A Few Insights into China’s Advertising Market in 2017

Media investment group GroupM recently announced that global advertising expenditure is surged to reach $547 billion in 2017. China and the US will account for half of all the net growth, with China taking a narrow lead. Expenditure on advertising in China is predicted to reach more than $86 billion, an increase of 7.8% from 2016. GroupM stated that the growth was mainly contributed by a combination of consumer confidence and increasing urbanization of China’s populace. However, digital advertising spend is expected to fall slightly – from 29.5% in 2016 to 21.5% in 2017.

Despite a slight fall in spend, strong growth will be seen in the digital advertising in China. According to market research company Statista, the size of the digital advertising revenue in China will be up to $44bn in 2017, the biggest share of which is online search at more than $30bn. This trend shows no signs of stopping in the near future, with search ads substantially occupying larger share than any other kinds of ads such as video and banner ads, social media advertising, and classifieds.

And recent reports from Magna and Zenith also indicate that China’s advertising growth will continue to outpace other large international markets and that digital advertising spend will finally exceed TV ad spend in 2017. Researchers also predict that mobile will take up nearly all of the global advertising growth and that social video will be a major driver of mobile’s growth. In 2016, mobile ad revenue in China began to outrank that of desktop for the first time, at approximately $23billion to $21billion. The mobile and desktop share is predicted to be $35 and $20 billion respectively in 2017, and $71 and $17 billion by 2020.

Here we have summed up some of the top trends that will shape China’s digital advertising landscape in 2017:

Bots follow the money. Currently, more budgets are injected into mobile advertising. About 59.5 percent of Google’s net global ad revenues will come from mobile Internet ads in 2017, up from about 45.8 percent in 2015. By 2018, nearly three-quarters of Google’s net ad revenues worldwide will come from mobile ad placements. But the dynamic surge in mobile traffic will also lead to more fake views and clicks. As a result, there’s a risk that mobile ad fraud may run wild in 2017.

China’s rapid expenditure growth on mobile advertising. The U.S. is currently the most valuable ad market in the world and it continues to grow at a healthy speed, but that growth pales in comparison to China’s staggering expansion.

Consumers annoyed by online ads. Data suggests that online advertising isn’t well received by consumers. Of the 3,200 internet users surveyed in a recent study, 92 percent said that they’d consider using an ad blocker, and 62 percent said they were annoyed by pre-roll ads. In 2017, it will be a higher priority to place ads in a more entertaining and less intrusive way to avoid annoying viewers.

Programmatic advertising continues to dominate digital display advertising. In 2014, only less than 50 percent of advertisers will purchase digital display advertising either programmatically or through an API. Just two years later, approximately 67 percent of ad buyers will go for digital display ads. Programmatic TV will become a more feasible option by automating ad buying for its high cost efficiency and precise targeting due to a data-driven approach. However, facing the threat of fake traffic for online ads, ad fraud could become a hurdle for TV advertising going digital.

Niche players may overperform large players. While large ad companies are increasingly adding more functions to provide ad buyers with a one-stop marketing channel, market players are looking for and advance in the opposite direction, where they wish to have an open platform that can accommodate best and various solutions. Under the backdrop of such a dynamic market, there is a need for niche players who can respond quickly and continuously improve their solutions based on new requirements to delve into the digital advertising, which is something that larger slower players are less likely to do.