What's behind China's slowdown?

As the world's third-largest advertising market after the US and Japan, China's advertising spending in 2007 totaled RMB312 billion ($43 billion). The figure, which included newspaper, magazine and television spending, represents a 9% over the year before. But in 2007, CTR Market Research said China's advertising spend stalled.

CTR market research, a joint venture between China International TV and TNS, said in 2007 China's ad spend had slowed from 22% in 2004, 18% in 2005 and 2006 to 9% in 2007. While still strong, the market is showing a downward trend.

Tian Tao, CTR vice president, says the 9% rate was considered a "historical slowdown" compared with the country's GDP growth of 11.4%.

"This is the first time the growth rate has dropped to single digits, and the first time the rate is lower than the GDP growth rate."

He explained that the shrinking ad spend were due to several factors such as marketers reserving money for the Beijing Olympics, weak spending from major industries, particularly pharmaceuticals and advertising spend on new media.

However data for the same period from Nielsen Media Research showed total ad spend for TV, newspapers and magazines increased 15% year-on-year to RMB441.5 billion with TV taking 82% followed by newspapers and magazines.

Despite the slower growth last year, CTR Market Research maintains promising outlook for China's advertising market in 2008. As marketers pour money into campaigns targeting the Beijing Olympics, CTR says total expenditures will grow by 13 percent.

In contrast with the performance of traditional media, advertising spending in new media experienced a robust growth last year, led by online advertising. In 2007, China's online advertisement spending grew by nearly 50 percent, to 11 .6 billion yuan.

Brigitte Lhomme from TNS Media Interlligence, a provider of advertising strategy, says the emerging field of new media is eclipsing the traditional market's share.

"The money is shifting to the new media, as we have seen, and print media has suffered the most."