China’s CPI Plateaus

China-Cosumer Price Index-Oct-18

After four months of price increases, October’s CPI plateaus at six tenths above October 2017.  It is clear that, even if you remove February’s number as an outlier, consumer prices in China are nominally higher than they were a year ago, which puts a tinge of inflationary pressure into the equation.  It remains to be seen if the temporary cooling of trade tensions plays a role in lowering the CPI over the next couple reporting periods.  Sources: www.; National Bureau of Statistics of China

Chinese Big Media Seeing Big Growth

Chinese Media Value

Overall Chinese media is expected to grow 24% in 2018 as compared to 2016.  It’s a number that’s in sync with the growth of mobile phone penetration and usage we’ve reported elsewhere.  Entertainment and paid content, especially paid video content, are the drivers behind the growth and they are pulling significant investment dollars into video and live streaming plays in particular.  Sources: 2018 China Cultural and Entertainment Summit; Ent Group

Native Ads Pull!

Native v. Banner

The value of native ads – content ads the nestle into websites natural look and feel – is worth the extra effort required to make them integrate into the natural structure and style of the ad carrier. Data from a consumer survey by Sharethrough and IPG Media Lab used eye-tracking technology to measure user attention.  The data in our table shows pretty strong positive results in favor of native ads.  Consumers were far more likely to view a native ad than a standard banner and natives had the effect of increasing purchase intent and brand affinity.  Thirty-two percent “would share the [natural] content with a friend” as opposed to only 19% who said they’d share a banner.  Source: Sharethrough

Chinese In-App Use: Both Depth and Breathe

China Installed

We are always trying to illuminate the Chinese market for Western advertisers. Often the point is made about the sheer size of it – giant population, giant consumer class population and giant mobile phone penetration.  Today’s data adds another dimension.  It is not merely that there are many Chinese consumers on phones, it is a measure of their engagement represented by the average number of apps they have installed on those phones.  If apps installs can be used as a measure of engagement, then Chinese consumers are 8.4% more engaged with their phones than their US counterparts.

Conclusion: In-App advertising in China is both broader and deeper than anywhere else in the world.  Source: Smaato

Ride the Wave

Market Timing

An analysis by Singular sets a marker for advertisers.  It compares the timing of marketing effort in key app categories against actual consumer activity.  The result demonstrates that brands are often out-of-sync with the consumers they are trying to influence and they are often spending more money for that influence.  Example: Productivity apps seem to be spending more acquisition money from July through November though consumers are focused on productivity apps in February.  Sometimes advertisers are off a little, other times they are off by a lot.

“Ultimately, what’s clear is that macro trends like seasonal holidays drive consumer behavior, but marketers often try to drive trends instead of riding them.”  Source: VentureBeat

And the Beat Goes On

China-Retail Sales 0ct-18

Sitting a tinge over the 13-month average, retail sales continues its monthly increase, a pattern that has been consistently upward ever since we have been watching.  Of course, we have been watching during the single fastest, largest middle-class growth period in history.  That coupled with the emergence of mobile communications and a government that committed to a consumer economy has made the consumption story what it is.  Source: www.; National Bureau of Statistics of China

Consumption among Chinese Consumers Expected to Accelerate

Private Consumption Projections

The reason we maintain our interest in cracking the Chinese market is represented in this chart.  Projected growth of private consumption, that is, consumer spending in the world’s second largest economy, is expected to reach $6.5 trillion in the next couple years. Chinese consumer consumption will grow from 34% to 43% the size of US consumption.  Source: Boston Consulting Group; Economist Intelligence Unit

AI: For Better or Worse


AI marketing is the future.  But that future both scares us and tantalizes us.  On one hand we hear of malevolent AI data manipulation that targets us to send ads for products in which we have no interest.  We see it as an intrusion into our digital life when we get email ad for a product you have already purchased.  It’s annoying.

By contrast, when the Netflix ‘loading…” message goes away and you are served choices that reflect your viewing habits, it’s a good thing.  Salesforce did a study that found “76% of consumers expect companies to understand their needs and expectations.”

One view is that content personalization means we will never see ideas or products that we would benefit from seeing even if it isn’t something we might choose.  Does the positive side of AI content manipulation keep us in our silos the way our choices of news channels does? Is that a good thing?  Source: Forbes

October Slowdown

Carrier Data - Oct2018

Growth in Chinese smartphone adaption slowed to 5.5 million new subscribers in October, the weakest growth seen in one month since a slowdown in the summer of 2017.  As a point of comparison, the 12-month run rate sits at over 10 million per month.  Still, we are talking about a country with more than 1.2 billion advertising-ready devices and an 80% penetration rate, so what is a million fewer here or there?  Sources: China Mobile, China Unicom, China Telecom

Winners: Mobile & Video

Projected Ad Spending

The latest data on programmatic ad spends support past projections that growth will continue.  These data say that programmatic will increase 76.5% in the next four years.  And they see strong RTB-based spending, particularly when private market placements (PMPs) are included.  PMPs are bound to increase in this environment where brand safety and fraud are concerns because they “take advantage of auction-based pricing while knowing with whom they’re transacting.”

For the first time, Magna Global’s survey reports mobile device ad spending and video format ad spending are both in excess of 50%.  This milestone recognizes the migration of people from desktops to mobile and where their attention is.  Source: AdExchanger