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October 2007 ONLINE COMMUNITIES Crossing the chasm WILLIAM BAO BEAN SOFTBANK CHINA & INDIA HOLDINGS
China advertising revenues US$25.8bn in 2007 Internet and Search only 4.3% of total “publisher” intake Note:  Excludes agency fees Source:  SBCI, GroupM, Company reports, National Bureau of Statistics of China, Zenith Optimedia
China Internet advertising and search revenues Units:  US$ millions Note:  Excludes agency fees Source: SBCI, Company reports
Opportunity:  Communities 69% of Chinese youth use social networking sites Only children of only children Chinese youth have 37 “net” friends vs 18 in the US Source:  Microsoft/MTV Circuits of Cool Project 2006/2007 (Millward Brown Sadek Wynberg OTX)
Online communities are where its at…where are the advertisers?  Online advertising spend in 2007 will hit US$1.17bn Online communities capture <5% Source:  SBCI, Company reports
Opportunity:  Music 57% only download/listen to music online vs 32% in US 72% have played music on an MP3 in the past month 39% have downloaded and saved a song to their phone in the past month 63% have illegally downloaded music in the past month Only 6% listen to music on the radio vs 20% in Asia Only 8% watch music videos on TV vs 19% in Asia Ad supported music in its infancy but growing fast Source:  MTV 15-35 year old urban youth April 2007 (Synovate)
Opportunity:  Games Online gaming spend in 2007 will hit US$1.28bn China has 40m gamers, only 21m of whom pay 81% between 18-30 years old, female players on the rise 71% have high school education with 27% holding BAs Gamers’ favorite promotions include 57% for free trials, 50% in-game treasure hunts and 42% game master gifts 64% of gamers play free games Ad supported gaming gaining traction IDC, CGPA 2007
Opportunity:  Video Youth in China spends time differently than the US TV content in China not compelling… … and the most compelling “voting” shows taken off of during prime time Ad supported video in its infancy but growing fast Source:  Microsoft/MTV Circuits of Cool Project 2006/2007 (Millward Brown Sadek Wynberg OTX)
Video case study: Tudou Tudou has 47% share of the China online video market Tudou sees 15bn minutes per month vs 3.5bn for YouTube Tudou’s average session is 40 minutes vs 15-20 for YouTube Tudou sees 4m unique visitors per day Tudou launching advertising platoform 20 major advertisers  Frame and “barn doors” Source:  Company reports, Hitwise
Crossing the chasm and doing it profitably Advertisers want: Reach customers where they are, not just through TV Avoid expensive Olympic TV ads Control ad timing, location, context, format, pricing model Coordinated campaigns across media and measurable results Agencies want: To become one stop shops for online services Offer search while still making a cut Publishers want: Monetize unsold inventory Raise pricing Avoid cannibalizing CPD sales Protect users from bad advertising
Thank You! William Bao Bean [email_address]   +86 139 1789 8171
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China Online Communities October 2007

  • 1. October 2007 ONLINE COMMUNITIES Crossing the chasm WILLIAM BAO BEAN SOFTBANK CHINA & INDIA HOLDINGS
  • 2. China advertising revenues US$25.8bn in 2007 Internet and Search only 4.3% of total “publisher” intake Note: Excludes agency fees Source: SBCI, GroupM, Company reports, National Bureau of Statistics of China, Zenith Optimedia
  • 3. China Internet advertising and search revenues Units: US$ millions Note: Excludes agency fees Source: SBCI, Company reports
  • 4. Opportunity: Communities 69% of Chinese youth use social networking sites Only children of only children Chinese youth have 37 “net” friends vs 18 in the US Source: Microsoft/MTV Circuits of Cool Project 2006/2007 (Millward Brown Sadek Wynberg OTX)
  • 5. Online communities are where its at…where are the advertisers? Online advertising spend in 2007 will hit US$1.17bn Online communities capture <5% Source: SBCI, Company reports
  • 6. Opportunity: Music 57% only download/listen to music online vs 32% in US 72% have played music on an MP3 in the past month 39% have downloaded and saved a song to their phone in the past month 63% have illegally downloaded music in the past month Only 6% listen to music on the radio vs 20% in Asia Only 8% watch music videos on TV vs 19% in Asia Ad supported music in its infancy but growing fast Source: MTV 15-35 year old urban youth April 2007 (Synovate)
  • 7. Opportunity: Games Online gaming spend in 2007 will hit US$1.28bn China has 40m gamers, only 21m of whom pay 81% between 18-30 years old, female players on the rise 71% have high school education with 27% holding BAs Gamers’ favorite promotions include 57% for free trials, 50% in-game treasure hunts and 42% game master gifts 64% of gamers play free games Ad supported gaming gaining traction IDC, CGPA 2007
  • 8. Opportunity: Video Youth in China spends time differently than the US TV content in China not compelling… … and the most compelling “voting” shows taken off of during prime time Ad supported video in its infancy but growing fast Source: Microsoft/MTV Circuits of Cool Project 2006/2007 (Millward Brown Sadek Wynberg OTX)
  • 9. Video case study: Tudou Tudou has 47% share of the China online video market Tudou sees 15bn minutes per month vs 3.5bn for YouTube Tudou’s average session is 40 minutes vs 15-20 for YouTube Tudou sees 4m unique visitors per day Tudou launching advertising platoform 20 major advertisers Frame and “barn doors” Source: Company reports, Hitwise
  • 10. Crossing the chasm and doing it profitably Advertisers want: Reach customers where they are, not just through TV Avoid expensive Olympic TV ads Control ad timing, location, context, format, pricing model Coordinated campaigns across media and measurable results Agencies want: To become one stop shops for online services Offer search while still making a cut Publishers want: Monetize unsold inventory Raise pricing Avoid cannibalizing CPD sales Protect users from bad advertising
  • 11. Thank You! William Bao Bean [email_address] +86 139 1789 8171