An excellent overview of China's digital media scene, presented by AdChina.

1. Brought to you by AdChina January 2012 Sina Microblog: @AdChina 易传媒 www.adchina.com/en/us MEDIA SCENE 2012 CHINA DIGITAL

2. Dear Partners, We start off the year 2012 with great excitement. In the past five years, the category of technology-driven internet advertising has grown from 0% to 8% of the total internet advertising spending in China. We estimate this number to double in 2012. Our confidence is based on the daily work we do for our clients, who are the largest 1,000 advertisers on the China market. Last year we upgraded several of our products, such as the cross-media planning system eTV2.0, and our clients’ satisfaction has risen dramatically. They have responded by increasing their project requests exponentially. An important agenda of AdChina in the past two years has been to expand our advertising operating platform both to the supply-side (media) as well as to the demand-side (agency and advertisers) of the value chain in China. Today, 200 online and mobile internet publishers are using our supply-side platform ASP, and 4 of the 6 largest international 4A media agencies in China are using our demand-side platform ADP to manage their advertising operations. We’re launching this 2012 Digital Media Scene Report with the aim to provide a practical digital outlook for the coming year for our clients: what are the new digital media trends in China and around the globe? What are the investment opportunities that no one should miss? During the process of preparing this report, we referenced a lot of domestic and overseas research reports, interviewed our clients and overseas collaborators. We also sponsored a Harvard Business School project on “the Future of China’s Technology-driven Advertising” in Q4, 2011. All in all, we hope you’ll find this report useful. Last but not least, we wish you and your loved ones a happy Lunar New Year and prosperous Year of the Dragon. May you find great health, happiness and success! Yours, AdChina Team Introduction Jing Pan VP of Marketing, AdChina Sina Microblog: @Jing 潘静

5. [ PART 1 ] 2011-2012 Digital Media Outlook [ 1.1 ] General: Winning on internet = winning the current & future consumers [ 1.2 ] Display Advertising [ 1.3 ] Mobile internet [ 1.4 ] Video [ 1.5 ] Social Media [ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5 ， Augmented Reality, NFC, QRcode, Open Platform, Interest Graph

8. Winning on internet = winning current & future consumers China’s netizens spend almost as much time on internet as on TV Newspaper avg. time spent hours/day Magazine CMMS Summer 2007 – Summer 2011 TV Internet Broadcast CNNIC 29th China Internet Statistics Report Jan 2012 StarcomMediaVest Group “China Yangtze Study: Oct. 2011 avg. time spent hours/day (age:13-45) TV Internet Younger users (age: 13-45) spend more time on internet than on TV, especially in Tier 3 & 4 cities 28% of internet users are below 20 years; 30% are 20-30

10. [ PART 1 ] 2011-2012 Digital Media Outlook [ 1.1 ] General [ 1.2 ] Display Advertising ： Ad placement through 3 rd party platforms to become mainstream [ 1.3 ] Mobile internet [ 1.4 ] Video [ 1.5 ] Social Media [ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5 ， Augmented Reality, NFC, QRcode, Open Platform, Interest Graph

15. [ PART 1 ] 2011-2012 Digital Media Outlook [ 1.1 ] General [ 1.2 ] Display Advertising [ 1.3 ] Mobile internet ： It’s a war. And it’s starting now. [ 1.4 ] Video [ 1.5 ] Social Media [ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5 ， Augmented Reality, NFC, QRcode, Open Platform, Interest Graph

20. [ PART 1 ] 2011-2012 Digital Media Outlook [ 1.1 ] General [ 1.2 ] Display Advertising [ 1.3 ] Mobile internet [ 1.4 ] Video ： Cross-screen is the gold mine for digital marketing [ 1.5 ] Social Media [ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5 ， Augmented Reality, NFC, QRcode, Open Platform, Interest Graph

22. Cross-screen usage increases year by year TV and internet complement each other well in terms of reach Internet complements TV reach during day time TV complements internet reach during the night time CMMS2009A~CMMS2010A China National Resident Survey, 2008-2010 60 top Chinese cities, sample age: 15-60 TV & internet user overlap is above 50% TV only users decreased year on year TV & internet overlap reached 63% in tier 1 cities CC11SUAC Mar. 2011

24. [ PART 1 ] 2011-2012Digital Media Outlook [ 1.1 ] General [ 1.2 ] Display Advertising [ 1.3 ] Mobile internet [ 1.4 ] Video [ 1.5 ] Social Media ： The market is looking for a practical social media marketing book [ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5 ， Augmented Reality, NFC, QRcode, Open Platform, Interest Graph

28. [ PART 1 ] 2011-2012Digital Media Outlook [ 1.1 ] General [ 1.2 ] Display Advertising [ 1.3 ] Mobile internet [ 1.4 ] Video [ 1.5 ] Social Media [ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5 ， Augmented Reality, NFC, QRcode, Open Platform, Interest Graph

30. So-Mo: Connecting with the consumers at real time Mo-Lo: driving consumers to the stores Lo-So: creating word-of-mouth LBS to direct consumers to the nearby stores and outdoor. More and more consumers are using mobile devices accessing social media, checking out micro-blogs and checking in to share their thoughts and activities with friends. Consumers today are eager to express themselves. Social media is their stage. Posting pictures and checking-in to share shopping experiences are common activities. O2O SoLoMo: connecting the digital and real world Mobile Connecting online with offline Social Where word-of-mouth and viral content fly Local Generating sales and shopping experiences

31. Two-dimensional code/quick response code: scan it, and you’ll know Consumers are scanning every code they can access Newspapers Product packaging Webpages Fliers Outdoor TV Postcards QR code scan enables Mobile payment Accessing product information Online/Mobile Shopping Sharing on social media Check-in Please try and scan the QR code above : ) APP download Coupon download

32. Augmented reality: adding new possibilities to marketing ideas Combining with QR codes: bringing life to the creative Combining QR scanning with LBS - Through scanning the QR codes on magazines, packages or other media, the users will be presented with animated content. - Through scanning the QR code at the store front or outdoor ads, users can see virtual content added to the environment they are in. - There are limited mobile applications in China with augmented reality functions. - The market is expecting the big fanfare event. AdChina targets to be the clients’ technology enabler. Augmented reality marketing is not widely adopted yet in China

34. HTML5: an upgrade to user experiences HTML5 will dramatically enhance mobile experiences: faster, bringing more powerful functions, and better compatibility - According to AT&T, 85% of all smart phones being sold in 2016 will support HTML5 - HTML5 can help marketers to deploy the same creative or campaign easily on mobile devices with different operating systems

35. Open platform: integration & fragmentation Integration - Through open platform, the user can utilize multiple services through one single platform, i.e. sharing video content to social media, and doing shopping on social media. Fragmentation - Open platform decreased the entry barrier for developing applications, services, and websites. A lot of new players will come into the market and provide more choices to the users.

36. Interest graph: the next hot thing Vertical social networking: based on interest - Through interest graph, users can get to know people beyond “6 degrees of separation” Augmented social networking: stronger media influence - Media based on interest graph push content to users according to their interest. Such content could be highly valuable and attract loyal users. - Fashion industry could be the first one to adopt this technology for marketing.