If ever you shed a tear for print or TV ad executives in Western markets, spare a thought for those in China.
While the internet has been eating into traditional advertising spending globally, the trend in China has been particularly dispiriting for the old-timers and ought to be eye-opening for the whiskey-swilling Mad Men of developed markets.
Internet outlets took the majority of Chinese advertising budgets last year with 58.1 percent and that's going to climb to 81.3 percent by 2020, according to estimates from Jefferies and iResearch. TV will fall to 14.4 percent and print's share of ad spend is set to shrink by 90 percent compared with 2010, they estimate.
This upheaval is being driven by rapid smartphone adoption, with more than 90 percent of the country's internet users connecting via mobile.
The New York Times made the point yesterday with a feature headlined China, Not Silicon Valley, Is Cutting Edge in Mobile Tech. For all the accusations that internet titans Baidu, Alibaba and Tencent are mere copies of U.S. counterparts, what Western advertising and technology executives are failing to see is the pace of innovation, adaptation and adoption in the China market.
Payments, shopping, news and of course social are all now dominated by convenient, cutting-edge mobile apps that literally put the internet in consumers' hands. The result is that not only are users spending more time online, particularly via mobile, but advertising executives both in-house and agency are realizing it and shifting budgets accordingly.
In her annual Internet Trends Report, Kleiner Perkins Caufield & Byers partner Mary Meeker points out the disconnect between where U.S. users are spending their time and where advertisers are spending their money. The mismatch is particularly stark for print, where companies are overspending, and mobile, where they are underspending.
Reliable data on time spent by users are hard to track for China, yet the fact that the internet is now garnering more than half the country's advertising revenue indicates that executives there are far more informed on where to find the eyeballs.
Jefferies analyst Karen Chan points out that China's growing adoption of programmatic buying -- where ad placement is automated in a process akin to flash trading -- means that advertisers will enjoy more efficient use of their budgets, which in turn will spur even more spending online.
As Western advertisers learn more from their Chinese counterparts, expect traditional media ad salesmen to go the way of jukeboxes and encyclopedia salesmen.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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