This report covers online marketing facts, trends, and China opportunities in the 5 key areas where brand managers should put their focus in 2012 Video – Extend TV campaigns into online video • Time spent watching online video in China and ad spending have nearly doubled in each of the past 2 years • Shared videos on Weibo and SNS account for over 20% of video traffic, and 70% of users recommend interesting video online • Extending TV ad campaigns to video is the most cost effective way to increase reach and improve ROI Mobile – Time to make a commitment • 90%of China smartphone users use apps, 66% use search, 72% use video sharing, and 59% use maps and directions • Mobile devices provide location information, the key advantage that will come to the fore in 2012 • Rather than one-off mobile campaigns, brand managers should consider a mobile element in every campaign E-Commerce – An investment that will pay off • China’s e-commerce market will grow to RMB 2 trillion by 2015, possibly surpassing the US market • Taobao now ranks second behind Baidu in ad revenue with 80% coming from SEM on its vertical search engine that covers 370m registered shoppers • New entrants should leverage Taobao expertise and traffic to gain experience before launching independently Social – Closing the gap with consumers • China has 250m Weibo users, up from 63m in 2010; user numbers and activity rates are still increasing with 66% of Weibo users posting more than once per day • Brands are using tools to regularly monitor social media to better hear consumer voices and preempt PR crises • China social media sites have lagged behind Facebook in creating branding opportunities and behavioral targeting Big Data – Data-first marketing • Data management and analytics now drives how online media is bought, sold and strategized; comprehensive data analytics provides personalized dynamic targeting opportunities • The shift to social media potentially opens up to marketers a vast trove of personal information • China is becoming a more performance-based market with advertisers insisting on the transparency, tracking, and analysis that underpins data-first marketing

1. 5 Digital Priorities
for China Brand Managers
in 2012
February 2012

2. 1 Online Video
Extend TV ad campaigns into video
2 Mobile
Time to make a commitment
3 E-Commerce
An investment that will pay off
4 Social
Closing the gap with consumers
5 Big Data
Data-first marketing

3. 1 Online Video: Key Facts
1 325m online video users = critical mass
Nearly two-thirds of China netizens watch online video, and penetration rates among younger audiences (15-40)
in tier 1 cities now equal TV (CNNIC, Nielsen)
2 Online video time surges, displacing TV
Time spent watching online video in China has nearly doubled in each of the past 2 years. Post-80s online video
users decreased their TV viewing time by 63% after starting to watch video online (GroupM)
3 Online video ad spend nearly doubled
In 2011, China online video ad spend reached RMB 4.25b, nearly double the 2010 figure of RMB 2.15b (iResearch)
Time spent watching video is growing 4x faster than time spent online

4. 1 Online Video: Key Trends
1 Video + Social
Shared videos on Weibo and SNS account for over 20% of video traffic, and 70% of users recommend interesting
video online (Sina, GroupM)
2 Multi-screen viewership
Multi-screen viewership (TV + phone/tablet/PC) is becoming mainstream with 34% of Chinese consumers
exposed to multiple media simultaneously (Ipsos)
3 Advertisers extending TVC reach with Video
Advertisers are rapidly increasing online video spending to extend TVC reach as studies show that those exposed
to 15’ ads on both TV and video had 2x better recall than TV alone (Ipsos)
Online video ad costs in China can be up to 80% lower than TV per view (Miaozhen)
4 TV restrictions benefit video
New SARFT TV regulations on entertainment will likely push users, talent, and content from TV to video

5. 1 Online Video: Advice to marketers
Extend TV ad campaigns into video
Opportunities
.Extending TV ad campaigns to video is the most cost
effective way to increase reach and improve ROI
.Mixed reach planning tools enable TV-video cross-
platform optimization
.Leverage competition among video sites to push for
deeper demographic info and audience-based ad buying
Challenges
.Price inflation of 40% and limited
inventory in tier-1 cities
.Demographic/location targeting and
cross-site frequency capping are
difficult to achieve

6. 2 Mobile: Key Facts
1 Mobile internet users hit 356m
China has nearly 1 billion mobile users, 1/3 of whom already use their phones to go online, and over 120m 3G
users (MIIT, CNNIC)
2 In 2012 smartphones will hit tipping point
By year-end 2012, expect the forecast 250m smartphones in China to drive the shift from WAP protocol to
HTML5, and unleash a wave of innovation similar to the PC revolution (GroupM)
3 iPad and tablets replacing PCs
Apple shipped 55m iPads globally in 2011, and PC shipments suffered a record decline in Q4 2011 (IDC, Gartner)
4 Users grow accustomed to mobile apps
90%of China mobile users use apps, 66% use search, 72% use video sharing, and 59% use maps and directions
(Ipsos)
5 High ROI on mobile media
buys in China
ROI on China mobile media buys is still
much higher than PC Internet and the
phone’s small screen = more attention
to brands

7. 2 Mobile: Key Trends
1 HTML5
The mobile web is rapidly shifting from WAP to HTML5, the new protocol for smartphones that brings
functionality approaching that of the PC internet
2 LBS = Location, location, location
Mobile devices provide location information, a key advantage that will come to the fore in 2012. 42% of China
mobile netizens already make use of LBS for convenience in their lives (Analysys)
3 Mobile search
Consumers use mobile search to find local information. 1 in 3 mobile searches is for local
information, and 61% called and 59% visited (Google)
4 Mobile commerce
Consumers are making purchases while on the move. China m-commerce grew at over 400% in 2011, and
T-Mall averaged 500,000 mobile transactions daily, with a daily peak of 1.7m (iResearch, Taobao)
5 Mobile as a cross-media bridge
Mobile is becoming an extension and bridge: 39% of mobile internet users access Weibo via mobile (CNNIC); QR
codes connect print and outdoor to the mobille web; TV + mobile multi-screen viewership going mainstream
6 E-publishing and tablets
The iTunes store features nearly 900 Chinese language magazines for download (iTunes)

8. 2 Mobile: Advice to marketers
Time to make a commitment
Opportunities
.Rather than one-off mobile campaigns, brand managers should
consider a mobile element in every campaign
.Continue to create and promote apps to deliver in-depth product
info and functional apps that bring convenience to users’ lives
.Develop and launch your HTML5 website to keep pace with the
migration from WAP to smartphones
.QR codes form a great “scan-and-visit” bridge from the real world
to mobile websites and coupons
Challenges
.Mobile sector still lacks mature
models in app development,
scaled campaign execution,
third-party tracking, as well as
data and analysis

9. 3 E-Commerce: Key Facts
1 E-Commerce in China on track to pass US by 2015
China’s e-commerce market will grow exponentially to RMB 2 trillion by 2015, possibly surpassing the US market. In
2011 Taobao daily transactions peaked at RMB 3.3b with peak sales of RMB100m in just 8 minutes (BCG, Taobao)
2 190m online shoppers
The number of online shoppers grew 21% in 2011 and represents 38% of internet users (CNNIC)
3 B2C in China enters golden era
China’s B2C market is rapidly taking share from C2C stores as B2C players make huge investments,
including T-mall, 360buy, Group Buy sites, traditional retailers, and manufacturers
4 Fast growing product
categories
Fastest growing products sectors
include travel, electronics,
casual wear, and skin care (BCG)
5 Online Payment
Consumers have opened 650m
accounts on Taobao’s leading
online payment service Alipay
and in 2011 completed daily
transactions worth RMB 4b, a
60% increase over 2010 and
nearly double Paypal

10. 3 E-Commerce: Key Trends
1 Chinese are highly social buyers
Chinese consumers are highly social in the buying process, reading and writing reviews prolifically (BCG)
82% of buyers consider other buyers’ opinions and 90% of Sina Weibo users also visit e-commerce sites
(Performics, comScore)
2 Growth in lower tiers
44% of women in tier 1 and 2 cities shop online versus 23% in tiers 3 and 4, but the number of female shoppers
in tiers 3 and 4 is growing faster and on average they spend nearly as much (MEC)
3 Taobao search second only to Baidu
Taobao now ranks second behind Baidu in ad revenue with 80% coming from SEM on its vertical search engine that
covers 370m registered shoppers. Brand advertising is also rapidly increasing (Taobao, iResearch)
4 E-commerce search
Comparison shopping via sites such as Taobao’s eTao will grow in importance if these vertical search
engines are able to successfully integrate results across the various B2C sites

11. 3 E-Commerce: Advice to marketers
An investment that will pay off
Opportunities
.Now is the time to establish an online
store(s), if not already up and running
.New entrants should leverage Taobao
expertise and traffic to gain experience
before launching independently
.Develop an e-commerce SEM strategy
using vertical search sites like eTao
Challenges
.Set and maintain a differentiation strategy for your
online products and online pricing to minimize
conflict with traditional channels
.E-commerce requires deep corporate-level
commitment, and entails a long learning curve

12. 4 Social: Key Facts
1 The tectonic transformation to Social
Social media, word-of-mouth, and “the feed” represent a fundamental shift in how content is curated and
consumed and create a gold mine of consumer data for marketers to leverage
2 250m highly active Weibo users
China has 250m Weibo users, up from 63m in 2010; user numbers and activity rates are still increasing with
66% of Weibo users posting more than once per day (CNNIC, Nielsen)
3 SNS plateaus but new forms emerging
Non-Weibo SNS penetration rates showed a slight drop in 2011 with major SNS players like Renren moving into
video and e-commerce. Social sites based on interest graphs and user ratings like Douban, Diandian, and
Dianping are gaining traction, especially in tier-1 cities
4 Sina Weibo activity rates beat Twitter
Sina Twitter
Registered users (Q4) 250m 300m
Users issue over 1
message per day 66% 41%
share information on
daily lives 86% 64%
(Nielsen)

13. 4 Social: Key Trends
1 Weibo as China’s new portal
Traffic to traditional portal channels such as news, blogs/BBS, and email/IM is dropping as users access
information and communicate through Weibo (CNNIC)
2 iWOM monitoring going mainstream
Brands are using tools to regularly monitor iWOM (brand buzz volume, competitive analysis, consumer
sentiment) to better hear consumer voices and preempt PR crises
3 Display ad market shifts to social
Facebook, with its high growth and engagement rates, grabbed the top spot in the 2011 global display market
and nearly 20% of the US display market as advertisers shift budget to social media
4 Government regulation of Weibo
Government may gradually exert increased control over Weibo in the form of real-name registration if the
platform gets out of hand

14. 4 Social: Advice to marketers
Closing the gap with consumers
Opportunities
.Leverage Weibo and SNS to listen to consumers, to
create “buzz marketing”, and to mitigate PR crises
.Sina Weibo will start selling ads in 2012, creating
opportunities for brands to build a presence and
experiment with audience-based buying
.Other social platforms such as Tencent, Renren,
Douban, and Dianping can complement a Weibo-
centric approach to social
Challenges
.China social media sites have lagged
behind Facebook in creating branding
opportunities and behavioral targeting
.Social media marketing is labor intensive
and requires a paradigm shift for brands to
act as “friends”
.Scalable media buys and performance KPIs
are still in early stages

15. 5 Big Data: Key Facts & Trends
1 Data-first digital marketing
As all media (and retail) becomes digitized & connected, we will be able to connect the dots between
channels/devices to deliver & measure a coherent brand story
2 Data-first media buys
Data management and analytics now drives how online media is bought, sold and strategized; comprehensive
data analytics provides personalized dynamic targeting opportunities
3 Search leads the way
In the era of big data, search, an industry born on the internet, is the most data-centric and analytic digital
marketing category. Data strategies inherent in search are increasingly informing all types of digital marketing

16. 5 Big Data: Advice to marketers
Data-first marketing
Opportunities
.China is becoming a more performance-based market
with advertisers insisting on the transparency, tracking,
and analysis that underpins data-first marketing
.The shift to social media potentially opens up to
marketers a vast trove of personal information
.Agencies are developing more sophisticated tools,
demand-side platforms, and consumer databases to
improve targeting and ROI
Challenges
.Comprehensive data capability
requires skilled analysts and a new set
of analytical and tactical tools

17. 2011 Internet:
China Digital China reached 513m internet users (CNNIC)
Netizens in first-tier cities spent more time online than
Milestones watching TV in 2011 (CNRS)
at a Glance Online Advertising:
China’s online ad market grew at 57% to reach RMB 51 billion in 2011 and
online ad spending surpassed print advertising (iResearch, GroupM)
Social + Commerce:
90% of Sina Weibo users also visit e-commerce sites (comScore)
E-Commerce:
China had 38% growth in e-commerce traffic in 2011 vs 4% in the US (comScore)
E-Commerce transaction volume topped $100 billion as B2C comes to the fore (iResearch)
Weibo:
Weibo users jumped from 63m to 250m in 2011 with Sina Weibo momentum still rising (CNNIC)
Mobile:
China has 356m mobile internet users, over 120 million 3G users, and nearly 80 million smartphones (CNNIC, GroupM)
Online Video:
Hours spent watching online video nearly doubled; online video site revenue more than doubled in 2011 (comScore, iResearch)

18. Thank you
For more information on this report:
craig.watts@groupm.com