Clear Media Zhang Huai JunEntrepreneur on White Horse

A research report revealed that the size of outdoor media market in China reached RMB6.23 bln in 2010, rising 8.35% YoY. The total market production in 2012 is estimated to attain US27 bln. As at the end of the fourth quarter of 2010, there were a total of 16,000 outdoor advertisements in Mainland China, lifting nearly 10% QoQ. The related market prices this year are likely to go up by 15% despite the tamed inflation. Zhang Huai Jun, the chief operating officer of CLEAR MEDIA (0100), said, during an interview with our website, that pursuant to the “Three-year Plan” of the group, the group would set up 10,000 advertising display panels at the bus stations within the borders of People’s Republic of China by the year 2012. The utmost important point is to maintain the leading position of Clear Media in the outdoor media industry in China through balancing the growth in advertising fees and occupancy rate.

In three years’ time the group will build 10,000 new advertising display panels at bus stations to embrace more advertising orders, according to the three-year plan. Zhang disagreed with the saying about China’s economy is turning negative, making clear the economic growth momentum still exists, steamed by investment, exports and consumption. Yet, internal investment and domestic exports saw a slight decline, he admitted, dragged down by dimming economic environment in the US and Europe. Outdoor media market is evidently benefited by the robust internal consumption market and urbanization. Clients’ budgets on outdoor advertisements were largely raised in view of the huge internal consumption demand in China, which is an upside factor for the group from a macroeconomic perspective. Information discloses the group’s average annual advertising charges for every single advertising display panel at a bus station is approximately RMB35,000, advancing 10-15% YoY. In 2010, advertisements from fashion, information technology as well as movies and entertainment sectors surged.

Zhang indicated that so far the three major mature advertising sectors are beverage, food and telecommunications, accounting for 25%, 13% and 11% of total income respectively. From the advertising sectors one gets an insight into the categories of the products being advertised. These are mainly consumer products targeting the mass instead of producer products. Advertising through outdoor media can achieve more effective results compared to other forms of advertisements, Zhang believed, as outdoor media is a “strong media” unlike TV or internet advertisements, which are much more passive in nature. When people walked along the street, they inevitably view all the outdoor media advertisements. Furthermore, outdoor media is suitable for all advertisements and there is no ‘media bottleneck”.

For many years the group focuses 90% of its business on advertising display panels at bus stations while the remaining 10% is about developing advertisements on bodies of buses in Shenzhen. The latter failed to contribute 10% of the group’s total revenue. Interim results revealed the income stemmed from the former and latter form of advertising amounted to RMB630 mln and RMB60 mln with the former recorded a more than 60% occupancy rate. Zhang said the group only began developing bus body advertisements in 2007 and it aimed to gain more experiences in vehicle body media in Shenzhen, paving the way for diversified development in the future, rather than pocket more revenue. After five years of diligent learning, the group, from top to bottom, is familiar with vehicle body media, which would assist the it to explore other forms of outdoor media.

The group currently possesses over 35,000 advertising display panels at bus stations located at 27 cities in the Mainland. As to exploring new media, Zhang felt that the management needs to mull over again and again on two points. First, try to jump out from the 2D mode, further digitalizing outdoor media. Second, they have to look from client’s point of view, considering whether the customers would accept the new modes as well as if the new charges are reasonable after successfully creating a digitalized interactive media. Zhang preferred to hold on until the digitalized outdoor media becomes mature and the costs fall before launching a brand-new outdoor media technological plan as technology is advancing fast every day. Clear Media’s parent is Clear Channel (NYSE: CCO), the largest outdoor media corporation listed in the US. With this background, Clear Media is in the upper hand in terms of fiscal and actual strength. Whether Clear Media will enter the markets beyond Mainland China depends on the parent, Zhang stated. He believed the group will do better than other companies if it enters the markets in Europe, the US and Southeast Asia with the parent’s advantages in global outdoor media network. The group will be more cost-efficient than its rivals, Zhang added.