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)