ilevel taxi.jpgFocus Media, a US-listed advertising company, seems to have struck a gold mine in China with its hi-tech advertising system.

Anyone who has visited China's big cities recently will have noticed the proliferation of LCD screens in public places showing advertising clips. This so-called out-of-home advertising (OHA) market is big business for Focus Media, which recently reported a 75% rise in year-on-year revenues to $58m.

Focus Media, which held an IPO on Nasdaq in 2005, claims to be the leader in China's OHA market with 90,000 screens strategically installed next to elevators in in shopping malls and office buildings. In addition, it has 40,000 in-store LCDs, 124,500 advertising poster frames that are installed inside elevators, and 200 outdoor LED displays in Shanghai.

But Focus Media is not the only player in this fast-growing market. Jiangxi-based Bus-Online Media had raised over $35m in funding from an undisclosed group of investors for its advertising network that reaches more than 20m passengers on 10,500 buses in 27 Chinese cities.

Shanghai-based Cgen Digital Media Network, which specialises in in-store LCD advertising, closed a $24m third round of funding, led by Merrill Lynch Asia Pacific. Cgen has the exclusive right to operate in-store video in Carrefour hypermarkets. It has also teamed up with B&Q to establish in-store advertising in the Chinese stores of the UK home improvement chain.

Another LCD screen play, Digital Media Group has received funds from international investors led by US-based Oak Investment Partners. It sets up advertising screens inside metro systems.

Meanwhile, Shanghai-based Touch Media focuses on taxi-based LCD screens in Shanghai. I-level Media Group is also going after this taxi market and has the exclusive rights to operate LCD screens in 3,200 taxis in central Beijing — see picture.

There are 870,000 taxis in major cities across China and, if these firms have their way, soon you will not be able to fine one that does not have an LCD screen in the back of the headrest.

Because car ownership is still relatively low in Chinese cities, advertiser lovein-taxi systems. Not only is there a captive audience for the duration of the ride, but taxis are used predominantly by the affluent and middle class, the ideal markets for advertisers.

Analysts at investment bank Smith Barney estimates that China's outdoor ad market will expand at a cumulative annual growth rate of 16% over the next two years, outpacing the growth of the general ad market and TV and print advertising in particular.

In 2006, the market was worth $2.25bn.

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