GroupM, an arm of the world's leading communications company,
WPP Group Plc, has teamed up with a Beijing firm to boost its share
of China's online advertising market.
Beijing Huang Yang Lian Zhong Advertising Corp (HYLZ) and GroupM
signed a joint venture deal yesterday.
HYLZ will have a controlling 51 percent stake in the venture,
which will be called GroupM Interaction, with GroupM holding the
remaining 49 percent.
"The reason for the joint venture is to better integrate online
media resources and serve our clients," said Li Qianling, CEO of
GroupM.
According to her, the venture was created to capitalize on the
rapid growth of China's online advertising market.
Statistics show that the number of Internet subscribers in China
rose by 18 percent last year to 111 million, which makes China the
world's second-largest online market after the US.
It was worth 3.1 billion yuan (US$387.5 million) last year, an
increase of 1.2 billion yuan (US$150 million) over 2004, according
to online market research firm iResearch.
"Cooperation with HYLZ will put us in an even stronger position
in the country," said Martin Sorrel, WPP's CEO.
Currently, HYLZ holds almost 10 percent of the online
advertising market, while GroupM has about 5 percent.
"It is a strategic move for WPP's long-term development here,"
Sorrel added.
China, as one of the fastest growing advertising markets in the
world, is already the fifth-largest market for WPP.
"We anticipate it will become our third-largest market by the Beijing Olympics in 2008," he said.
The group's total revenue in China is about US$500 million, with
GroupM accounting for a third of that.
But, according to Li, the online advertising business
constitutes only a small part of WPP's total revenue.
"With the establishment of the new venture, we will combine
GroupM's expertise and its broader range of international clients
with HYLZ's local experience," said Su Tong, chairman of HYLZ and
the president of GroupM Interaction.
(China Daily May 19, 2006)