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The Mobile Ad Boom Reaches China

Spend is weighted toward SMS/MMS for now

October 11, 2013

Mobile has long tempted marketers in China, but slow download speeds, a dearth of quality data available from third-party tracking and analysis services, and uncertainty about how to get started have constrained the channel. But 2013 marks a tipping point for marketers, according to a new eMarketer report, “China Mobile Advertising: The Long Wait Is Over.” The size of the mobile audience—and the amount of time users spend on their mobile devices—is simply too massive to bypass any longer.

“For several years, marketers have preached that this is the year for mobile. However, it never was—but now, I think we might finally be there,” said Sascha Engel, deputy head of digital and national director of the digital lab at Ogilvy & Mather China.

eMarketer estimates that 28.5% of China’s population used a smartphone in 2012. We expect that percentage to continue to rise over the coming years, but the huge growth of the recent past seems likely to moderate a great deal. The total smartphone population will top half a billion by 2015.

Smartphone Users and Penetration in China, 2011-2017

The market is not merely large in terms of number of users, but also in terms of how much time those users spend online. Results of February 2013 polling by the China Internet Network Information Center (CNNIC) showed how deeply ingrained mobile use is in China. Nearly one-quarter of smartphone owners said they spent more than 4 hours on the mobile internet daily.

Given the size of the addressable market, the engagement of the audience, and the widespread availability of speedy mobile connections, it is no surprise that advertisers have finally had to step up.

Still, for all the growth of the user base, expenditure on mobile advertising is still relatively tiny. eMarketer expects mobile ad investment, excluding SMS, MMS and peer-to-peer messaging-based advertising, to grow sharply in 2013, from $288.9 million in 2012 to $722.3 million. We forecast strong growth for years to come.

Mobile Internet Ad Spending in China, 2011-2017 (millions and % change)

However, message-based advertising still makes up a significant chunk of all mobile ad spending in China. eMarketer predicts that more than 55% of mobile advertising dollars will go toward messaging—a level that will decline over time as mobile internet advertising expands. With message-based spending factored into the mix, eMarketer predicts that total mobile ad spending will top $1.61 billion this year.

Mobile clearly presents tremendous opportunities for brand advertisers. But the challenges are equally daunting.

The greatest obstacle is for advertisers to think beyond the ad itself—to see mobile as a broad range of touchpoints. “The device is in a sense an interaction unit. So whether it is consumed mobile media through advertising or whether it is playing a branded game or downloading an app, for example, they’re all part of an overall mobile marketing suite,” explained Ranjit Singh, CEO of mobile ad agency Fugumobile.

However, it is important not to take at face value the oft-repeated mantra that consumers in China will always engage with apps over other channels. There is a high rate of non-usage of downloaded apps.

Building expensive apps is not suitable for everyone. Brand advertisers must carefully consider their marketing objectives, and only if they are committed to long-term engagement should they invest the time and money required to build a customized app.

The full report, “China Mobile Advertising: The Long Wait Is Over,” also answers these key questions:

  • How large is China’s mobile ad market?
  • How much of mobile ad spending still goes toward messaging?
  • What is the size of the smartphone market in China, and how much will it grow?
  • How are advertisers using apps?

This report is available to eMarketer corporate subscription clients only. eMarketer clients, log in and view the report now.


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