SINGAPORE AND HONG KONG'S top digital out-of-home advertiser – Focus Media Network Ltd (HK: 8112) – and China's biggest Internet television firm YouKu Inc (NYSE: YOKU), are tying up to go after the big prize: the 530 mln and growing online population in the PRC.
The two media giants made the deal official on Wednesday in Hong Kong and executives were on hand to detail their joint strategy.
Focus Media Network and its new partner YouKu inked their strategic tieup in front of a roomful of reporters during which the Hong Kong-listed firm became the International Media Sales Partner of YouKu.
Both are clearly in the catbird seat in terms of having more than a foot in the door of the world's biggest pool of netizens.
For Focus Media's part, it has been around since 2004, having pioneered the concept of creating a sizeable network of flat-panel displays in elevator lobbies of office and commercial buildings to sell advertisements, and is the largest such player in terms of the number of flat-panel displays in both Singapore and Hong Kong.
"Our leadership position in Singapore and Hong Kong is solidified, so we are looking to move to new markets," said PJ Wong, Focus Media's Co-founder, Chairman and CEO.
Focus Media Network was initially appointed as the media sales partner in Hong Kong and Macau of YouKu on Dec 19 of last year.
But the two sides are looking to strike it big not only in the world’s most populous country and home to over half a billion online regulars, but are also aiming to expand into other markets.
As a result of a successful start to the tieup, both parties decided to expand the geographical coverage of the partnership to other overseas regions outside Mainland China.
Mr. Wong said Southeast Asia was the most immediate target for ex-China growth potential.
The co-founder of Focus Media Network, whose screens greet this author every time I access my elevator in Shenzhen, said the returns on expansion are simply too tempting to pass up.
“For us, we are consistently looking at an enviable situation wherein we can put up a reasonably small investment and increase our revenue to by disproportionately high level. In fact, it’s closer to an exponentially higher level,” Mr. Wong said.
Executives from YouKu taking part in the signing ceremony were equally sanguine on the landmark tieup.
“YouKu is the number one choice of 65% of China’s online Internet television audience which translates into being number one among at least 300 mln viewers in the PRC. In fact, if we were a traditional TV channel, we would currently be ranked the fourth most watched in the country.
“And not to be content with this, we are constantly taking the pulse of the marketplace to provide the most popular and in-demand content to our rapidly growing customer base," said YouKu's Senior VP for Sales Mr. Dong Yawei.
As one example, he said the rapid expansion of visitor numbers travelling from Mainland China to Hong Kong has made “Discover Hong Kong,” one of YouKu’s most popular new content streams a very tempting template upon which to market the Special Administrative Region to China’s 1.3 bln potential consumers.
When NextInsight asked Mr. Wong of Focus Media if he was concerned about the sluggish growth in the US economy and the debt crises making headlines across a growing number of EU member states, he said the if history is any guide, the Hong Kong-listed firm had nothing to wring its hands over.
In particular, how exactly would the market downturns in various parts of the world and the expected slower GDP expansion in the PRC impact the willingness of firms to allocate money for advertising campaigns?
“We all know what happened in 2008. Lehman and Bear Stearns went south, and the global financial meltdown began in earnest. But that same year we had one of our strongest performances in our history.
“So I expect this year to be another strong growth story for us, regardless of the economic uncertainties in various regions,” Mr. Wong said.
He went on to explain that economic downturns – whether real or perceived – actually worked to the advantage of new media firms like Focus Media Network.
“We must remember that when markets are up or down, and especially when they’re down, potential advertisers are even keener to get value for their money.
“We have found that during any economic uncertainty, advertisers want more negotiating flexibility and creative options. Fortunately for us, these two factors are what make online ads and ‘New Media’ better offerings," Mr. Wong said.
The Singaporean native was asked about another platform for advertising and how Focus Media Network differed, by way of comparison.
“Let’s take billboards, for example. They’ve been around since the caveman days, and will never fully go away.
“But we here at Focus Media can ‘change’ our ‘billboards’ every 30 seconds, if we so choose. But billboards have a much tougher time doing that, needing to stay put for at least 30 days under a typical contract.”
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