CHINA DIGITAL AD TRENDSMultiple Forces Driving Growth

JUNE 2014

David Peter Green

Contributors: Man-Chung Cheung, Haixia Wang

Read this on eMarketer for iPad

CHINA DIGITAL AD TRENDS: MULTIPLE FORCES DRIVING GROWTH ©2014 EMARKETER INC. ALL RIGHTS RESERVED 2

CONTENTS2 Executive Summary

3 Economic Signals and Total Media Ad Spending

5 Digital Ad Spending Trends

12 Spending Drivers

16 eMarketer Interviews

16 Related eMarketer Reports

17 Related Links

17 Editorial and Production Contributors

EXECUTIVE SUMMARY

Digital ad spending will account for roughly

one-third of total media ad investment in China in

2014. Over the next several years, that proportion

is set to climb even higher, eMarketer predicts, as

digital ad spending gains outpace China’s overall ad

spending growth throughout the forecast period.

Search, mobile and online video are important contributors to the total growth of digital in China. Meanwhile, social networks and social chat channels are opening up new opportunities with huge audiences.

This report examines the state of digital advertising in China, with a consideration of the impact of economic, social and regulatory trends. In addition, the report looks at some of the key drivers for digital ad spending growth.

KEY QUESTIONS ■ How fast is digital ad spending in China growing

and what is driving the growth?

■ How is China’s vibrant ecommerce marketplace

affecting digital advertising?

■ How might slower economic growth affect digital

advertising in China?

billions and % changeDigital Ad Spending in China, 2012-2018

2012

$11.43

85.0%

2013

$15.54

36.0%

2014

$18.03

16.0%

2015

$20.20

12.0%

2016

$22.21

10.0%

2017

$24.21

9.0%

2018

$25.91

7.0%

Digital ad spending % change

Note: includes advertising that appears on desktop and laptop computersas well as mobile phones and tablets, and includes all the various formatsof advertising on those platforms; excludes SMS, MMS and P2Pmessaging-based advertising; excludes Hong Kong; converted at theexchange rate of US$1=RMB6.19; CAGR (2013-2018)=10.8%Source: eMarketer, March 2014170910 www.eMarketer.com

CHINA DIGITAL AD TRENDS: MULTIPLE FORCES DRIVING GROWTH ©2014 EMARKETER INC. ALL RIGHTS RESERVED 3

ECONOMIC SIGNALS AND TOTAL MEDIA AD SPENDING

Ad spending across all media in China will grow a

healthy 8.2% this year, according to eMarketer’s latest

estimates for the country. While that growth rate

represents a slight easing from the 8.4% increase in

2013, it will still outstrip China’s stated target growth

rate of 7.5% in 2014.

billions and % changeTotal Media Ad Spending in China, 2012-2018

2012

$42.46

8.0%

2013

$46.03

8.4%

2014

$49.80

8.2%

2015

$53.84

8.1%

2016

$58.14

8.0%

2017

$62.74

7.9%

2018

$66.50

6.0%

Total media ad spending % change

Note: includes digital (online and mobile), directories, magazines, mobile,newspapers, outdoor, radio and TV; excludes Hong Kong; converted at theexchange rate of US$1=RMB6.19; CAGR (2013-2018)=7.6%Source: eMarketer, March 2014170809 www.eMarketer.com

Compared with their peers in nearby nations, marketers in China will devote more toward paid media than those in any other country in the Asia-Pacific. Ad spending in China will total $49.80 billion this year, making up one-third of Asia-Pacific’s ad market.

billions

Total Media Ad Spending in Asia-Pacific, by Country,2012-2017

China*

Japan

Australia

Indonesia

South Korea

India

Other

Asia-Pacific

2012

$42.46

$47.20

$10.86

$7.62

$9.21

$5.26

$19.52

$142.14

2013

$46.03

$39.36

$11.11

$9.14

$9.41

$5.69

$22.25

$142.99

2014

$49.80

$40.47

$11.35

$11.16

$9.74

$6.08

$23.38

$151.99

2015

$53.84

$41.56

$11.59

$12.94

$9.99

$6.51

$24.55

$160.99

2016

$58.14

$42.09

$11.85

$15.01

$10.22

$6.93

$25.44

$169.68

2017

$62.74

$42.60

$12.08

$17.26

$10.42

$7.38

$26.19

$178.67

Note: includes digital (online and mobile), directories, magazines,newspapers, outdoor, radio and TV; numbers may not add up to total due torounding; *excludes Hong KongSource: eMarketer, March 2014170770 www.eMarketer.com

One reason for ad spending’s healthy growth outlook is an ongoing effort by China’s government to reduce the economy’s reliance on investment and exports and instead increase domestic consumption. This is likely to drive gains for advertising in sectors such as fast moving consumer packaged goods (FMCG), travel, financial services and luxury products, among others.

However, the overall economy has shown signs of slowing growth, which has led some to wonder about the outlook for advertising budgets.

Thus far, ad spending hasn’t felt the squeeze, said Eugene Chew, chief digital officer at JWT Shanghai. “We still think that overall advertising spending in China will still go up, maybe by about 6% or 7% this year.”

Moreover, if slower economic growth does crimp ad spending, digital ad investment may not necessarily feel the pinch as leading marketers shift a larger portion of their spending to digital channels. “When the economy slows down, the first budget item that gets questioned is marketing spend in general,” said Brent Cohen, managing director and founder of Beijing-based Asia Media Services Ltd., an advertising, marketing and public relations firm. “[But] within that subset, the very first line item that gets pared back is branding, with emphasis shifting [instead] to performance marketing.”

That emphasis on performance is part of a confluence of factors driving a swing in budget allocation away from traditional media channels—TV and print in particular—and toward digital advertising.

CHINA DIGITAL AD TRENDS: MULTIPLE FORCES DRIVING GROWTH ©2014 EMARKETER INC. ALL RIGHTS RESERVED 4

“We see more brands allocating their resources from traditional TV to digital media in their pursuit of more integration,” said Andy Wang, North Region deputy general manager at Neo@Ogilvy. “Very generally speaking, a possible shakeout will mainly affect print and TV media.”

ZenithOptimedia’s “Advertising Expenditure Forecasts” report, released in June 2013, predicted a 4.1% gain in TV ad spending in China in 2014, to $16.7 billion. The ZenithOptimedia estimate suggested that only newspaper investment will decline in 2014, while budgets for all other traditional formats will grow, but at slower rates than in 2013. In TV’s case, spending increases will have slackened considerably from the double-digit gains seen just a few years earlier.

millions and % changeAd Spending in China, by Media, 2010-2015

2010 2011 2012 2013 2014

TV $10,926 $14,431 $15,384 $16,046 $16,698

—% change 26.8% 32.1% 6.6% 4.3% 4.1%

Internet $5,162 $4,769 $7,001 $9,500 $12,359

—% change 54.9% -7.6% 46.8% 35.7% 30.1%

Newspapers $6,131 $7,545 $7,015 $6,622 $6,404

—% change 3.0% 23.1% -7.0% -5.6% -3.3%

Outdoor $4,398 $4,442 $5,204 $5,985 $6,793

—% change 42.4% 1.0% 17.1% 15.0% 13.5%

Radio $1,240 $1,462 $1,619 $1,755 $1,899

—% change 7.4% 17.9% 10.8% 8.4% 8.2%

Magazines $518 $837 $908 $973 $1,036

—% change 6.1% 61.6% 8.5% 7.2% 6.4%

Cinema $47 $55 $70 $85 $99

—% change 10.0% 17.0% 28.0% 20.7% 16.9%

Total $28,422 $33,540 $37,202 $40,966 $45,288

—% change 25.3% 18.0% 10.9% 10.1% 10.5%

2015

$17,325

3.8%

$15,869

28.4%

$6,192

-3.3%

$7,594

11.8%

$2,047

7.8%

$1,099

6.1%

$114

15.0%

$50,241

10.9%

Note: converted at the exchange rate of US$1=RMB6.22; numbers may notadd up to total due to roundingSource: ZenithOptimedia, "Advertising Expenditure Forecasts," June 2013;provided by Starcom MediaVest Group, June 2013159924 www.eMarketer.com

There remain significant downside risks to China’s economy going forward into the second half of 2014. As the central government’s campaign to cool rapidly rising property values takes effect, and both price growth and sales have started to slow, policymakers face a difficult balancing act to ensure property market weakness does not undermine the broader economy. The same can be said of government efforts to limit the availability of credit as China seeks to stem the economy’s reliance on infrastructure investment.

Advertisers must also be aware of regulatory risks. In mid-March, the People’s Bank of China suspended the use of QR code-based mobile payments and halted the issuance of new virtual credit cards issued by the tech titans Alibaba and Tencent. In one stroke, the ruling capped explosive growth in online and mobile payments, purportedly in the name of consumer protection. However, the rapid growth of online wealth management products and mobile payments is deemed by some as a key driver of exactly the kind of consumer spending the government is keen to promote, and as such any cap on transfers is likely to be temporary.

“They need to fuel the economy with proper access to cash if they want to grow domestic demand, and the likes of Alibaba and Tencent can do that extremely quickly because they’ve already got everybody on their platforms,” said Vincent Digonnet, executive chairman for Asia-Pacific at Razorfish. “They can assess creditworthiness better than anybody because they’ve got the buyers and the sellers on their platforms, and they can do that much more cost-effectively than banks. Banks will not be able to fuel that economy. Only the ecommerce and social media platforms can, and my belief is that in the year to come we’re going to see the government relaxing restrictions on the level of spending via QR code, and from mobile and social platforms.”

Elsewhere, a much publicized austerity drive launched by President Xi Jinping in March 2013 aimed at reining in the excesses of Communist Party officials has taken its toll on China’s luxury market. The campaign is part of an anti-corruption campaign set to run until 2017, and has had a knock-on effect on sectors such as liquor, jewelry, automobiles and tourism. A Bain & Company report noted that China’s growth in luxury spending dropped to around 2% in 2013 from 7% in 2012.

However, as Neo@Ogilvy’s Wang noted, the majority of China-focused luxury brands have yet to push strongly into digital, meaning the fallout from the austerity drive is landing more heavily on traditional media ad spending.

“For high-end ‘baiju,’ white spirits that dominate the domestic luxury sector, the main media channels are TV and outdoor,” Wang said. Luxury car marketers have increased their digital ad spend, he said, but at the very high end they are more focused on content marketing. “At the moment, luxury brands are not the biggest digital players in China.”

CHINA DIGITAL AD TRENDS: MULTIPLE FORCES DRIVING GROWTH ©2014 EMARKETER INC. ALL RIGHTS RESERVED 5

DIGITAL AD SPENDING TRENDS

According to eMarketer’s latest estimates, digital

ad expenditures in China will total $18.03 billion

in 2014, a figure more than $1 billion higher than

previously forecast.

billions and % changeDigital Ad Spending in China, 2012-2018

2012

$11.43

85.0%

2013

$15.54

36.0%

2014

$18.03

16.0%

2015

$20.20

12.0%

2016

$22.21

10.0%

2017

$24.21

9.0%

2018

$25.91

7.0%

Digital ad spending % change

Note: includes advertising that appears on desktop and laptop computersas well as mobile phones and tablets, and includes all the various formatsof advertising on those platforms; excludes SMS, MMS and P2Pmessaging-based advertising; excludes Hong Kong; converted at theexchange rate of US$1=RMB6.19; CAGR (2013-2018)=10.8%Source: eMarketer, March 2014170910 www.eMarketer.com

eMarketer has increased its forecast for digital ad spending in China from its December 2013 projections in response to robust gains for digital video and real-time bidding-based (RTB) ad investments, and because of strong earnings for China’s leading digital publishers. Digital ad spending in China is set to represent 36.2% of the total this year. Digital ad expenditures will continue to grow strongly, eMarketer expects, and are on target to reach $25.91 billion by 2018.

A survey of marketers by R3 Worldwide and Admaster highlighted digital ad spending’s acceleration. It found the percentage of marketers in China allocating more than 30% of their budgets to digital rose to 24% in 2013, up from just 9% in 2012.

% of total

Percent of Marketing Budget Allocated to Digital AdsAccording to Marketers in China, 2012 & 2013

2012 2013

<3% 6% 4%

3%-5% 13% 8%

6%-10% 31% 12%

11%-15% 28% 8%

16%-20% 13% 24%

21%-25% 0% 12%

26%-30% 0% 8%

30%+ 9% 24%

Note: n=280Source: R3 and AdMaster Digital Consulting, "Winning in Digital 2013 Report," June 2013164407 www.eMarketer.com

A February survey of digital marketers in China by Hylink Advertising, comScore and Pacific Epoch found that roughly three-quarters expected digital ad spending at least 5%, and fully 20% projected growth of more than 25%.

% of total

Expected Change in Digital Advertising Budget in2014 According to Digital Marketers in China

Increase by more than 25%20%

Increase between 5%-24% 53%

Remain the same 17%

Unsure/did not respond10%

Note: n=30Source: Hylink Advertising, comScore and Pacific Epoch, "2014 DigitalMedia Marketing Report," March 31, 2014174048 www.eMarketer.com

“I think we’re going to get about 20% year-on-year growth at the current pace in digital,” said JWT’s Chew. “In FMCG, it’s upwards of 25% of total ad spend. In automotive, even higher.”

“China’s digital ad spend is growing steadily in spite of shrinking marketing budgets,” said Neo@Ogilvy’s Wang. “We see clients becoming more willing to spend their budgets on ecommerce and building their brands through social media. Budgets for mobile internet and online videos have grown astronomically, while spending on web portals has remained the same.”

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DIGITAL VIDEO GROWTH Digital video ad investment has grown sharply in China over the past five years. A February 2014 Analysys International Enfodesk study showed video took share from across the digital spectrum in 2013. The shares of keyword [i.e., search], display and banner advertising, and email, as well as other forms of digital advertising, all fell in 2013, while video’s share rose to 20.8% from 19.2% in 2012.

% of total

Digital Ad Spending Share in China, by Format,2008-2013

Search Display/banner Online video Email Other

2008 42.8% 47.4% 3.7% 1.6% 4.5%

2009 45.8% 31.7% 5.5% 1.3% 15.6%

2010 42.1% 28.4% 7.9% 1.1% 20.5%

2011 38.1% 25.5% 18.1% 1.0% 17.3%

2012 39.4% 25.0% 19.2% 0.9% 15.5%

2013 39.3% 24.8% 20.8% 0.8% 14.2%

Note: numbers may not add up to 100% due to roundingSource: Analysys International Enfodesk study as cited in company blog,Feb 18, 2014170093 www.eMarketer.com

As much as digital video spending has grown, there appears to be room for further growth, based on marketer attitudes. The Admaster report showed online video to be the platform of choice for digital media marketing by a large and widening margin, with just over one-third of marketers opting for it as their primary platform in 2013.

% of respondents

Primary Digital Media Marketing Platforms Accordingto Marketers in China, 2012 & 2013

2012 2013

Video 23% 36%

Industry vertical 14% 20%

Microblogs 20% 16%

Search 15% 12%

Portal 10% 12%

Social networks 16% 4%

Mobile (tablet, mobile phone) 2% 0%

Ad alliance/networks 2% 0%

Note: n=280; numbers may not add up to 100% due to roundingSource: R3 and AdMaster Digital Consulting, "Winning in Digital 2013Report," June 2013164410 www.eMarketer.com

A number of other estimates and forecasts reflect that growing preference for digital video. Figures from the Data Center of China Internet (DCCI) are at the higher end of the spectrum, estimating digital video ad spending rose 77.1% in 2013, to $1.86 billion. DCCI forecasts that spending will continue to grow strongly to near $4.35 billion by 2015. Analysys International put online video ad spending growth at 37.3% in 2013 with $1.95 billion, but coming from a higher base in previous years than the other estimates. Moreover, Analysys’ projections continue through to a high-end spend forecast of near $6 billion for 2016.

billions

Comparative Estimates: Digital Video Ad Spending in China, 2012-2017

DCCI, Feb 2014

Analysys International*,Jan 2014

iResearch Consulting Group,Jan 2014 (2)

PwC**, June 2013

2012

$1.05

$1.42

$1.07

$0.29

2013

$1.86

$1.95

$1.55

$0.41

2014

$2.96

$2.75

$2.18

$0.54

2015

$4.35

$4.04

$2.91

$0.69

2016

-

$5.98

$3.70

$0.81

2017

-

-

$4.56

$0.90

Note: *converted at the exchange rate of US$1=RMB6.19; **excludesmobile; converted at the exchange rate of US$1=RMB6.32Source: various, as noted, 2013 & 2014173852 www.eMarketer.com

There are a number of factors driving the migration to online video. One is a 2012 move by the State Administration of Radio, Film and Television (SARFT) to implement a nationwide ban on advertising during TV dramas. This cut the number of available ad slots, leading to higher premiums and a windfall for agencies, which then redeployed the cash to digital efforts.

Another is increasing demand among advertisers for improved audience targeting, at relatively lower cost. “Media agencies are out there telling clients that online [TV commercials] are half the cost of traditional, and you can target better and frequency cap with online TV,” said JWT’s Chew. “They’re saying, ‘Don’t buy traditional TV, it’s overpriced and seeing more inflation year after year. Go digital, or do a multiscreen buy.’”

However, supply constraints and the high fragmentation of China’s digital video market limit the reach and effectiveness of video ads. Moreover, as higher demand pushes up against limited inventory, digital video ad costs are rising, noted Charlie Wang, digital director at Mindshare.

CHINA DIGITAL AD TRENDS: MULTIPLE FORCES DRIVING GROWTH ©2014 EMARKETER INC. ALL RIGHTS RESERVED 7

Looking ahead, the market could be primed to experience a sustained wave of consolidation and merger activity among leading platforms, following up on the 2012 merger of market leaders Youku and Tudou. Baidu paid $370 million in June 2013 to buy PPS Net TV’s internet video business, before merging it with IQIYI to create China’s largest online video site by mobile users and viewing time. In October 2013, PPTV received a $420 million joint investment from Suning Commerce Group and Hony Capital, allowing it to accelerate spending on development. Youku Tudou pulled in 27.9% of digital video ad revenue in China during Q3 2013, according to November 2013 information from Analysys International Enfodesk.

% of total

Digital Video Ad Revenue Share in China, by Company,Q3 2013

Youku Tudou 27.9%

iQIYI 16.5%

Sohu Video 10.3%

Tencent Video 8.6%

LeTV 7.9%

PPTV 6.7%

Funshion 4.5%

Xunlei Kankan4.2%

Phoenix Video2.9%

Sina Video2.5%

Other 8.1%

Note: includes PC and mobile; numbers may not add up to 100% due toroundingSource: Analysys International Enfodesk, "China Digital Video Q3 2013Market Report" as city in company blog, Nov 11, 2013168172 www.eMarketer.com

While Youku Tudou is the overall leader, other players are nipping at its heels. “Right now, IQIYI is the leader in mobile video ad spend,” said Neo@Ogilvy’s Wang. “If Sohu and Tencent partner in online video service, I think that could be a winner.”

SEARCH RETAINS ITS LEAD Search remains the largest generator of digital advertising revenue in China, and will continue to outpace display spending for the foreseeable future, according to eMarketer’s estimates.

billionsDigital Ad Spending in China, by Format, 2012-2018

2012

$5.71

$5.71

$11.43

2013

$7.93

$7.51

$15.54

2014

$9.56

$8.47

$18.03

2015

$11.05

$9.15

$20.20

2016

$12.44

$9.77

$22.21

2017

$13.80

$10.41

$24.21

2018

$15.03

$10.88

$25.91

Search and directories* Display**

Note: includes advertising that appears on desktop and laptop computersas well as mobile phones and tablets on all formats mentioned; numbersmay not add up to total due to rounding; converted at the exchange rate ofUS$1=RMB6.19; excludes Hong Kong; *paid listings, contextual text linksand paid inclusion; **banners (static display), rich media, sponsorships andvideo (in-stream, in-banner, in-text)Source: eMarketer, March 2014170918 www.eMarketer.com

iResearch Consulting Group projects that search engine ad revenue (counting both online and mobile) will grow by 32.5% this year, reaching RMB45.73 billion ($7.39 billion)—and growth is projected to continue at a very healthy double-digit clip for the foreseeable future.

billions of Chinese yuan renminbi and % changeSearch Ad Spending in China, 2008-2017

2008

4.9

2009

6.6

36.2%

2010

10.3

55.6%

2011

17.2

67.1%

2012

25.5

48.2%

2013

34.5

35.5%

2014

45.7

32.5%

2015

58.5

28.0%

2016

71.6

22.3%

2017

84.3

17.8%

Search ad sending % change

Note: includes mobile and PCSource: iResearch Consulting Group, "2014 China Online AdvertisingReport," May 13, 2014174059 www.eMarketer.com

Search advertising generated RMB11.16 billion ($1.8 billion) in Q1 2014, contracting slightly from a Q4 2013 peak of RMB11.42 billion ($1.84 billion), according to Analysys International figures.

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In 2013, Baidu received 78.5% of China’s search ad spending. Google China garnered 14.0% and Sogou, a relative newcomer to the market, took 5.1%, Analysys found.

% of totalSearch Ad Spending Share in China, by Company, 2013

Baidu78.5%

Google China14.0%

New Sogou*5.1%

Other2.4%

Note: excludes spending on all other channels; *collaboration betweenSogou and Tencent SosoSource: Analysys International Enfodesk study as cited in company blog,Feb 18, 2014170096 www.eMarketer.com

Sogou, which is owned by internet behemoth Sohu, has emerged as a stronger draw since Tencent invested $448 million in the company for a 36.5% stake in September 2013. The move enabled Tencent to merge Sogou with its own search operation, Soso, and push search traffic through its QQ services and mobile browser. It is also part of the wider competition between China’s three internet giants—Baidu, Alibaba and Tencent—across the full spectrum of online and mobile services.

In terms of search page views, Sogou and Qihoo 360 attracted a combined 37.7% of page views in April 2014, compared with Baidu’s 60.0%.

% of total

Share of Page Views and Unique Visitors AmongSearch Engines in China, April 2014

Page views Unique visitors

Baidu 60.0% 58.1%

Qihoo 360 26.0% 26.0%

New Sogou* 11.7% 13.4%

Google 1.2% 1.1%

Bing 0.6% 0.9%

Youdao 0.1% 0.2%

Yahoo 0.1% 0.1%

Other 0.2% 0.3%

Note: includes mobile and PC; numbers may not add up to 100% due torounding; *formed by joint venture between Sogou and Tencent SosoSource: CNZZ as cited in company blog, May 1, 2014174192 www.eMarketer.com

This competition has prompted Baidu to improve its offering by investing in new search algorithms that weed out content from so-called link farms and paid article-trading platforms, as well as offer more complex offerings than simple keyword search to attract larger advertisers.

MOBILE GAINS GROUND Despite the rapid growth of mobile usage in China, mobile internet ad spending as a proportion of digital ad spending remains limited at 7.8% in 2014, according to eMarketer estimates. That is projected to grow to account for one-fifth of total digital spend by 2018, placing China very solidly at the head of emerging markets such as India and Brazil, but lagging developed markets such as Europe, Japan and North America.

billionsMobile Ad Spending in China, by Format, 2012-2018

2012 2013 2014 2015 2016 2017

Mobile messaging* $0.61 $0.98 $1.41 $1.98 $2.47 $2.69

Mobile internet** $0.29 $0.78 $1.40 $2.39 $3.34 $4.51

Total $0.90 $1.76 $2.82 $4.37 $5.81 $7.21

2018

$3.52

$5.42

$8.94

Note: includes ad spending on tablets; excludes Hong Kong; converted atthe exchange rate of US$1=RMB6.19; numbers may not add up to total dueto rounding; *includes SMS, MMS and P2P messaging-based advertising;**includes display (banners, video and rich media) and searchSource: eMarketer, March 2014171073 www.eMarketer.com

eMarketer estimates that mobile ad spending (including spending on tablet ads) in China reached $2.82 billion in 2014, and is forecast to reach $8.94 billion by 2018. Mobile messaging makes up an unusually high percentage of mobile ad spend compared with other countries, reflecting the widespread use of messaging in China (by both consumers and marketers) and the popularity of messaging and chat services such as QQ and WeChat.

China’s mobile audience is primed and willing to engage with mobile advertising, according to InMobi’s “2014 China Mobile Internet Users Behavior Report.” In-app ads lead the way as of November 2013, with 45% of users ages 15 and older willing to pay attention to them, followed by 40% of respondents saying the same for mobile ads encountered via search and one-third of users willing to heed mobile ads on video sites.

CHINA DIGITAL AD TRENDS: MULTIPLE FORCES DRIVING GROWTH ©2014 EMARKETER INC. ALL RIGHTS RESERVED 9

% of respondents

Mobile Internet Users in China Who Pay Attention toMobile Ads, by Channel, Nov 2013

In-app 45%

Search engine 40%

Video site 34%

Retail site 24%

Other 11%

Note: ages 15+ living in tier 1-4 cities; based on InMobi's networkSource: InMobi, "2014 China Mobile Internet Users Behavior InsightReport," Jan 9, 2014168784 www.eMarketer.com

According to data from Admaster, mobile has been attracting a rapidly growing share of China’s digital video viewers. In a study that was the first of its kind to combine data from all of the country’s major video sites, Admaster said that by the end of December 2013, some 9.2% of total digital video ads viewed in China were displayed on mobile, an increase of nearly 10 times the level in January 2013.

In a separate analysis of the state of mobile ad network development in China in 2013, mobile ad exchange and supply-side platform AdsMOGO also noted important developments in the nature of mobile ads. The report said that while banner ads have long been the preferred mobile ad format, and that they accounted for 94% of the 220.7 billion ads served by AdsMOGO in 2013, the desire of advertisers and developers to experiment has pushed growing use of interstitial ads—those that appear before or after an expected content page. The report noted that while banners’ clickthrough rate was just 0.75% in 2013, interstitial ads achieved a 4.1% clickthrough rate. Games were the most successful hosts of ads, with a 3.23% overall clickthrough, AdsMOGO found.

“There’s lots of money being spent by venture capitalists and other investors, as well as by advertisers in the mobile landscape, but I don’t think anybody has figured out how to deliver effective mobile advertising, how to monetize that in a strong ROI [return on investment] way,” said Asia Media Services’ Cohen.

AdsMOGO’s report also noted the advent of programmatic mobile ad buying in 2013. It found that by December 2013, programmatically purchased ads represented 10.7% of mobile ad inventory served, including both real-time bidding (RTB) and non-RTB, providing 100 million impressions per day, having rapidly risen through the second half of that year.

THE SHIFTING SOCIAL ENVIRONMENT Spending on social media advertising in China is set to maintain the strong growth seen since 2010, exceeding $1 billion in 2014, according to eMarketer estimates.

millions, % change and % of digital ad spendingSocial Network Ad Spending in China, 2012-2015

2012

$644.7

131.3%

5.8%

2013

$947.4

47.0%

6.5%

2014

$1,183.6

24.9%

7.0%

2015

$1,420.3

20.0%

7.5%

Social network ad spending% change % of digital ad spending

Note: includes display, search, video and other forms of paid advertisingappearing within social networks, social games and social applications;excludes spending by marketers that goes toward developing ormaintaining social network profile pages or branded applicationsSource: eMarketer, Jan 2014167631 www.eMarketer.com

eMarketer’s forecast for future growth is more conservative than those of Analysys’, which projects 52.4% growth in 2014 to RMB8.73 billion ($1.41 billion).

billions of Chinese yuan renminbi and % changeSocial Media Ad Spending in China, 2010-2016

2010

1.45

2011

1.98

37.1%

2012

3.24

63.6%

2013*

5.73

76.9%

2014

8.73

52.4%

2015

12.46

42.7%

2016

16.79

34.8%

Social media ad spending % change

Note: includes PC and mobile; *forecastSource: Analysys International Enfodesk study as cited in press release, Jan 27, 2014170054 www.eMarketer.com

CHINA DIGITAL AD TRENDS: MULTIPLE FORCES DRIVING GROWTH ©2014 EMARKETER INC. ALL RIGHTS RESERVED 10

Analysys projects social ad spending will reach $2.71 billion by 2016, but how that spending is deployed is heavily dependent on how the predominant social platforms open up to advertisers.

“After online video, I would say social media is another huge priority for clients,” said JWT’s Chew. “A lot of them have launched weibo and now want to launch WeChat this year. And as social requires being always on, they’re creating in-house teams, as well as partnering with agencies, to meet that kind of always-on demand.”

But China’s social web is changing rapidly, making it difficult to gauge how social advertising will develop. Chief among these is the emergence of Tencent’s WeChat as a platform that blends mobile, social networking and social commerce. Tencent said in its Q4 2013 earnings release that the number of monthly active users on WeChat had swelled to 355 million, up from 271.9 million in Q3.

Meanwhile, Sina, which operates the most popular weibo microblogging platform in China, said in late May that its daily active users climbed 37% in Q1 2014 to reach 66.6 million, arresting five consecutive quarters of user losses.

Despite Sina’s encouraging user growth numbers, microblogging as an activity is losing popularity in China to mobile instant messaging apps, according to data from the China Internet Network Information Center (CNNIC). It revealed in January 2014 that the number of microblog users in China fell to 280.8 million in 2013 from 308.6 million the previous year.

millions and % of internet users**Microblogging* Users in China, 2012 & 2013

2012

308.6

54.7%

2013

280.8

45.5%

Microblogging* users % of internet users**

Note: ages 6+; includes PC and mobile; *known as weibos in China; **whoaccessed the internet in the past 6 monthsSource: China Internet Networks Information Center (CNNIC), "33rdStatistical Report on Internet Development in China," Jan 2014169454 www.eMarketer.com

By contrast, the CNNIC reported the number of mobile instant messaging users grew to 430.8 million, fully 86.1% of mobile internet users, in 2013, up nearly 80 million from 2012.

millions and % of mobile internet users*Mobile Instant Messaging Users in China, 2012 & 2013

2012

352.2

83.9%

2013

430.8

86.1%

Mobile instant messaging users % of mobile internet users*

Note: ages 6+; *who accessed the internet via a mobile device in the past6 monthsSource: China Internet Networks Information Center (CNNIC), "33rdStatistical Report on Internet Development in China," Jan 2014169508 www.eMarketer.com

WeChat is the social and mobile instant messaging app of choice in China, but it remains difficult for advertisers to engage with potential consumers using the platform. In an attempt to focus on user growth and utility, and to limit spam, it still restricts the number of messages that can be sent to corporate account subscribers. However, WeChat remains an important place for brands to engage with and provide services to their fans and customers, more than one-third of whom use the service many times during a single day, according to a Sootoo.com survey.

“I think most brands are still trying to work out how WeChat could help them—I think it’s more of a service channel,” said Chew. “So, rather than just pushing out content, they’re thinking about how they can use it for loyalty programs or for building some functionality or new service.”

Attempting to retain WeChat customers can pose problems, he pointed out. “They’re less about acquiring new customers and more about keeping current customers and engaging them,” said Chew. “I don’t think it’s a great environment for advertising because it’s a place where you go to have intimate conversations with friends, and so display advertising in particular would be very intrusive.”

CHINA DIGITAL AD TRENDS: MULTIPLE FORCES DRIVING GROWTH ©2014 EMARKETER INC. ALL RIGHTS RESERVED 11

However, in early May 2014, Tencent announced the creation of a WeChat business group as part of an internal restructuring that will see the business unit incorporate Tencent’s WeChat Pay third-party payment service. As such, there may be more opportunities for advertisers to engage with WeChat as Tencent seeks to monetize its services.

“I expect that will start to solidify their thinking and they’ll approach the market with a more unified approach,” said Asia Media Services’ Cohen. “But you look at the US, and the likes of Twitter, which is still trying to figure out their way with regard to advertisers and how to engage sponsors with content, and monetize what is already a pretty large user base. So you’ve got to cut the guys at Tencent and WeChat a little bit of slack.”

PROGRAMMATIC BUYING Programmatic buying is in its infancy in China, but is projected to grow rapidly from a small base going forward. In 2013, spending on programmatic digital display advertising in China grew 179.5% to RMB1.53 billion ($247.17 million), according to forecast data from iResearch Consulting Group. That spend is projected to more than double in 2014 to RMB3.30 billion ($533.12 million), and maintain strong growth to reach RMB17.22 billion ($2.78 billion) by 2017.

billions of Chinese yuan renminbi and % change

Programmatic Digital Display Ad Spending in China,2012-2017

2012

0.55

2013

1.53

179.5%

2014

3.30

116.0%

2015

6.37

92.7%

2016

11.23

76.4%

2017

17.22

53.2%

Programmatic digital display ad spending % change

Note: includes mobile and PCSource: iResearch Consulting Group, "2013 China DSP Market TrendReport," Oct 22, 2013172856 www.eMarketer.com

RTB accounted for the lion’s share, fully 95.4% in 2013, with mobile taking just 1.0% and non-RTB programmatic spending the remainder. RTB’s share is projected to fall steadily with each passing year as both mobile and non-RTB programmatic spending gain share, but will still account for more than 80% in 2017, iResearch reported in October 2013.

% of total

Programmatic Digital Display Ad Spending Share in China, by Type, 2012-2017

Real-time bidding (RTB)

Non-real-time bidding (Non-RTB)

Mobile

2012

100.0%

-

-

2013

95.4%

3.6%

1.0%

2014

92.6%

5.5%

1.9%

2015

89.3%

8.3%

2.4%

2016

85.3%

10.5%

4.2%

2017

81.4%

13.3%

5.4%

Note: numbers may not add up to 100% due to roundingSource: iResearch Consulting Group, "2013 China DSP Market TrendReport," Oct 22, 2013172857 www.eMarketer.com

China’s leading internet firms are driving this growth in spend by developing ad exchanges and demand-side platforms (DSPs). At the start of 2013, Tencent launched its own ad exchange and DSP, quickly followed by the release of Sina’s own private ad exchange platform. Alibaba, Baidu and JD.com all subsequently launched their own exchange services or DSPs, with JD.com’s also being an exclusive offering.

Ad spending on DSPs increased sharply as ad tech vendors received significant financing and their offerings improved, and advertisers switched from ad networks to DSPs.

However, there remains substantial work to be done in terms of convincing publishers to allow access to third-party DSPs, or even their own ad exchanges. The closed nature of some of their platforms also has important consequences for the way programmatic buying will develop, especially as there is still a dearth of data management platforms (DMPs) that allow advertisers to tally underlying data.

“Not every publisher has a published API or an ad exchange that you can tie into. So a company like iClick, which I think is probably the market leader in programmatic buying here in China, is not reaching everybody,” said Asia Media Services’ Cohen.

CHINA DIGITAL AD TRENDS: MULTIPLE FORCES DRIVING GROWTH ©2014 EMARKETER INC. ALL RIGHTS RESERVED 12

iResearch suggests that this is likely to change as the market matures and publishers realize the profit incentive to open their platforms so they can shift higher-quality inventory at higher prices. iResearch forecasts that by 2017 more than half of programmatic ad placements through DSPs will come via third-party ad buying, as opposed to those privately operated by larger agencies or publishers.

As of mid-2014, publishers and portals in China are using RTB primarily to clear unsold or low-quality inventory, and have yet to make the transition to audience buy or premium programmatic.

“I think the publishers want to sell the high-quality inventory at the highest CPM possible. There’s still a lot of traditional media buying going on where they want to buy the above-the-fold banners on the index pages, and what goes into RTB is a lot of run-of-site, which is the below-the-fold or the smaller size banners,” said JWT’s Chew. “There are sites that have a lot of remnant or unsold inventory, so they turn to RTB as a way to monetize it. But it tends to be the long tail.”

International Data Corp.’s (IDC) estimates for spending in the so-called “premium programmatic” segment only starts in 2014 and with a paltry $4.6 million spending expectation. But its growth projections are noteworthy, with premium programmatic forecast to grow 652.1% to $34.3 million in 2015, and close in on $500 million by 2018.

millions and % change

Premium Programmatic* Digital Display Ad Spendingin Select Countries/Regions in Asia-Pacific, 2013-2018

Japan

—% change

Australia

—% change

China

—% change

Rest of Asia-Pacific

—% change

2013

$7.0

-

-

-

-

-

-

-

2014

$42.4

506.7%

$2.5

-

$4.6

-

$3.9

-

2015

$118.3

178.8%

$16.1

535.7%

$34.3

652.1%

$27.4

607.3%

2016

$251.7

112.8%

$44.7

177.7%

$107.9

214.8%

$86.6

216.0%

2017

$453.6

80.2%

$91.0

103.8%

$252.9

134.3%

$199.9

130.8%

2018

$734.1

61.9%

$152.8

67.9%

$484.5

91.6%

$382.8

91.5%

Note: includes digital display ads, digital video ads and mobile display ads,including video; *includes all digital display ad spending on upfront,programmatic direct deals secured using pre-existing, real-time bidding(RTB) technology infrastructureSource: International Data Corporation (IDC), "Forward Markets 2013-2018:Moving Direct Display Ad Sales onto the RTB Platform" sponsored by TheTrade Desk, March 2014172287 www.eMarketer.com

“The main growth is not going to come from RTB,” agreed Mindscape’s Wang. “It will come from publisher-ran [ads], like programmatic guaranteed and programmatic direct.”

SPENDING DRIVERS

A number of forces are driving increased digital ad

spending in China. This section of the report will look

at three of them:

■ The growth of ecommerce

■ Mergers and acquisitions

■ A new focus on ROI

THE GROWTH OF ECOMMERCE Ecommerce in China is booming. eMarketer forecasts that retail ecommerce sales will grow 76.1% in 2014 to $249.38 billion. By 2015 they will have reached $369.67 billion, outstripping even the $347.3 billion predicted for the US the same year, and will have doubled China’s 2014 total by 2016.

billions and % changeRetail Ecommerce Sales in China, 2012-2017

2012

$70.88

138.2%

2013

$141.64

99.8%

2014

$249.38

76.1%

2015

$369.67

48.2%

2016

$506.31

37.0%

2017

$665.07

31.4%

Retail ecommerce sales % change

Note: includes products or services ordered using the internet via anydevice, regardless of the method of payment or fulfillment; excludes traveland event tickets; excludes Hong Kong; includes sales from businesses thatoccur over C2C platforms; converted at exchange rate of US$1=RMB6.19Source: eMarketer, Jan 2014167761 www.eMarketer.com

In addition, China’s retail ecommerce market will be more than three times larger than Japan’s this year, and more than four times bigger in 2015. China’s retail sales are already higher as a proportion of total retail sales than in the US, accounting for 7.9% in 2013 according to CNNIC, against eMarketer’s estimate for 5.8% in the US the same year.

CHINA DIGITAL AD TRENDS: MULTIPLE FORCES DRIVING GROWTH ©2014 EMARKETER INC. ALL RIGHTS RESERVED 13

Meanwhile, mobile commerce took off in a big way in 2013, expanding 707% to RMB1.22 trillion ($197.09 billion), according to data from iResearch. Growth this year is projected to be 141.1%, pushing up sales volume to RMB2.94 trillion ($474.96 billion), with the vast majority of payments (96.5% in 2014) occurring via mobile web. But proximity payments are expected to grow only incrementally, representing just 3.6% of the total by 2017, while the share taken by SMS payments will fall to just 0.6%.

The explosive growth of ecommerce and mcommerce has obvious implications for digital advertising spend.

FMCG brands are adapting to China’s slowing macroeconomy by investing heavily in ecommerce advertising channels, according to Neo@Ogilvy’s Wang. “Digital ad spend of FMCG brands in China has doubled from previous years. Mobile internet (online video and social media) make up half of their digital ad spend. These are phenomena that would have been inconceivable just a year ago,” he said.

These campaigns are heavily promotion-driven and are increasingly funded from traditional marketing budgets. This, in turn, has driven sites like Taobao to open up their platforms, allowing marketers to build campaign sites and minisites directly on ecommerce channels, according to Mindscape’s Charlie Wang.

“You can actually host a brand video right on your Taobao shop now,” he said. “You can host sort of interactive activity, like a mini game, just like we do with marketing campaigns. Then once you win the mini game, you get a coupon for 20% off.”

Social Commerce There is also a massive social media aspect to the ecommerce revolution. Digital buyers in China source an overwhelming majority of their product information from the internet. User reviews on WeChat and Sina Weibo were the leading source of information for 39% of China’s digital buyers, according to a recent KPMG study. Moreover, some 36% said they studied user reviews on ecommerce sites themselves, with brands’ official sites and other online media platforms accounting for 35% and 33%, respectively.

% of respondents

Top 10 Information Channels Among Digital Buyers inChina, Oct 2013

1. User reviews on social media (e.g. WeChat, SINA Weibo) 39%

2. Friends/word-of-mouth 38%

3. Ecommerce websites like Taobao Marketplace 36%

4. Brand's official sites 35%

5. Online media platform 33%

6. Official brand news 27%

7. Online display ads 21%

8. Traditional media 20%

9. Celebrities 20%

10. Key opinion leaders 17%

Note: ages 18-50 who have purchased luxury items via PC or mobiledevices in the past 12 months and live in tier 1-4 citiesSource: KPMG, Glamour Sales and Mogujie, "China's ConnectedConsumers," Feb 25, 2014171166 www.eMarketer.com

“Taobao, to a certain extent, is advanced in social media in the sense that in Tmall in Taobao, the amount of consumer-oriented content and ability for consumers to share views on their platform is quite enormous, so there’s a lot of chat going on,” said Razorfish’s Digonnet.

China is significantly ahead of the rest of the world in terms of the interaction between social media and ecommerce, according to Digonnet. He attributed part of that to a higher overlap between older, and therefore relatively wealthier, users of social media than in developed markets. Sina Weibo reported some 37.0% of its users in 2013 were ages 25 to 34, providing a significant wealth base for advertisers to leverage. Sina Weibo users also tend to be extremely well educated, with more than 70% holding a bachelor’s degree or higher, and thus more likely to hold high-paying jobs with more disposable income.

CHINA DIGITAL AD TRENDS: MULTIPLE FORCES DRIVING GROWTH ©2014 EMARKETER INC. ALL RIGHTS RESERVED 14

% of total

Demographic Profile of Sina Weibo Users in China,2013

GenderMale

50.1%

Female49.9%

Age<24

53.0%

25-3437.0%

35-448.0%

45+2.0%

EducationElementary school

2.8%

Technical/vocational school5.0%

Junior high school9.1%

High school12.3%

Bachelor's degree or higher70.8%

Note: n=80,000+Source: Sina, "2013 Sina Weibo Users Development Report," Dec 6, 2013172523 www.eMarketer.com

“[China’s social and ecommerce sites] are active platforms on which people gather together to make sure that they’ve got the right information before buying, and therefore they’re extremely consumer-oriented in the design of the social media communication, but at the same time they do not accept direct advertising on social media,” Digonnet said. “On top of that, the very reason why China embraces social media is very much for consumers to create a sort of captive power against [state-controlled] media institutions.”

Digonnet also said that social commerce is opening a direct channel for marketers to communicate with consumers living in China’s smaller cities.

“The reality in China is wealth is growing faster in lower-tier cities, where there is a growing middle class, but it takes time before you build the entertainment capabilities, the shopping malls, bringing the brands in in order for them to be able to spend their money,” he said. “So actually, ecommerce platforms are now being driven more by the three-, four- and five-tier cities than the Tier 1 cities.”

MERGERS, ACQUISITIONS AND PUBLIC OFFERINGS China’s social commerce revolution is also driving heightened merger and acquisition activity as the country’s leading internet companies scramble to obtain access to the mobile and social channels that feed ecommerce sites. That competition is in turn likely to accelerate ad spending in an attempt to drive traffic to these new, newly competitive channels.

“It’s funny because the BAT—Baidu, Alibaba and Tencent—all started out [with] unique niches; their marketplaces, if you will,” said Asia Media Services’ Cohen. “In the last couple years they have each kind of gone after the other’s core markets, all of them making sure that they have long-term monetization opportunities.”

One of the most important strategic investments of 2013 was Alibaba’s April purchase of an 18% stake in Sina Weibo for $586 million. The deal offered Alibaba’s ecommerce sites access to traffic from one of China’s most popular microblogging services in return for cash to develop advertising revenues. Sina had already partnered with Baidu to integrate search functionality into its mobile website. The deal also provided a platform for the January 2014 integration of Alibaba’s Alipay service into Sina Weibo. Sina later spun off Sina Weibo in a US IPO that raised a less-than-expected $285.6 million.

Tencent responded in kind via the April 2014 acquisition of a 15% share of ecommerce platform JD.com for nearly $215 million, in the process integrating Tencent’s existing ecommerce plays such as consumer electronics specialist Yixun. In one stroke, the deal matched Alibaba and Sina Weibo by offering WeChat users access to a strong ecommerce play. JD in late May went on to exceed expectations for its US IPO, raising $1.78 billion.

“Tencent had been very good at building audience, but they really didn’t have an ecommerce play,” said Cohen. “So they started to build out the payment processing, and their investment in JD was genius. JD has invested a ton of money, more than anybody else in the ecommerce landscape, really, in infrastructure, the warehouses, the trucking lines, the logistical support of tracking things, something that Amazon.com does very, very well in the United States and globally.”

CHINA DIGITAL AD TRENDS: MULTIPLE FORCES DRIVING GROWTH ©2014 EMARKETER INC. ALL RIGHTS RESERVED 15

For Baidu, the major obstacle was its relative lack of a mobile play. The importance of mobile as a channel in China was illustrated by Baidu’s $1.9 billion purchase of China’s leading third-party app store, 91 Wireless, in July 2013. At the time, Baidu’s mobile search app was hosting just 9% of wireless searches, as opposed to its 80% share of the desktop search market.

“Baidu’s big weakness is twofold. No. 1 is that they didn’t get into mobile soon enough, and the browsing on mobile is very different so you’re not going to search the same way,” said Razorfish’s Digonnet. “The second one is they didn’t get into social commerce at all, so they’re lagging behind Tencent and Alibaba, who are now the real two behemoths driving the ecosystem in China.”

On the periphery of these major deals, all three of the BAT companies have invested in a breathtaking array of auxiliary services. Alibaba bought music streaming service Xiami; Tencent invested in Yelp-style mobile restaurant and services review site Dianping. Also, Baidu acquired video streaming site PPS and Tencent moved into search via investment in Sogou. The list goes on, but a key consequence is that the Alibaba and Tencent ecosystems are increasingly mutually exclusive.

In November 2013, Taobao’s mobile unit blocked the use of WeChat services, ensuring WeChat users could no longer purchase goods and services at Taobao stores via the platform. The same block applies to Sina Weibo and Xiami.

“If you look at Tmall and Taobao, you cannot search those via Baidu,” said Cohen. “So you can’t put a search budget into fixed content management on Baidu and expect that people will find your Tmall store. Alibaba is closed down, so you have to do search marketing within the Alibaba family of companies, specifically Tmall and Taobao.”

For brands, the rise of social and ecommerce presents a unique challenge, one that some argue requires a much more holistic approach to influencing the customer journey than in other markets.

“Baidu, Alibaba and Tencent all require video to reach a high concentration of people and to keep consumers’ attention,” said Neo@Ogilvy’s Wang. “They all need social media to keep consumers’ stickiness. At the same time, they all need ecommerce to complete consumer purchases. Internet finance is also an important part that has linked consumers’ bankcards online to help them manage their personal finances. All these are built around the consumer’s needs and lifestyles, and not for the advertiser. This has prompted a shift to a more holistic and focused strategy that requires everything from the headline to planning the customer journey.”

Heightened merger and acquisition activity across the ecommerce, social and mobile landscape will drive advertising spend as an increasing number of consumers gain access to a more diverse range of products and payment options. Competition and consolidation will also broaden and simplify advertisers’ spending choices as these discrete ecosystems evolve, reducing fragmentation as activity becomes more concentrated across platforms and services owned by the big three firms.

HEIGHTENED FOCUS ON TRANSPARENCY AND ROI As in other markets around the world, marketers in China are paying more attention to data, with an eye on measuring the effectiveness of their advertising efforts. And increased measurability is a driver of digital ad growth.

“We’re seeing … more and more emphasis on performance in marketing, and of course the good news in the world of digital is that if properly instrumented, most digital advertising can be tracked and measured, and should be able to yield through attribution modeling to bottom-line analysis on your ROI performance,” said Cohen.

In this respect, the ecommerce boom is a godsend for digital marketers in certain segments as it provides exactly the kind of traceability brands demand when feeling the squeeze on their budgets.

CHINA DIGITAL AD TRENDS: MULTIPLE FORCES DRIVING GROWTH ©2014 EMARKETER INC. ALL RIGHTS RESERVED 16

“I think part of the reason why more and more brands are starting to make more money and also to do more branding on ecommerce is that it can prove immediate ROI,” said Mindscape’s Wang. “Customers click on a banner. They’re on to your promotion site. They participate in an activity. They bought a product. Everything is traceable. Everything can be proven. So in this respect I think it fits China marketers. China marketers have always been more about money and ROI-driven instead of brand-equity driven.”

The increasing amount of advertising dollars being plowed into advertising on ecommerce channels is also spurring changes in the way these platforms interact with marketers.

Contrary to expectations, given China’s reputation for difficulty providing data, platforms like Tmall actually make it fairly easy for brands to export customer information, according to Mindscape’s Wang. “Taobao has a very good CRM system that lets brands export their own data out of the Taobao system. You can get very detailed data like consumers’ phone numbers, names and addresses.”

With Alibaba’s massive US IPO on the horizon, that willingness to share data and ease relationships with brands is only likely to improve as shareholders demand transparency and adherence to best practice. The increasing tendency for China’s internet firms to list overseas should also drive improved analytics reporting up and down the digital advertising chain.

“I see huge improvement in the transparency of data,” said Neo@Ogilvy’s Wang. “Data is certainly more complete now, more authentic. We have the technology to monitor each point of a customer’s behavior.”

EMARKETER INTERVIEWS

Marketing in China: Digital Advertising at a Crossroads

Brent Cohen Managing Director and Founder

Asia Media Services Ltd. Interview conducted on May 9, 2014

Eugene Chew Chief Digital Officer

JWT Interview conducted on May 7, 2014

Andy Wang North Region Deputy General Manager

Neo@Ogilvy Interview conducted on May 12, 2014

Charlie Wang Digital Director

Mindshare Interview conducted on May 7, 2014

Vincent Digonnet Executive Chairman, Asia-Pacific

Razorfish Interview conducted on May 5, 2014

RELATED EMARKETER REPORTS

China Mobile Payments: Dueling Technologies, Gigantic Opportunities

China Mobile Advertising: The Long Wait Is Over

CHINA DIGITAL AD TRENDS: MULTIPLE FORCES DRIVING GROWTH ©2014 EMARKETER INC. ALL RIGHTS RESERVED 17

RELATED LINKS

Admaster

AdsMOGO

Analysis International Enfodesk

China Internet Network Information Center (CNNIC)

comScore

Data Center of China Internet (DCCI)

Hylink Advertising

InMobi

International Data Corp. (IDC)

iResearch Consulting Group

KPMG

Pacific Epoch

R3 Worldwide

Sina

ZenithOptimedia

EDITORIAL AND PRODUCTION CONTRIBUTORS

Cliff Annicelli Managing Editor, ReportsBen Clague Chart Data SpecialistJoanne DiCamillo Senior Production ArtistNoah Elkin Executive EditorStephanie Meyer Senior Production ArtistDana Hill Director of ProductionKris Oser Deputy Editorial DirectorEzra Palmer Editorial DirectorHeather Price Copy EditorKatharine Ulrich Copy Editor

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