The Internet is now officially king in advertising

Google is a household word all over the world, probably even in the fields of agriculture here in Tianjin. Gone are the libraries, gone are the people who hand down ancient practices. Today if you want to find out something, you go to the Internet. There really is no avoiding the implications or the sheer need for such a creation. However, the Internet has created a power of its own. Bringing down newspapers and magazines, supporting huge networks of people, and creating giants who control information, the power has become demanding.

There is a huge gap between demanded space for advertising and the gigantic supply, which reaches almost anywhere you look. This gap is a gaping hole that is creating problems for the industry as a whole to move forward. The gap is being filled by rather intrinsic methods and most people don’t understand how this is being done or how this will effect them. To put it modestly 92 percent of young adults believe behavior tracking is against their needs for common practice. This is becoming a big problem not only in America but also here in China. The reason being is that most people do not understand what this means. Now the ability to generate results based on sex, location, and age, people are starting to become wary as to where this new power is taking itself.

If you put advertising into the mix, which is the sole model for growth of all media, and then take this in terms of the Internet, only 8 percent of all people on the Internet account for 85 percent of all ad clicking now down by half through this year alone. Once the model for tracking, clicking is becoming outdated and new methods of cookie tracking are in force and taking hold. Making your online traffic all the way through to brick-and -mortar purchase key elements for profiling.
Who is King? Display, Search, …Print?
The internet accounts for over 50 billion dollars in advertising every year, and continuing to grow, while the US alone accounts for 20 billion of that. Premium online ads are going up 32 percent year over year with no end in sight. Here in China some sites are so heavily overloaded with advertising you wonder what content is actually being provided. However China also puts things very much in perspective for advertisers. This is because for brick and mortar stores, the print media is still the most effective. The Internet has created a strange void between national advertisers and your corner bakery. That is the reason so many companies are popping up, seemingly proving with very little results that advertising is effective and seemingly able to drive traffic to your store.

This is not stopping the Internet in China. Sina, China’s leading Internet portal is expected to grow by at least 35 percent in this year alone. This is like nothing else around the world. The reason being is that Asian countries are dominated by display advertising, well over search. Display here is expected to grow by 60 percent through the end of 2010. If I were a surfer, I would call that a dangerous reef.

The good thing is that display advertising has found a home and that is on social community sites. But social community sites only hold about 15 percent share of all online advertising. The dominance comes from search engines. Baidu up from $100.50 to a high within the last fifty two weeks of $439.90 is now garnering new power as it integrates its new search results system, or the Pheonix Nest System. According to Google CEO Eric Schmidt, “Five years from now the Internet will be dominated by Chinese-language content.” This might be a free pass for Baidu to lead the way search is created and delivered to the world, while Google focuses on its operating system and mobile technology.
My phone is their life!
Actually now HTC, which makes all the nine different Google Android powered phones, has launched its new Quietly Brilliant ‘YOU’ ad campaign. They promote that, “You don’t need to get a phone. You need to get a phone that gets you.” They aren’t doing this just to impress you with your new little toy. This is again an advertising dominated strategy. Lenovo is even buying back its mobile phone business to pursue mobile Internet technology.

‘My tool the telephone is now the new ad rag.’ That is not exactly the intention most consumers would happily say is a bonus to buying a phone. But there are many people who would gladly see ads as helpful if it meant that in return they could lower their costs of purchasing the phones or even the service charges. This is hard to understand as most phones here in Tianjin are inundated with ad text message every time they hang up or send a message.

For some this doesn’t matter because they delete the messages every so often, but the new smart phones take several steps to acquire the message and that dirty little notifier that tells you that you have a message won’t go away till you look at the message. These days there is now too many able capabilities to deliver full screen MMS messages to your phone while your phone is idle. Therefore that is the first thing you see when you click your phone on from the black screen.

Like the movement in the US to stop dinner time telemarketers, I hope there are movements to remove these developments. Although nifty, after a while, most noticeably annoying. This is a story where again the percentages are low and most people, if they had the chance, would never opt-in.
Hey executives, I’m my own company…
There is a way to utilize the Internet to your advantage. There are millions of bloggers out there telling you how you can make money by monetizing your blog. With so many people in the know, how come there are still so few who actually really know? Well the bright spot is in the creative. This year there was a man in the US who made $83,000 broadcasting himself on the Internet. What he did was go to consumer product companies and said he would wear their company T-shirt for a day. Then he got out there, into the sunshine, and took videos of himself wearing it, then he got on Facebook and shared his thoughts, wrote something on his blog, kept everyone up to date on his Twitter, and basically became a one man billboard.

This is true in effect here in China. Thousands of girls are online on Taobao promoting the clothes that they buy. These skinny little things have themselves followed around by amateur photographers as they pose and primp themselves to beautiful pictures that the other girls online just simply can’t get enough of, and adore them for all those pretty little pink dresses and haute couture jeans they wear.

This is the new content, blogging and news feeds. Whether it is fashion, how to use makeup, or the news, social content makes up 40% of all online traffic outstripping community, communication, e-commerce and search. This content sharing is the premium space on the Internet and the giants are trying to control it. However, the giants are having a tough time trying to create fair competition in terms of asset prices in the difference between online sales and brick and mortar establishments.

People now go out shopping with the sole intention of window shopping and then returning to the Internet to buy. This creates even a larger supply side window as more people try to fill the small portion of demand accrued by the big retailers and girl’s shopping sites like Hers.
The ad focus is tried and true and will be
This is a very narrow view on the whole topic, because in reality the Internet population is spread roughly equally across all social economic backgrounds and age groups. This comes from more well developed Internet markets but eventually within all cultures this will take place. However, even with the wide swath of consumer interest, advertisers tend to pick on the younger more affluent customers. The power of the Internet should develop to accept this swath of population, unlike what magazines and the television have done.

In China advertising is very family centric with the young heavily influencing the older generation. The advertising tries to pull families together. But in social economic struggles, as is happening now, advertising should associate product with positive emotions of calmness rather than happiness. China’s advertising is still a little giddy and focuses much on the happy family unit a little too much. By diversifying the mother from the father from the daughter, advertising will become more effective.

For instance with the various super novas, Google is trying very hard to take over the mobile phone industry by attracting younger generations who understand more how to utilize smart phones. Apple is trying to come into China to reach the mature wives market with it’s capabilities to help the home become a place of prestige. Then Microsoft is focusing on the business end, mainly the older generation with their Software as a Service (SaaS) and helping the business person of the house create value in their businesses.
You are there, I will reach you
The Internet is the key to all of these changes and ChinaNet (CHNT) a full-service media development has already shown third quarter results in an increase of 21.7 percent. It seems strange that companies similar in the US are at such a disadvantage. The US currently wants everyone to pay for their content and only 50 percent of US citizens would be willing to pay a fraction for their media content. The US is currently thinking of using tax payers money to finance journalism. There are now even algorithms that generate story ideas, that then predict the revenue they will generate, and determine how much they are worth. Where China already has government regulation on content, the US is now stepping in to see whether this area needs regulation.

This could spell harm to the Internet. Recently there have been privacy hearing and briefings. This is mostly due to the adolescent age group that is now picking up the Internet heavily. The line between what adults use as content and what children explore is becoming more blurred. Especially here in China. In the US KidZui is a new web browser the maximizes parent and child computer time to connect and converse through shared content online. Here in China it is all too obvious that the children own the computer and the parents watch television. There is almost no interaction at all. High school students can spend endless hours after school staring at the computer while parents cook dinner, clean up and make themselves for bed. There is almost complete separation between the family members.

However, while the students are busy studying at school, the parents are busy developing their new business models around advertising. In the US 42 percent of SMBs have websites. In contrast to those that build websites the even smaller businesses advertise more. It is difficult to say whether this will come to Tianjin. Many of the smallest businesses advertise by using stickers or plasters. The small guy sees the need to advertise, or otherwise the family network is soon to run out. The Internet is seen as a domineering component in advancement. Small families with small time shops see traffic as the people who pass by their shop, not the people who see them as part of the local online community. It is the children in the family who are building these neighborhood bonds. So they are there, and how to maximize them as an integral part of the family business, most likely dismays them, let alone their parents.
That is mine, give it back
As for television in China, there will be $1.6 billion spent next year on China Central Television, which is an increase. There is no doubt that China will watch television in the future, but the dynamics of television are limited. This again only allows national television sponsors and foreign major influences to enter. The message will be clear, following the age old tradition, family first. The market is huge and the focus is limited, for this reason supply is low and demand is high, therefore higher prices. A good strategy if you are in the television business, but a bad buy if you are in advertising. There are alternatives but there are also other things taking place.

In the US there have been eight quarters of double digit drops for the advertising industry in newspapers. Here in China, newspapers are still easy to get, and much is the same online. For some reason, online newspapers are not cannibalizing the printed version. They are almost one in the same. It is like reading the printed version, simply transformed online. There is not an overload of spotted advertising and the screen is left resilient enough that you are free to browse your e-paper.

However, China seems to be one of the more outstanding economies when it comes to context. In most areas of the world, content is copied 4.4 to 15 times around the Internet. The same story copied over and over. So how does the Tianjin newspaper hold in there when the locals can find the same content on most probably their favorite sites, without ever going directly to the news channel site? The reason is that it really takes that much to reach that many people.

But in the US the FTC has claimed that newspapers have lost $20 billion over the last year. This is not happening in China at all. Newspapers are so easy to get and they come in morning and evening editions, and people have so much time to break open the paper, that advertising is still a very strong medium here in Tianjin.
Hey hey hey, you figure it out
Tianjin is not worried about advertising. In fact it is accepted and well reputed. The age old saying of breaking through the clutter is almost dust in the wind here. Clutter is a promise that people will notice. And yet people try so hard. Though compared to traditional advertising, product placement can arouse the least unpleasant feeling from the audience because it is naturally merged into the scenes of a movie or game and does not interrupt your enjoyment. Integrating commercials into games can create more influence to users because movie product placement is static while in games, it is interactive. When a user finds a new ad in a game in China for some reason he/she always plays, the first reaction is to not to ignore the ad but to click on it and see what bonus one can get by acquiring this product because such a product always possesses some properties that can give a hand in the game.

So advertising in China is well accepted. The rest of the world should watch as China takes over the first initiative to incorporate advertising into everything that is online. It is admired as well as empowering. The overwhelming presence of the fad will not leave China. The rest of the world can not leave these fads unnoticed. Millions of people are being attracted to seemingly simple advertising tools. Although they may be cloaked in games or cinema, it does not matter because this country prides itself on the incoming of gigantic pulls in seemingly unnoticeable emotions, aka joy.

Advertising is a giant, so it must have a purpose. In most countries critics cry out that there should be none. But the true to heart know that this will be here forever. Advertising will drive the economy in 2010. Advertising will be the first notifier for every industry that will once again re-emerge. However this time, advertising is no longer the indicator but the master. Google is trying to make their ads, “Bigger, Better, more Interactive. We’ll keep trying new things until we discover the ‘perfect’ ads.”

And this is all going to happen in a blink of an eye.

Referenced copy available upon request