Why do American Internet companies, like Facebook, want so badly to get into China?
The second-largest pool of advertising dollars in the world is there, and right now, Chinese companies like Alibaba and Baidu are scooping up the lion’s share of it.
Alibaba, China’s leading e-commerce company, and Baidu, which dominates Chinese-language search, will be the world’s third- and fourth-largest sellers of digital advertising by revenue this year, each with about 4.7 percent of the global market, according to new projections published on Tuesday by eMarketer, a leading research firm.
Two other Chinese companies, Tencent and Sina, will together account for another 1.21 percent of digital ad spending worldwide, according to the report.
Google will retain the No. 1 spot, with 31.1 percent of the $146 billion digital ad market worldwide in 2014, and Facebook will remain second with 7.75 percent of the market, eMarketer said.
Over all, total marketing dollars spent in China this year across all media — digital, broadcast and print — will be $63.8 billion, second only to the United States at $180 billion, according to a separate eMarketer report last week.
Digital ad spending in China this year will be $23.7 billion, the researchers predicted. About 27 percent of that will be on mobile devices, placing the country second only to the United States in both digital ad spending and mobile ad spending. Most of the spending in China is taking place with the homegrown companies, particularly in mobile, where Alibaba and Baidu are powerhouses.
Dan Marcec, a spokesman for eMarketer, said that advertisers had been slow to adjust to China’s rapid growth in mobile users, but are now catching up, increasing spending on mobile ads by 600 percent this year.
The research firm predicts that total digital ad spending in China will increase by 30 percent in 2015.