Same Old, Same Old

china monthly retail

As long as the Chinese consumer wants to keep spending, these numbers will keep rising and the those of us trying to sell products to them have fertile ground to plow.  For those companies not selling into the second most active and still fastest growing consumer market in the world, you are missing an opportunity.  Source: Trading Economics; National Bureau of Statistics, China

Mark June 2017 as a High Point

china caixin non-manu

June marks the highest Index we have seen in the two and half years we’ve monitored China’s service sector.  The entire time it has remained comfortably above the magic 50 line that indicates a positive view of the future.  A secondary significance is that manufacturing, which also remains positive, is giving up some space in the Chinese economy to non-manufacturing forces, a sign of a more mature economy.  Source: Trading Economics; National Bureau of Statistics, China

Programmatic TV Ad Spend to Triple

us programmatic TV spend

Programmatic TV ad spending is projected to triple by 2019 from the expected $1.13 billion for this year according to eMarketer. Though it is only one advertising medium, TV is the last that will succumb to the lures of programmatic because it is the richest, most entrenched medium.  To provide a sense of the hill to climb, the $1.13 billion projected for this year is only 1.6% of the $72 billion in total TV ad spend expected for the year.  Still, programmatic will grow. Source: eMarketer, CNBC

Full Stop

china mobile carriers

China’s mobile subscription base has reached its limit – one billion-ish.  June 2017 saw a mere 231,000 new subscribers.  To put that in perspective, June 2016 saw monthly growth of 21,666,000 new subscribers.  The big drop-off began in January of this year when the monthly gain was around six and half million compared to December where we saw the last monthly in the twenty one million plus range.  Even the coming of 5G in a couple years is unlikely to expand subscriptions. The Chinese mobile phone business is now essentially a replacement market.  Sources: China Mobile, China Telecom, China Unicom

The Winner: NBCU

top ten

Advertisers have their natural adversarial grudges when it comes to publishers that make their jobs harder by, for example, dividing programmatic from direct buying and by imposing restrictions on how buying can be done for one category or another.  With that in mind, the folks at AdExchanger created a list of the top 10 publishers with which advertisers and agencies like to do business. They make the process easiest and most transparent. Note: Facebook and Google were not included because they are Facebook and Google.  Source: AdExchanger

Follow the Money

projection consumption growth

If one is to follow the money over the next five years, there are two places where consumer consumption is projected to grow significantly, the US and China.  These are the numbers that consumer products companies need to watch as opposed to overall GDP growth or decline. The overall US economy is growing modestly and the Chinese economy is slowing, or more accurately, coming back into the range of normalcy, but both are expected to add trillions in consumer spending and that is all that matters to brands looking for sales.  Source: Boston Consulting Group

Chinese Consumers: Pent-Up Demand Still a Factor

consumer response

In our ongoing attempt to understand Chinese consumer behavior we note a Kantar Media survey of 1,067 Chinese adults that reveals a strong, positive connection to brand advertising.  In all cases Chinese consumers are far more likely to respond to advertising that speaks to them than are consumers from the rest of the world.

Our theory as to why the difference is so pronounced is that Chinese consumer desires represent a hangover from the years of pent-up demand dating from the formerly closed economy. Even five years ago it was all so new them. They are more sophisticated today, but still, they enjoy the hunt for stuff.  For advertisers, these numbers only mean good things; products that are exposed to Chinese consumers are more likely to be responded to than in our more mature, domestic markets.  Source: WARC

Evidence Supporting the Logical

top 5 advertisers

A new breakout of the top advertisers by number of placements and category of advertising offers no surprises.  Money management firms veer toward native ads because they have more complex products requiring deeper explanations.  The logic says that if they are able to blend into the natural content of the audience supplier they are likely to communicate more effectively.  Meanwhile, consumer products companies are likely to see mobile and video as their best way to reach a broad audience with their message.  Source: MediaPost

Morgan Stanley: China’s Consumer Economy Will Continue to Grow

 

morgan stanley

A new study by Morgan Stanley affirms an idea we have been positing for some time; smaller cities in China is where future growth lies.  Their analysis projects “China’s smaller cities [will] fuel a US$9.7 trillion consumption market in China by 2030.”  That will happen because of steady increases in disposable income in those markets.  Aside: Those ‘smaller’ cities are often home to two or three million people, such is the magnitude of China’s population.  According to Morgan Stanley these cities represent 59% of the nation’s nominal gross domestic product. Source: Business Times

The Hens Come Home to Roost

programmatic ad buys

We have been writing about the need for new levels of transparency in the programmatic ad space. It seemed clear that if demand side players believed they were not benefiting from their budgets, they would stop playing.  These year-over-year numbers may be the first evidence that advertisers are backing off.  The ad placement numbers were down 12%.

Todd Krizelman, MediaRadar’s CEO and co-founder, and author of the report notes, “…the near-constant drumbeat of concern over brand safety and fraud in the first six months of 2017 has slowed the tide. There is more buying of direct advertising, especially sponsored editorial, and programmatically, there is a ‘flight to quality.”