24 | Magazine World | April 2007 www.fipp.com
China
Advertising
8 play a major role in shaping lifestyle interests, tastes and
leisure activities for the adult, professional middle classes
China fashion magazine category metrics:
who are aggressively cultivating hobbies, brand preferences Annual ads, circulation and page-count growth
and new consumer values. Even more encouraging for ad-
driven magazine businesses is the advantage magazines hold
2003-2006
as an advertising medium. Research among middle- and
upper-middle-class adults indicates that nearly 60 per cent Ad growth* 38%
of readers find magazine advertising credible; nearly three
Page growth** 31%
quarters report actively reading magazine ads, while less than
half regularly open or click on online ads.
Circulation growth*** 15%
Comparing the cost structures of circulation-driven
and ad-driven leading titles further reinforces the latter's
Source: Media Pacific research
attractiveness in a supply-based publishing market. Table
* estimated annual growth in net annual ad revenue
2 shows leading ad-driven titles derive nearly 90 per cent of
** estimated annual average-issue page growth
revenue from advertising. With low subscription rates and
*** estimated annual average-issue circulation growth
moderate advertiser focus on circulation, publishers can
Table 1
control print and production costs, meaning highly attractive
margins. In the near term, China’s ad-driven models should
continue to generate juicy profits for leading magazine brands
Table of models: Economics of two leading titles
and publishers; this continues to draw new entrants into
(% per issue revenue)
crowded categories – fashion, business, IT, automotive.
Circulation-driven Ad-driven
leader leader
Ad-driven magazines: Don't
leave readers behind...
Circulation revenue 62% 12%
Ad revenue 38% 88%
Although ad-driven models appear to be here to stay as the
cornerstone of China’s magazine industry, shifting reader
Total revenue 100% 100%
behaviour and media choices mean that longer-term success
and the next phase of print-media opportunities require
Print and production 63% 23%
a much closer link to reader interests, usage patterns and
Gross profi t 37% 77%
segmentation than many publishers are pursuing today.
As Table 3 shows, China’s budding middle classes haven't
Source: Media Pacific research and analysis
given up on print: they’re spending more time with magazines
Table 2
than they were five years ago. But they’re spending even more
time online – more than twice as much as five years ago and
more than 10 times what they’re spending with magazines. At
Where Chinese readers are spending time
the same time, our research shows readers developing clear
(Average hours per month)
preferences for how, why and in which information categories
they use magazines versus online media.
As China’s readers are aggressively exploring new media
2001 2006
choices, advertisers follow suit. Although magazine ad
Time with magazines 4.6 5.9
spend continues to climb impressively, its share of total
ad spend remains relatively flat. Meanwhile, ad buyers are Time online 32.8 72
steering toward the internet, new outdoor media and radio
Source: CNNC, Media Pacific research
at well over double magazine-growth rates. (See Table 4)
While ad-driven titles continue to rely on brand, perceived
Table 3
reach and category relevance to hold their ad-budget share,
many of their online counterparts are starting to deliver
data-backed accountability. Performance-based advertising
Where ad spend is shifting
programmes offered by search engines and online ad networks
mean that advertisers can pay-per-click with an increasingly
2004-2005 % Total '05 ad
clear picture of who is clicking. So, circulation may not drive
growth spend
revenue growth for Chinese publishers today or tomorrow, but
Magazines 20.9% 2.3%
ad-driven players will want to get much closer to their readers
in order to remain top media brands in a fast-changing, more
Newspapers 2% 15.6%
accountability driven market.
Online 85% 3.1%
Outdoor 75% 4.6%
Radio 40% 1%
Jeff Sprafkin is managing partner at Media Pacific Limited, a
China-based research and consulting firm specialising in the
Source: Media Pacific research and estimates
media industry. www.media-pacific.com.cn Table 4
P24-25 CHINA AD.indd 2 28/3/07 13:56:01
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53