIEWPOINT ON OOH

OOH innovations gives added possibilities to reach the commuting audience.1.

Analytics combining user locations and OOH give actionable insights via big data, providing advertisers new sets of KPIs to evaluate the performance of their OOH campaign.

2.

OOH still has the ability to generate organic buzz if executed well, while new technologies offer chances to directly tie OOH formats with direct conversions to a store or online visit.3.

Interactivity in OOH – such as peel-off coupons, magnets, iBeacons, and souvenirs which can be redeemed for prizes or discounts – is a rising trend and effective in high-traffic areas.

4.

120

E-COMMERCE

331* MILLION USERS


7 DAYS PER MONTH


PC MOBILE


13 DAYS PER MONTH


Source: Reach from CNNIC, days and time spent from iUserTracker & mUserTracker Jun 2014;*Total user number only includes PC

E-COMMERCE OVERVIEW

122

ONLINE SHOPPING OVERVIEW

216.55260.42 287.45

422.37363.71

427.41461.67

639.71

525.09

628.76

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

0

100

200

300

400

500

600

700

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014e

CHINA ONLINE SHOPPING MARKETQ1 2012 - Q2 2014

Total Transactions (Billion RMB) QoQ Growth Rate YoY Growth Rate

461785

11871892

2760

3780

4772

5634

0.0%

20.0%

40.0%

60.0%

80.0%

0

1000

2000

3000

4000

5000

6000

2010 2011 2012 2013 2014e 2015e 2016e 2017e

CHINA ONLINE SHOPPING MARKET 2010-2017E

Total Online Shopping Transactions (Billion RMB)

Growth Rate

% of Total Retail Transactions

Source: iResearch July 2014

YOY growth holds steady above 40%, as online shopping reaches over 10% of total retail transactions by year’s end.

123

MEDIA SHARE OF TIME SPENT ON PC AND MOBILE

52%

22%

4%

8%

10%

TAOBAO

TMALL

JUHUASUAN (GB)

JD.COM

VIP.COM

YIXUN

MEITUAN (GB)

WOWO (GB)

Others

56%

7%

3%

9%

5%

2%2%

16%

E-COMMERCE PLATFORMS SHARE

Alibaba dominates EC market on group level, although competitors such as Jingdong see increases in share.


+4%

-4%

PC MOBILE

+2%

-9%

+8%

*TMALL products can also be purchased through TAOBAO APP.

124

PRODUCT CATEGORY

ONLINE SHOPPERS VIA MOBILE DEVICES AND SOCIAL MEDIA

Source: CNNIC Online Shopping Report

Online shopping has grown for most categories in the last year, notably even among virtual goods.

18%

22%

23%

26%

31%

33%

35%

43%

45%

76%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Cultural & Sports Facilities

Food & Health Products

Household Appliances

Books & DVDs

Cosmetics

Bags & Suitcases

Virtual Products

Electronic Products

Groceries

Apparel & Accessories

+8%

+14%+14%

+18%

+20%+15%

125

B2C VS. C2C

13.7%25.3%

34.6%40.4%

48.0%54.1% 58.1% 60.5%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

2010 2011 2012 2013 2014e 2015e 2016e 2017e

ONLINE SHOPPING MARKET B2C VS. C2CBY TOTAL TRANSACTIONS

B2C C2C


B2C continues to rise as consumers see at is more reliable source for significant purchases, making up almost half of all transactions.

57.4%21.2%

3.5%

2.8%1.9%1.5%

1.5%

1.4% 1.4% 7.4%

CHINA TOP B2C WEBSITES MARKET SHARE BY TOTAL TRANSACTIONS

Q2 2014

TMALL

JD.com

Suning.com

VIP.com

Gome.com.cn

Amazon

Dangdang

Yixun.com

yhd.com

126

BRANDS EMBRACE B2C

More and more big brands cross all categories opened their official stores in B2C market in past year.

127

MOBILE E-COMMERCE SURGES

5.0% 5.9% 7.4% 10.5% 11.9% 14.3% 18.7%25.7% 26.8%

95.0% 94.1% 92.6% 89.5% 88.1% 85.7% 81.3%74.3% 73.2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014

SHOPPING TRANSACTIONS - MOBILE VS. PC

Mobile PC


One out of four transactions now take place over mobile phones.

13.118.1

31.238.1

50.7

65.8

119.4

135.1

168.4

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2e 2014

CHINA MOBILE SHOPPING MARKET

Total Transactions (Billion RMB) QoQ Growth Rate

128

JD AND TENCENT PARTNERSHIP

Jingdong and Tencent reach a strategic e-commerce alliance.

As of March 2014, Jindong acquired 100% of Tencent’s e-commerce operations. This includes Tencent’s B2C platform QQ WangGou, as well as its PaiPai C2C platforms.

JD also acquired a partial stake in Yixun, coupled with the option for a complete buyout at a later date.

In return Tencent acquires a 15% stake in JD, with the option for an additional 5% when Jingdong files for its IPO.

129

E-COMMERCE ON CHAT PLATFORMS

WECHAT QQ

Jingdong announced they will give away RMB1 billion Hong Baomoney to users on mobile QQ..

JD brings e-commerce to Tencent’s WeChat and mobile QQ, with a strong emphasis on limited time offers and group deals.

JD is currently deploying its WeChat shop among select users in Beijing in Shanghai with WeChat version 5.3

130

FORMATS & CASES

FORMAT & SUGGESTIONS

SEARCH RTB DISPLAY

ADVERTORIALREGULAR DISPLAY

132

THE ROLE OF E-COMMERCE

AWARENESS EVALUATION PURCHASE

FORMAT: DISPLAY ADSKPI: TA REACH (%), COST PER TA REACH

FORMAT: ADVERTORIALKPI: COST PER VISIT, TIME SPENT(IF IT’S TRACKABLE)

FORMAT: SEARCH, RTB DISPLAY BANNERSKPI: SALES REVENUE, ROI

133

VIEWPOINT ON E-COMMERCE

Expect further consolidation and partnerships to bring opportunities for e-commerce.1.

Official brand stores will continue to gain momentum as more brands sign on to B2C, following the likes of Estee Lauder and Burberry.2.

E-commerce dedicated search is becoming an important battlefield, with relatively new players like mobile-focused sm.cn, as well as in house search engines (e.g. on JD.com) breaking new ground.

3.

Mobile e-commerce is rising fast and definitely warrants planning for a mobile experience of your owned e-commerce channels. 4.

134

SEARCH

507 MILLION USERS


12 DAYS PER MONTH


PC MOBILE


11 DAYSPER MONTH


Source: Reach from CNNIC, days and time spent from iUserTracker & mUserTracker Jun 2014; Total user number only includes PC, mobile data refer to site

SEARCH OVERVIEW

136

Though people mostly search on PC, mobile is catching up - though mostly quicker searches compared to PC. On mobile, search via browser dominates vs. APPs


SEARCH ACROSS DEVICES

92%76%

6%

15%

2%9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jan-13 Jan-14

SHARE OF TIME SPENT ON SEARCH

PC Site Mobile Site Mobile App

137

SEARCH – SHARE OF QUERIES ON PC AND MOBILE

Search remains dominated by Baidu, but it’s losing share to different players across PC and mobile devices. 360 search continues to rise and on mobile SM.cn makes a move.

Source: CNZZ, China Mobile – August 2014

SHARE OF SEARCH

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

2013Jan

2013Feb

2013Mar

2013Apr

2013May

2013Jun

2013Jul

2013Aug

2013Sept

2013Oct

2013Nov

2013Dec

2014Jan

2014Feb

2014Mar

2014Apr

2014May

2014Jun

2014Jul

2014Aug

Baidu Qihoo 360 Sogou Google Soso

Bing Youdao Other New Sogou

PC SEARCH MARKET SHARE (% QUERIES) MOBILE SEARCH MARKET SHARE (% QUERIES)

79.7%

9.7%

7.4%

1.7% 0.9% 0.8%

Baidu SM.cn Sogou Google Easou Other

138

A NEW MOBILE SEARCH ENGINE

Mobile-friendly e-commerce search engine sm.cn rockets to second place.

139

SOGOU AND WECHAT SEARCH

WeChat public accounts are now searchable via Sogou as of June 2014; recall that Tencent had acquired a 36.5% stake in Sogou in late 2013.

140

ALIBABA SEARCH TECHNOLOGY

OpenSearch is based on Alibaba’s self developed large-scale distributed search engine platform, which powers major digital e-commerce properties including such as Taobao and Tmall.

With OpenSearch, developers can implement on-site search functionality for their websites and even build a professional search engine.

Aliyun currently released OpenSearch to its users for free during public testing phase via its cloud computing platform.

Aliyun, Alibaba Group’s cloud computing services company, announced it is opening up search to public developers via OpenSearch.

141

FORMATS & CASES

THE ROLE OF SEARCH & INVESTMENT & FORMAT

EVALUATION

FORMAT: KEYWORDS SEARCH, BRAND ZONEKPI: CPV, TIME SPENT

AWARENESS

FORMAT: SPECIAL SEARCH FORMAT (NOT COMMON)KPI: IMPRESSION, REACH

BRANDZONE

PAID SEARCH

MINI ZONE

MOBILE ZONE

143

PROGRAMATIC BUYING

VOLUME OF PROGRAMMTIC BUYING

Programmatic buying from DSP is projected to double by year’s end 2014, hitting an estimated 3.3 billion RMB.

5501,530

3,300

6,370

11,230

17,220

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

2012 2013 2014e 2015e 2016e 2017e

MARKET SCALE OF DSP DISPLAY AD IN CHINA 2012-2017 (MILLION RMB)

Source: iResearch China DSP Market Trends Report

+115% YOY

145

GLOBAL GIANTS COMMIT TO PROGRAMMATIC BUYING

It’s a bold move given that P&G ranks as the world’s biggest media spender, committing roughly $235 million to online display last year. Until now it has been speculated that P&G’s use of programmatic buying has been mainly limited to relatively small tests.

The move has significant implications from brand advertisers, given an industry where until now more direct-response focused advertisers like AMEX have been more eager to embrace programmatic buys. AMEX, the U.S. based financial services company, in fact recently stated an intention to go 100% programmatic.

Consumer goods giant P&G announces plans to buy 70% to 75% of its U.S. digital media programmatically by the end of this year.

Source: WARC June 2014

146

ACCESS TO 12 BILLION IMPRESSIONS PER DAY

80% COVERAGE OF CHINA’S TOTAL RTB

INVENTORY

Audience On Demand (AOD), Vivaki’s trading desk for programmatic buying, allows tremendous access to scale via search keyword cookies.

SEARCH KEYWORDS ON BAIDU

AOD TARGETING USING SEARCH KEYWORD COOKIES

147

DISPLAY ADS

AOD AUDIENCE TARGETING WITH OTV AND DISPLAY

exclusive to ZenithOptimediaOTV ADS

AOD is able to reach a hyper-relevant audience on both OTV and display, coupled with frequency capping for even greater efficiency.

148

EXTENDING OUR PROGRAMMATIC FOOTPRINT

Remarketing Look-Alike Targeting

A

B

C

Extended Key WordsEXTENDED KEYWORDS RETARGETING LOOK-ALIKE TARGETING

Optimization of programmatic via keyword extension, retargeting, and look-alike targeting further maximize relevance and effective reach.

149

VIEWPOINT ON SEARCH & PROGRAMMATIC BUYING

Take advantage of powerful targeting abilities of programmatic buying via search cookies, through platforms like Vivaki’s Audience on Demand.1.

Use search and programmatic buying as a key source of insights and campaign optimization: test creative materials in real time and identify key consumer groups.2.

Start integrating your databases (site, e-commerce, advertising cookies) to reach optimal retargeting and look-alike targeting campaigns. 3.

Don’t just look at the last click conversion! Invest in attribution modelling solutions to better understand the business drivers in your campaign4.

150

QUESTIONS: [email protected]

ZenithOptimedia - China Media & Digital Scene 2014

Marketing

Transcript of ZenithOptimedia - China Media & Digital Scene 2014