China’s growth in online advertising continues at a quick pace, reaching 4.06 billion RMB in the first quarter of 2010—a 52.7% increase over the same period in 2009. This trend is expected to continue for the remainder of the year. The Fashion industry was the top spender, with almost 18% market share. Half of the top 10 industries lost market share in the first quarter.

China’s advertising market kept up a fast pace in the first quarter of 2010, after enjoying a 39% year-over-year growth for 2009. More than 3,600 advertisers in China advertised online during this time—an increase of 36.2% from Q1 2009.

This is a good start for the Chinese online advertising industry. Despite the difficult economic environment many countries struggled through last year, China enjoyed growth, and saw tremendous increases. As more advertisers step into the online market and advertisers regain their confidence, this trend of rapid growth should continue into the remainder of 2010.

The Fashion category was the biggest spender, with a 17.7% of total market share. It is also a fast-growing industry, with market share increasing 3.3%, compared to Q1 of 2009. This top 10 industry played a major role in Q1, representing 87.6% share of the entire markets’ advertising value. Among the top 10, Real Estate is the only one that dropped in advertising value compared to 2009, leading to a 4.7% drop in market share. There were four other industries that also lost market share in Q1: Entertainment (-2.3%), Employment (-1.6%), Automotive (-0.2%) and Media (-0.2%).

For more information, please visit www.cr-nielsen.com.

Chang Park, Executive Director, Nielsen Analytic Consulting, Greater China

SUMMARY: Today’s tough economic marketplace, coupled with highly price-conscious consumers, is forcing companies to take a look at which marketing activities maximize their return on advertising dollars. Nielsen has developed eight guiding principles to show marketers how to increase ad effectiveness.

With consumers becoming increasingly price conscious in a highly competitive marketplace, maximizing the return on their advertising spend is more important than ever.

Marketing return on investment (ROI) is the amount of sales achieved for every dollar spent on marketing/advertising. In today’s tough economy, measuring this return is vital to ensure that ad dollars are allocated to those activities that best maximize sales. The steps necessary to achieve the greatest return differ across brands, and an evolving tailored strategy is necessary.

Measuring marketing performance at the brand level will ensure that good advertising spend isn’t thrown behind underperforming marketing tactics. Through numerous studies conducted worldwide, Nielsen found that the average short-term ROI (sales within three months of media execution) is 9%.

Room for improvement
When looking at the overall efficiency of marketing strategies in achieving that 9% return, Nielsen discovered that there is room for improvement. Research found that, on average, advertising effectiveness could be increased 30–40%. The only investment necessary to achieve this increase is to take a closer look at how well each media and promotion type worked for each brand.

Eight guiding principles can help marketers maximize ROI.

1. Consider both the short- and long-term sales impact of marketing programs.
   An advertising campaign is only effective in building sales if the right marketing tactic is employed. Online campaigns and co-op programs are effective in boosting short-terms sales, while television and PR remain key to ensuring long-term brand loyalty.
2. Choose the right portals and campaigns for online success.
   The Internet is a powerful medium that can reach billions of consumers. To capitalize on its reach, you need to understand the percentage of the target market using the web, how they use it and for how long. Then tailor the campaign accordingly.
3. Influence target groups with magazine advertising.
   Unlike daily newspapers that have a broad reader base, magazines have a clearly segmented target group. In addition, newspapers are disposable, whereas magazines are read after their published date.
4. Focus on campaigns that create the greatest halo effect.
   Marketing initiatives that positively impact the sales of the advertised brand and other brands in the portfolio should be invested in further.
5. Drive brand loyalty with TV advertising.
   TV advertising remains the most valuable driver of brand equity due to its effectiveness at building brand awareness and subsequently sales. TV’s residual effect on stimulating sales is greater than any other media.
6. Create synergies across media to produce additional uplift.
   Regardless of the media being consumed, a constant brand message must be conveyed tailored to how the consumer interacts with that specific media.
7. Create brand awareness through in-store advertisements.
   Excessive discounting and promotion erodes the brand’s equity. Using displays and features are more useful at building long-term incremental sales due to its emphasis on building brand awareness and value.
8. Invest in consumers with premium gift packs.
   Although more costly in the short-term, an expensive giveaway can deliver better long-term sales volume because of the perceived value to shoppers.

Marketers have the opportunity to optimize advertising effectiveness by up to 40% by being mindful of how each piece of the marketing mix performs for each brand.

• Download the full report, Is Your Marketing Investment Delivering Expected Returns?

Main media, defined by Nielsen as free to air TV, newspapers and magazines, increased 13 percent in 2008, while all other media (radio, outdoor, pay TV, cinema and other) posted an 8 percent increase for the year.

In 2008, three markets recorded declines in ad spend versus 2007, while another posted no growth:

• Taiwan (-11%)
• South Korea (-8%)
• Thailand (-4%)
• New Zealand (0%)

Meanwhile, five countries showed solid double-digit growth:

• India (29%)
• Indonesia (19%)
• China (17%)
• Malaysia (12%)
• Philippines (11%)

Other key findings from Nielsen’s research:

• A total of US$115.2 billion was spent on advertising in the twelve markets monitored.
• A total of US$108.4 billion was spent on “Main Media” advertising, with television comprising 70 percent of expenditures.
• Television ad spend grew 15 percent. Only three countries recorded declines in TV ad spend, while five countries posted solid double-digit growth in this category.
• Although Americans are being deluged with stories of newspapers closing, cutting back and filing for bankruptcy, the medium recorded 9 percent growth, with declines in four countries.
• Magazine ad spends, while still comparatively small, increased 10 percent, with India leading the way.
• Radio dominated “all other media” with a 47 percent share of spend and a 12 percent increase for the year.

Over the next few days, Nielsen Wire will dig deeper into the numbers for Australia and New Zealand, East Asia, Southeast Asia and India.

The automotive industry’s ad spending fell hardest in 2008. The industry slashed its spending by almost $1.8 billion, or 15.5%. Among the Big Three automakers, Chrysler (Cerberus Capital Management) and Ford Motor Co. cut advertising 31% and 29%, respectively. General Motors trimmed its advertising 1%.

Pharmaceuticals also cut back its spending significantly, declining 18% and almost $1 billion compared to 2007. Quick Service Restaurants, however, was the only category in the top 5 to spend more in 2008, with 3.8% more expenditures in 2008.

Cable TV was one of only two media (along with Hispanic Cable TV) whose ad spend showed growth in 2008. Its 7.8% jump in 2008 accounted for almost $2 billion in additional revenue for cable networks. Meanwhile, Network TV ad revenue declined 3.5% in 2008.

Print media continued its anticipated decline in 2008. Local and National Newspaper ad spends declined 10.2% and 9.6%, respectively. National Magazines fell 7.6%, while Local Magazines dropped 3.7%.

Procter & Gamble maintained its perch as the top advertiser this year, despite a 19% decline vs. 2007.

To see the full release from The Nielsen Company, including a media breakout and top advertising companies, click here.

But according to Nielsen, many of China’s advertisers took a break from advertising in August, sending overall ad spending in China tumbling to levels last seen in May 2008, when the Sichuan earthquake hit and advertising was suspended for three days.

Advertising spending in China grew, year over year, by just 7% in August, Nielsen reported Monday.  In comparison, China’s ad spending grew by an average of 19% in the seven months leading up to the Olympic Games.

In August, sponsor advertising grew by 40% — or RMB2.8 billion (US$370 million) in China, but that increase was not enough to compensate for the withdrawal of the rest of the market’s advertisers.

“This is quite unprecedented, based on our monitoring of advertising behavior and spending for previous Olympic Games.  Rather than attempt to battle it out with the Sponsors, other players opted simply to ’sit out’ the month of August,” Richard Basil-Jones, Managing Director, Media Asia Pacific, Nielsen, noted.  “With the London Games four years out, time will tell whether this was a situation unique to China, or whether in the future, other non-Sponsors will chose to sit on the side lines, leaving the Games open and clear for Sponsors to enjoy maximum cut through in an unusually uncluttered advertising environment.”

Despite the ongoing global financial turmoil, advertisers returned to China’s ad market after the Olympic Games.  In September, ad spending in China registered healthy, near pre-Games growth of 16%, according to Nielsen.

View the full press release.

Read coverage of Nielsen’s findings in the Financial Times.

Among credit card services companies, TV ad units for Sept. 1 – 21, 2008 were down by almost 24% versus the same time period last year.

Most of the top advertisers in the Credit Card Services category — including Capital One, Discover, Synovus, Washington Mutual, and Visa — reduced their TV television advertising activity in September.

Earlier in 2008, advertising by credit card services companies had shown increases.  In July and August, ad spending for the category was up by almost 27% over the same period a year ago.

Ad spending by other sectors of the financial services industry has declined steadily so far this year. 

In July and August, ad spending by mortgage service companies was down by almost 54%, compared to the same period in 2007.  Ad spending by loan companies also dropped by almost 37% between July-August 2007 and July-August 2008.

Read coverage of Nielsen’s findings by the Associated Press and in Ad Age, the Los Angeles Times, The Globe and Mail, Broadcasting & Cable, and Adweek.

Despite a continued softening of the economy, several media showed healthy growth in advertising for the first half.  Advertising on Cable TV (+8.1%), Syndication TV (+7.2%), and National Sunday Supplements (+7.2%) saw the largest growth, according to Nielsen.  Spot Radio fared worst among the 19 media categories analyzed by Nielsen (-10.1%). 

Although overall Internet ad spending, when including paid search and online video advertising, was up by 11% during the first half of this year, image-based Internet advertising declined by 6% during the first half of 2008, compared to the same period in 2007.

Among specific product categories, Credit Card Services (+18.95%) and Direct Response Products (+20.48%) showed the strongest ad spending gains, while the Automotive (-.01%), Pharmaceutical (-4.76%), and Motion Picture (-4.64%) categories recorded the largest advertising declines.

The decrease in image-based Internet advertising was driven by a 27% drop in online ad spending by financial services companies, which decreased their spending from $1.5 billion in the first half of 2007 to $1.1 billion during the first two quarters of this year. 

Other industries — entertainment (+47%), automotive (+45%), and consumer goods (+32%) — showed strong increases in image-based online advertising during the first half of 2008.

View the full press release.

View Nielsen Online’s report on first half 2008 online ad spending.

Read coverage of Nielsen’s findings in Wired, Investment News, the Financial Times, Crain’s New York Business, TV Week, Broadcasting & Cable, MediaPost, The Hollywood Reporter, Adweek, and Mediaweek.