Huang Wei, chairman of Power Stream, posted an article yesterday, saying brands spent merely a total of 500mn Yuan (about $81mn) on mobile advertising in 2012, 0.2%of the total ad spending in China, or 1.3% of online ad advertising. After five years in mobile advertising business, Huang concluded that brands didn’t see existing mobile advertising methods had a positive effect on consumption. (Article in Chinese)
Mr. Huang also pointed out that,
- The top 100 conventional brand advertisers don’t spend on mobile ad regularly, consistently or with a large scale.
- The top three mobile media, Mobile Tencent, Mobile ifeng and Mobile Sina, each make 30mn – 50mn Yuan ($4.8mn-8.1mn) on brand advertising in a year.
Huang blames mobile ad formats that are either traditional or too fancy to work out. “I talked with a provincial general manager of Cola Cola, he thinks so far the most successful mobile ad is the text interaction through the phone number printed on bottle caps”, Huang raised an instance.
iResearch, a third-party research agency, released some numbers (article in Chinese) earlier this month, saying the mobile advertising market in China would be 5.52bn Yuan (about $890mn) by the end of this year, ten times of Huang’s estimate. Commenting on those big numbers, Huang said, 90% are commissions from app downloads. Ad agencies receive 2-5 Yuan for every download and activation of an app. The iResearch number does include app-related marketing, downloads, in-app ads and the like. The total app downloads in this year would be over 3 billion, iResearch said.
Mr. Huang doesn’t think the app-driven model can last, saying it’s in decline and will go down to where it should be. But it is a business many mobile advertising agencies are doing on.
I learned from AdSage, a mobile marketing agency founded in 2007, that what most developers or app advertisers care about is how many new users they can get. They’d prefer to pay much higher a price for a user rather than impressions or click-throughs. Mobile game developers are major clients of this user-acquisition service, as they really need new users and they are the ones who have already monetized the mobile and who’d like to pay for marketing.
Personally I’d prefer to see the whole market based on the bigger numbers. Think about mobile search. A former staff at its mobile search team told me that Baidu made 400mn yuan from mobile in 2011; target for this year is over 1bn yuan. Assume it has 50% of the mobile market share — Baidu claimed its share passed 50% in April, the total market could be around 2bn Yuan, four times of the brand advertising by Mr’s Huang’s definition. And, it’s also an early stage for mobile search, industry people agree that different services and business models need figuring out for the mobile. So do mobile brand advertising and advertising in general.