WPP, the world's biggest advertising agency, has acquired 70% of Beijing Century Harmony Advertising, a leading internet advertising firm, in a move which shows internet advertising is entering the mainstream in China.
Its easy to forget that traditional advertising is still relatively new in China, despite the forests of billboards now extolling western and Chinese brands.
The brave new world of internet advertising is newer still, but maturing fast, thanks to China's soaring internet population which, at 123m users, is second only to that of the US.
In 1998, China's internet advertising market was worth just 300m yuan but by 2004 it had reached 1.9bn yuan, according to this AsiaMedia story.
Based in Beijing with a branch in Shanghai, five-year old Century Harmony employs 93 people and had revenues of 13.6m yuan in 2005. Its clients include the recently-listed bank ICBC, Yahoo China and Li Ning, China's sportswear giant. Century Harmony will join WPP's Ogilvy & Mather Worldwide network.
Before western companies rush to post their billboards in China's cyberspace, its worth remembering that internet advertising is a grey area as far as regulation is concerned.
National legislation specifically focusing on online advertising has yet to be enacted in China, so the current regulatory environment is based on a 1994 national law governing traditional advertising and local rules that some cities have drawn up specifically for online advertising, such as the so-called Beijing Online Measures.
The latter require the content of online advertisements in Beijing to be checked by Beijing officials prior posting on websites, which I would have thought detracts somewhat from the dynamic nature of the new medium.
Of course, the internet transcends local boundaries so I'm not sure how they prevent "non-compliant" ads from outside of Beijing being viewed by Beijing residents.
A new national online advertising law, currently being drafted, might sort out the confusion. Thanks to the Beijing office of law firm Perkins Coie for the legal low-down.
Another example of the growing appeal of China's internet users for western firms, is Viacom's deal to provide TV and music content to Baidu, announced earlier this week.
Baidu is China's answer to Google and gets 250m page views a day. More on the deal in this New York Times article.
More on WPP's China strategy in this EngagingChina article.
Photo Credit: "Six Magic Ingredients" from Assignment Kunming by Ed Kaspar
