Bill Bishop’s estimate of 2007 China Internet Advertising Revenue

Aiming to settle the discussion on this blog about Chinese Internet advertising statistics, Bill Bishop offers numbers he compiled from the annual reports of publicly listed Chinese Internet companies.

To Bishop, his numbers (shown and explained below) prove at most US$850 million in Chinese Internet ad revenue for 2007, significantly less than the US$1.3 billion (10 billion RMB) predicted by Nielsen Online.

Update on Nov 8 with context: Research firm eMarketer this week forecast spending on Internet advertising in the US will surpass $21 billion this year and double by 2011.

Anyone else have an estimate?

Based on his experience in the China market
Bishops was a cofounder of www.marketwatch.com and ran the consumer internet business, including ad sales, from 2002-2004, when we sold to dow jones for 500m. His current company, Red Mushroom, is doing Baobao Bengbeng, the kids virtual world, that will eventually have advertising.

Bishop criticizes Nielsen Online’s calculation method
“They are counting the number of ads they see, multiplying by some discount off of rate card, and extrapolating the size of the whole market. Unless they disclose what discount to rate card they are using, whether they apply it universally or have site-specific discounts, I think their numbers are not too credible. So many deals are barter, or, in the case of someone like China Mobile (regularly listed as one of the top online advertisers), gifts to keep China Mobile if the site has wireless services like ringtones, etc,” Bishop said.

warns that the current lack of data hurts development of China’s Internet
“Chinese publishers are hurting themselves by not working together to come up with legitimate usage metrics. In spite of the massive internet market here (172 million at last count), how many are desirable consumers for the big brands advertising online?” Bishop said.

offers an alternate calculation method
“I have been tracking the ad revenue for the public internet companies in the attached spreadsheet. The numbers are what have been reported thru q2 2007, then estimates (with the exception of the Baidu number) for q3 and q4. Even in the most bullish fantasies i don’t see how 1.2 billion is possible, barring a 30% rmb revaluation. I believe that 90%+ of online ad spend goes to the top handful of portals. Even if you assume that the public guys are only getting 70% of the overall ad pie, you are still looking at US$850 million or so for 2007, and that is very very aggressive,” Bishop said.

that has self-confessed shortcomings
“Yes, it is missing Google and Yahoo China revenue. I have no idea what Google china revenue is, but I would guess they are somewhere around a quarter of Baidu’s given their lower share, weaker distributor network, and less aggressive monetization tactics (they do not comingle ads in search results like Baidu). Yahoo China is also a total guess. I believe it is doing under 20m in real ad revenue,” Bishop said.

Bill Bishop’s underlying numbers (Click here for a full sized version)

Technorati Tags: Bill Bishop, China, comscore, Internet Advertising, Nielsen Online

Popularity: 5% [?]

Angel Cabrera pushes a Hippocratic Oath for business

Nice article today in the International Herald Tribune on Angel Cabrera, a friend who, as president of the Thunderbird School of Global Management in Arizona, has been pushing an ethics oath for business school students.

The oath:

Students at Thunderbird have voted to adopt a Professional Oath of Honor, which they helped formulate. Graduating students pledge to act with honesty and integrity, oppose corruption and exploitation, and create “sustainable prosperity worldwide.”

The rationale:

If executives are to have a functioning moral compass, Cabrera said, business schools have an important role to play.

“You may be taught right and wrong at home, like not poking someone in the eye, but you certainly don’t have conversations at the dinner table about stock options and backdating them, and is that good or is that bad,” Cabrera said.

Technorati Tags: Angel Cabrera, Hippocratic oath, Thunderbird

Listening to greatest hits queen (by WinAmp Windows Plugin)

Popularity: 4% [?]

China’s Internet rarely links to foreign websites

The world is not so flat after all!

Only six percent of the Chinese Internet’s hyperlinks leave China’s webspace.

The above chart was based on a study of 40 million external links on 5 million pages of 15,000 sites in China.

Professor Jonathan Zhu of City University of Hong Kong led this research into Chinese hyperlink behavior, which I came across on Tobias Escher’s excellent blog.

Escher qualifies the national/provincial distinctions based on a conversation with Zhu: “While this figure is more or less robust he tells me that the distinction between Home vs. Other provinces is still preliminary as it is based on geo-IP location. This might tell you where the server sits but not necessarily much about the “location” of the websites its been hosting. Therefore they are now trying to explore new methods including content mining.”

I corresponded with Professor Zhu, who said he would alert me when further results come out in a few months.

Technorati Tags: China, hyperlink, Jonathan Zhu, Tobias Escher

Popularity: 6% [?]

At last, fresh China Internet advertising statistics!

China’s Internet is extremely difficult to quantify

As I mentioned in a posting on why China’s web stats are so unreliable (government concerns) and another on the impact (heavy reliance on Alexa; banner ads are sold by the hour on major sites).

Nielsen Online noticed

They just sent over their latest statistical update on China. Not much detail, but the best I have seen!

with the size

China’s online advertising market will reach a value near RMB 10 billion this year, Nielsen reckons.

pace of growth

Based on their AdRelevance system, the report analyze on ad value, industry trends, advertisers activity, campaign and release that the ad value of 2007 Q3 reaches RMB 2.6 billion, grown 14.1% compared with 2007 Q2. 2007 accumulated ad value has reached RMB 6.6 billion, estimated full year value will be close to 10 billion or even more.

value of display ad revenue

Display ad value of each quarter this year are RMB 1.7 billion, RMB 2.3 billion and 2.6 billion respectively, The peak appears at September with RMB 1 billion ad value, which is the highest in past nine months.

sectors contributing

Accumulated number of advertiser and campaign are 2661 and 19049 respectively. Automobile, IT/Electronics, FMCG and Finance are top four contributors whose total ad value occupies over 60% of market ad value.

top heaviness of companies advertising

In past nine months, ad value of top50 advertisers share 47% of total market ad value, and 31% of total number of campaign in market. Ad value of big spenders, such as Faw-mazda, ING Group, Eachnet, Lenovo, Samsung, China Mobile, Nissan , are all exceed RMB 100 million.

and prospects for fast growth ahead.

* More integrated/cross-media marketing cases are accepted as effective.
* Holiday and New-year consumption are growing extremely fast.
* 2008 Beijing Olympics

Anyone know of better or fresher stats?

Technorati Tags: AdTech, AdTech Beijing, Beijing, China, Neilsen Online

Popularity: 4% [?]

Kent Lindstrom: Why Friendster refuses to localize for China

In China for AdTech, Friendster’s president, Kent Lindstrom (Current Friendster status: “I’m having fun in Hong Kong”.), told the conference why the site refuses to localize.

From Friendster’s position
Claiming to be largest social network in Asia Pacific and largest Chinese social network outside of mainland China, Friendster was launched in 2003. Current size: 50 million registered users, more than 2 million people join Friendster each month.

social networks are becoming

more global
Social networks are tending towards a few global players, like the three or so instant messenger systems. This is in part due to the fact that no community is an island. By the very nature of the world, someone in your network will have a friend across a border, even if you do not.

more standardized
Socialization has more similarities than differences around the world: People want to communicate. Unlike eBay or Internet commerce, there are few regulatory issues that directly address social networks. As for content, there are few culture-specific issues since users themselves create the content.

more mobile
People are always connected via mobile, on the other hand, mobile has been the Next Big Thing for the last two years. The mobile aspect will be a supplements to existing web-based social network issues.

more commercially useful
Outside organizations - music groups, political movements, companies - will increasingly tap the power of social networks to reach the 10s of millions of potential fans. There will be major impact on the former gatekeepers - record companies, party hierarchy, distributors - as fans open direct communication with those things they are passionate about.

more open
Social networks no longer see outsiders hacking their platforms as a threat. Instead, opening up and facilitating widgets and content only serves to strengthen the social network itself. This trend started two years ago and look set to continue.

which argues against localization for China (or elsewhere).
“Our expertise is listening to our members and they tell us that we need to be the Chinese language, but other localization is taken care of by our members.”

On anonymity in Friendster:
In response to a question about anonymity, Lindstrom said:
“The web is great at anonymity, but you are not anonymous on a social network. If you are on the web in a group of real friends, you are acting with a level of trust and responsiblity. Those things that are cloaked by anonymity are not done on a social network. Generally people use a social network to broadcast to 30 friends - unlike other kinds of broadcasting where you try to reach as many people as possible.”
He estimated that 95 percent of Friendster users were presenting their actual identity.

Bonus link: Check out the China photos Lindstrom took while visiting.

Technorati Tags: AdTech, AdTech Beijing, Beijing, China, Friendster, Kent Lindstrom

Popularity: 4% [?]

Beijing101: Humidifiers and Air Filters

Built on the rim of the Gobi desert and one of the most polluted cities in the world, Beijing residents are forced to take extreme measures to survive the winter, including facial cream.

Other necessary equipment discussed in this video are humidifiers and air filters. Winter life in Beijing is a bubble-boy existence!

Any tips further tips on surviving our first Beijing winter are most welcome.

This video courtesy of Seemsic (more on that later!)

Technorati Tags: Humidifiers, Air filters, Loic Le Meur, Seesmic

Popularity: 2% [?]

New York Times praised for going Open Source

Non-technical people:

Check out this link of fun old stories hacked out of the newly opened NYT site.

Techies:

The The New York Times and the International Herald Tribune (I formerly worked at both papers), have earned high praise for welcoming engineers into sections of their websites that were formerly off-limits.

The move - according to Yusuf Goolamabbas of Outblaze - means that parts of the website formerly under lock and key are open to all.

The NYT has figured out they are not in the infrastructure business and they gain no value by keeping the site close to their chest.

By moving it to an open source platform, they get a lot of street cred, other smart people looking at their system and learn how to work with a community. This might even help their business/editorial side learn about how to leverage the ‘wisdom of the crowds’

Other than CNET (which is a tech focused publication) I haven’t come across media publishing houses which get the religion of open source and how IT is not neccesarily a cost center

I think this is a pioneering move and the powers-that-be at the NYT need to be acknowledged for this.

Here’s the NYT developer’s blog and the IHT developer’s blog.

Technorati Tags: The New York Times, Open Source, International Herald Tribune

Popularity: 2% [?]

Jack Hidary: Turning the Big Apple’s car fleets Green

Thomas Friedman highlights, efforts by Jack Hidary, a good friend who recently visited us in Beijing, to turn New York’s car fleets green:

Take the New York City taxi story.

Two years ago, David Yassky, a City Council member, sat down with one of his backers, Jack Hidary, a technology entrepreneur, to brainstorm about how to make New York City greener — at scale.

For starters, they checked with the Taxi and Limousine Commission to see what it would take to replace the old gas-guzzling Crown Victoria yellow cabs, which get around 10 miles a gallon, with better-mileage, low-emission hybrids. Great idea, only it turned out to be illegal, thanks to some old size regulations designed to favor Crown Vics.

Recalled Mr. Hidary: “When they first told me, I said, ‘Are you serious? Illegal?’”

Friedman hopes that:

When the Big Apple becomes the Green Apple, and 40 million tourists come through every year and take at least one hybrid cab ride, they’ll go back home and ask their leaders, “Why don’t we have hybrid cabs?”

Go Jack and Smart Transportation!!

Technorati Tags: Smarttransportation.org, hybrids, Jack Hidary, Green Apple

Popularity: 3% [?]

Is Alibaba’s IPO price too high?

The Alibaba Group, one of China’s best known Internet companies, is expected to list a section of the company in November on the Hong Kong stock exchange. The part being listed is involved in B2B activities - linking buyers to sellers online - while their popular auction website, Taobao, will likely be listed later. The result of the listing has been the kind of hype not seen since 1999. Is the hype justified (and price)?

An experienced source…
In all the hype about the upcoming IPO of Alibaba, there are few more credibly positioned to speak about the company than Paul Woodward, founder of BSG Asia. BSG Asia is the only consulting business to focus exclusively on Asian B2B media and Paul has 20 years of experience in the region.

…with a view counter to the market…
To Woodward, Alibaba’s valuation is “extremely ambitious”.

…backed up by numbers…
Alibaba’s current valuation is 4 to 5 times that of the entire B2B market in China. At the current valuation running between HK$10 and HK$12 per share, the value of Alibaba is put somewhere between US$6 billion to US$7.5 billion. Compare this to Paul’s estimate of the China’s entire B2B market at US$1.4 billion in 2006 and $2 billion in 2007. (Also, the PE ratio of Alibaba would be a very high 90.)

…that imply “extremely ambitious” growth numbers…
“If Alibaba can maintain 50 to 60 times profits growth per year and keep it up, the current valuation could be reasonable. I do not think this growth is impossible, but it is pretty challenging,” Woodward said.

…but market craze and a desire to reposition the company…
“Alibaba wants us to see them as a general China Internet play, such as Baidu or Sohu, but they are only listing a B2B entity. If they can shift the perception of their company the value may hold, but this does present a downside risk,” Woodward said.

…may hold the stock’s value.
“I think the market will buy the stock.”

Woodward said that from a B2B perspective, the online hype has distracted attention from a key source of revenue in B2B media: Those hundreds of conferences organized across the region. (Alibaba does not organize any trade fairs.)

Online may be sexy, but industry events make more money…
Apart from Alibaba and Global Sources, where online revenue is extremely important, trade fair companies that focus on organizing exhibitions are doing very well financially. After just a few years of organizing events, Global sources has gone from zero to more than US$50 million per year in exhibition revenue. For Woodward’s BSG itself, 60 to 70 percent of billings focus on industry events.

…data is difficult to compile…
The market for trade fairs is, however, extremely fragmented, with many tiny companies that are hard to research.

…but the numbers are staggering for China…
Trade fair revenue is estimated at US$2.5 billion across Asia with 30 percent of it in China (US$759 million) in 2006

…with revenues heavily concentrated in events…
Of the B2B industry’s US$1.4 billion in China revenue in 2006, B2B trade fairs account for US$759 million, with US$350 million online and US$300 million magazines.

…growing fast…
China B2B trade fair revenue increased 33% in 2006 from a year earlier. Hong Kong grew 50%, due to opening of the airport exhibition center.

…concentrated in major cities…
Excluding Hong Kong, China B2B trade fair revenue comes 29% from Beijing and 26% from Guangzhou.

…but Macau presents a challenge.
Macau’s opening will create new opportunities, but will also draw away from other venues.

To see more data in Woodward’s slides click here.

Technorati Tags: AdTech Beijing, Alibaba, B2B, Beijing, BSGAsia, China, Global Sources, Paul Woodward

Popularity: 3% [?]

First Facebook Developer’s Garage in Asia

For those who can break themselves away from their newsfeeds for a day, Sriram Krishnan and some friends are organizing Asia’s first Facebook developers garage next Wednesday (October 24) in Singapore.

There’s a wiki and - of course - a Facebook group.

Technorati Tags: Facebook, Sriram Krishnan

Popularity: 2% [?]

UPDATE: YouTube blocked in China?

UPDATED March 17, 2008: YouTube now appears blocked in China once again due to the violence erupting around Tibet. See comments below for getting around the block. Good luck!

XXX

Oct 17, 2007 at 9:24am: Blogger.com is back up, but YouTube now appears blocked in China.

It is hard for this newcomer to follow the vagaries of the Great Firewall! It is also difficult to video blog on a blocked platform.

UPDATED: 16:50 There are now reports from Techworld and Transpacifica confirming the blockage on YouTube, but also saying that Flickr has been unblocked.

UPDATED at midnight:

Is the blockage in Beijing due to the opening YouTube’s Taiwan version? Here’s an excerpt from an AP story from today:

TAIPEI, Taiwan (AP) — Google Inc.’s YouTube said Thursday it has launched a version of the video-sharing site in Taiwan in its latest push to expand in foreign markets.

The site features locally produced content, including that from YouTube’s four Taiwan media partners, China Television Co., Sanlih E-Television Co., Lion Travel Service Co. and Taiwan Broadcasting System, YouTube said in a statement.

Steven Schwankert of Sinoscuba (and IDG News Service) is one of the few to dive into the issue in depth with this good summary of the situation.

How to get around the blockage? This from Shanghaiist:

We are getting really tired of this on-again off-again situation and may just whip out our credit card on Witopia for a personal VPN. Apparently it’s just US$39.99 per year and we’ve had quite a friends raving to us about it now. If any of you geeks out there have other fabulous ideas on how to beat the Youtube block, PLEASE get in touch with us at info AT shanghaiist DOT com.

Another fix to watch YouTube is HotSpot Shield suggested (with reservations worth reading) by Jottings from a Granite Studio

(Merci Krapax de Wuhan)

UPDATE: YouTube is no longer blocked as of October 31! Woohoooo!!!! That was a tough couple of weeks.

Technorati Tags: Beijing, Blogger, China, Chinalyst, Shanghaiist, Sinoscuba, Steven Schwankert, Witopia, YouTube

Popularity: 8% [?]

Kent Lindstrom’s 3 kinds of innovation

Here on trip to China Kent Lindstrom, president of Friendster, just described all Internet innovation as fitting into only 3 kinds:

1- A new technology (such as Bittorrent)

2- A new idea (such as PayPal)

3- An idea that was there all along (such as a video platform like YouTube)

Technorati Tags: Beijing, China, friendster, Kent Lindstrom

Popularity: 2% [?]