China’s media inflation rate will be led by digital mobile media and OTT in future as the popularity of streaming services and wider access to 5G connectivity continues to rise, according to a report conducted by independent consulting firm R3.
The 2020 China Media Inflation Trend Report highlights that as of June 2019, 61.2% of the total population, or more than 99% of China’s mobile users, were netizens and that digital has become the main focus for advertisers when it comes to investment.
It’s expected that digital media will account for 63% of advertiser media spend in 2019. Meanwhile, 23% of media spending will go to TV, with radio coming in third with only a 4% share. According to the report, TV and radio media investment will shrink in future, but TV still occupies a very important position because of loyal audiences.
More than 80% of advertising revenue in digital media came from four major digital conglomerates; Baidu, Alibaba Group, Tencent, and ByteDance. ByteDance achieved a 213% increase in terms of advertising revenue in 2018, accounting for 12% of revenue for the digital media industry. The company has also showed a 23% increase in revenue in H1 2019.
In contrast, traditional media has continued its downward trend, with newspapers taking the biggest hit dropping to -30.6% growth in media investment in 1H 2019. Dwindling readership has resulted in publishers facing permanent shutdowns and content overhauls, further making print unfavourable with advertisers.
“Rate cards for mobile media, OTT, OOH, and radio will cap at 10% next year, despite the media market slowing to 2.8% in 2019, a decrease on both Y2018 and Y2017,” said Sabrina Lee, Managing director of R3 China.
It seems that only mobile media inflation rates will experience an increase in the coming year, from 8% in 2019 to 10% in 2020.
Looking forward, all short video apps and news feeds will see up to a 10% increase in media inflation in Y2020 as these platforms become a staple for advertisers.
Lastly, the inflation of radio and OOH media will increase in tier one, two, and three cities as commuters in China embrace large subway networks. In 2019, Beijing introduced 5G connectivity across its entire subway network, encouraging people to consume more online mobile media during their journeys.