The Chinese Media EnvironmentA Framework for How to Win

Jesse GoransonSenior Vice PresidentNielsen

A Point of View on Chinese Media • The dynamics of Chinese TV are unique

– TV is foundational but can be expensive

• Digital is important, fragmented and developing– Overinvest and focus– Develop a social media strategy

• Mobile has great promise, and is important– Don’t waste your effort getting good at the wrong thing

Chinese TV Can Demand High Prices…

U.S.30 sec: $3.5M

CHINA10 sec: $8M

Source: http://media.people.com.cn/GB/40724/17270734.html

Demand for TV is Rising as Local Giants Rise

2007 2008 2009 2010 2011

OLAY OLAY L'OREAL OLAY L'OREAL

SANCHINE PHARM KFC OLAY L'OREAL OLAY

KFC SANCHINE PHARM KFC KFC KFC

GAI ZHONG GAI L'OREAL SANCHINE PHARM WAHAHA WAHAHA

COLGATE GAI ZHONG GAI WAHAHA YILI YILI

CREST COLGATE MASTER KONG MASTER KONG MASTER KONG

HUANGJINDADANG WAHAHA BISHENGYUAN BISHENGYUAN DALI FOODSTUFF

REJOICE CREST DALI FOODSTUFF SANCHINE PHARM SANCHINE PHARM

WAHAHA HUANGJINDADANG CHINA MOBILE CREST PANTENE

HUTONG PHARM CHINA MOBILE JIANGZHONG PHARM

JIANGZHONG PHARM BISHENGYUAN

Source: Nielsen CCData China AIS service, Brand Level, TV Only

Chinese Regulators Have a Consistent Philosophy on the Role of TV• Channels should not rank programs solely by ratings

• Programming should serve the public good: entertainment shows on satellite channels should be limited

• No commercials in TV drama series

China’s Online Ad Market Has Room to GrowOnline ad spend growth rate and % of total media 2010-2015e

Source: Zenith Optimedia, eMarketer

Social Can Be the ‘Surprise’ in the Marketing Mix

Simultaneous TV, Online and Mobile Usage Increasing

What screens are consumers using while watching TV? Shanghai, China, Q3 2011

Source: Nielsen China Shanghai 3-screen Panel, 2011, Q3

Adults Driving Simultaneous Usage

What screens are people using while watching TV?

Source: Nielsen China Shanghai 3-screen Panel, 2011, Q3

Age Group

Simultaneous Tablet and TV Usage% of consumers that are using tablet while watching TV several times a day, Q4 2011

Source: Nielsen Wire: Double Vision – Global Trends in Tablet and Smartphone Use while Watching TV

Chinese Consumers are Also ‘Simultaneously’ Working and PlayingOnline viewing for personal entertainment during working hours

Source: Nielsen China Shanghai 3-screen Panel, 2011, Q3

Yes70%

No30%

Cross-Media Ads Work Best

% TV brand and message recall: TV ad performance

Source: Nielsen US Brandeffect

0

2

4

6

8

10

12

14

12AM 1AM 2AM 3AM 4AM 5AM 6AM 7AM 8AM 9AM 10AM 11AM 12PM 1PM 2PM 3PM 4PM 5PM 6PM 7PM 8PM 9PM 10PM 11PM

Handsets are Woven into Consumers’ Lives

Source: Nielsen US Smartphone Metered Panel

An Android user’s time spent engaged with handsetUS, Android, July 20, 2011

Min

utes

Gaming

Productivity Apps

GamingSocial Media

Web Gaming

Mobile Has Many Potential Advantages

Comparison Index of Advertising Characteristics by Media

Source: Chetan Sharma

Where mobile can go: SoLoMo

58.com Taobao Dianping Jiepang

Nielsen Point of View: TV

• TV will remain the foundation for reaching many consumers and “storytelling”

• A limited supply of TV ad inventory will face increasing demand, creating price pressure

• Companies that buy TV smarter will have an advantage

Nielsen Point of View: Digital

• Digital can be a high efficiency vehicle, but is complex

• Digital usually works best when combined with offline campaigns

• Pick one thing to be “best in class” and make sure you are social

Nielsen Point of View: Mobile

• Mobile advertising has some inherent advantages

• Smartphones will become the center of the ‘social’ recommendation and the transaction

• Develop a mobile strategy within this framework