As reported in Media, Nurun China will manage the account, which includes digital strategy, execution of online campaigns, media planning and analytics, for the remainder of 2009 and 2010, with the first campaign expected to debut in August.

Digitas won Absolut’s Chinese business from Agency.com in January last year. At the time, a Digitas source said Absolut was “beginning to take digital seriously in China” and that the company would bolster its marketing efforts on the platform.

Well done Nurun Team…

If this report is accurate then we are seeing not just an increase in revenues for Google but a fundermental shift in user and advertising sentiment in China for this Western search engine. For the revenues to grow at this rate, the number of advertisers believing Google is reaching their target audience is clearly increasing. Unfortunately, I can’t tell where this increase in revenues is coming from for the regional advertising agencies; SME’s (Baidu’s core advertising base) or large local Chinese advertisers. I am assuming a larger percentage coming from Multinationals and 4A’s as this would explain the difference in increase from the local agency growth and the H1 Google China results.

Let the battle of the Chinese Search Engines move to the 2nd round….. oh, and look out for Microsoft’s Bing, NetEase’s youdao and Tencent’s Soso to via for audience.

As reported by China Tech News, The9 announced on April 16, 2009, that it had learned that Blizzard’s World of Warcraft would be licensed to another China-based online game company following the expiration of the license agreement between Blizzard Entertainment and the The9 on June 7, 2009. World of Warcraft accounts for a substantial majority of The9’s revenue, and the company is finalizing its financial reporting treatment and related disclosures resulting from the non-renewal as reflected in its financial statements as of and for the year ended December 31, 2008.

As a result of the non-renewal of the World of Warcraft license agreement, as well as taking into consideration certain other events that occurred subsequent to year-end in connection with certain other licensed games and lower than expected operating performance of one of its games, the company will record impairment and certain other charges in its financial statements for the year ended December 31, 2008. As a result of these charges, net income for the year ended December 31, 2008, presented in its annual report on Form 20-F is expected to be between 55% and 75% lower than net income for the same period presented in the Form 6-K filed by The9 on February 24, 2009. The company intends to file the Form 20-F on or before July 15, 2009.

Chinese gaming rival NetEase.com won rights to operate the WoW game and NetEase is currently planning to re-launch the game servers soon. There has been noice in the local market about the delays to these WoW game servers but I expect that these will be online soon.

The study on digital marketing has revealed that 44% of marketers blame a lack of suitable metrics to measure impact and ROI as a barrier to cross channel adoption in campaigns. Wow… that was certainly a significant population of Marketers but I wanted to drill into the study further and really understand the issues and rational for this. I downloaded the study (after registering for the download I started fearing this maybe nothing more than a lead gen exercise rather than a credible whitepaper done with rigor and good research discipline).

The study looked at 400 senior marketers across three regions; North America, EMEA, and APAC. Unfortunately, the paper did not include the original interview questions or methodology, so it makes it dificult to provide an alternative analysis of the responses.

The report said there was a gap between the appreciation of cross channel campaigns and true cross channel integration as nearly 67% of respondents cite that they already are running cross channel campaigns - yet only 12% are actually integrating cross channel performance data.  Other barriers to cross channel adoption cited by marketers are a lack of case studies to prove cross channel effectiveness (37%), and a lack of technology (34%).

I am afraid that the paper seemed more self serving in the promotion of the notion “better analytics leads to more cross channel adoption”. I am an eyeblaster fan but was disappointed at the level of detail provided. Maybe a great marketing doc and lead generator … but as a credible piece of research… it was poorly lacking.

I am very happy to get other feedback and ideas on this paper. Let me know if you agree or not.

Media Magazine reported that The CDC, with the China Soong Ching Ling Foundation, will launch its campaign to educate domestic audiences on the dangers of the disease and to promote vaccination.

The account was awarded to UM following a three-way pitch that involved Mindshare and ZenithOptimedia.

Separately, UM China has also been appointed the media agency-of-record of jewellery chain Temix, which is also a subsidiary of Fuqi International.

Temix does not have an incumbent for its business and did not call a pitch. According to the agency, UM will guide the brand’s advertising and marketing initiatives, which will include TV and print campaigns to promote Temix’s more than 50 outlets, and boost brand awareness in the market.

So well done UM Team!

The appointment also follows a pitch against Starcom and several local agencies. ZenithOptimedia’s assignment will focus on print and TV to spur audience involvement in the highly popular Mengniu Yoghurt Super Girl contest (a Chinese version of American Idol) on Hunan Satellite TV. I am reaching out to the folks at ZenithOptimedia to understand if there is any digital components but at this stage have not had this confirmed.

Zenith’s experience on the Sony account was also important. Steven Chang, CEO of ZenithOptimedia Guangzhou, said: “With rural expansion a basic necessity for white goods firms, Chinese electrical appliance brands have advantages over the international brands in terms of pricing and distribution channels.”

He added: “Big local brands have bigger brand awareness among rural populations with their advertising on national and provincial satellite TV channels.”

TCL was established in 1981 and has factories in Huizhou of Guangdong province in Southern China, and a marketing base in Shenzhen. Its monitored media spending for 2008 was Rmb 250 million.

Well done, Guangzhou’s ZenithOptimedia team!

UPDATE: China announces postponement of rule mandating all computers be sold with Green Dam software http://tinyurl.com/nyh44t

For those that have not been following what is happening in China with the introduction of Green Dam, I will give some background. Fundamentally, Green Dam Youth Escort is content-control software developed in the People’s Republic of China (PRC) which is meant to block pornography and other “unhealthy information”. Under a directive from the Ministry of Industry and Information Technology (MIIT) of the PRC taking effect on 1 July 2009, it is mandatory to have either the software, or its setup files pre-installed on, or shipped on a compact disc with, all personal computers sold in Mainland China, including those imported from abroad. End users, however, are not under mandate to run the software. While I am not going to enter into the ‘open Internet” or ‘free speech’ debate in this post, I am interested in looking at how this will impact our industry.

So given in a weeks time, all new PC’s will have Internet filtering software installed; should we as Marketers be concerned? What if any are the likely impacts? These are the questions I have posed to my executive team to ensure we are not going to be facing any unexpected results from this new product introduction. The short answer was we thought their would be no impact on the advertising side of the business. Advertisers (the multi-nationals and local) have already been working in China for a long time and the acceptable practices are understood in terms of ad copy, imagines and messages.

In fact, the Chinese Government is not alone in wanting to initiate Internet filtering. The Australian Government is also formulating a plan to implement an Internet filter (already being called “The Great Aussie Firewall”) that would block about 1,300 Web sites from being viewed. They say the list of sites, which they will not release, consists mainly of child pornography, excessive violence, instructions in crime or drug use, and advocacy of terrorism. According to an AP story, protests over the plan have grown rapidly in Australia since the plan was first floated earlier this year but fundamentally both Governments are working to a common goal; that of reducing the incidence of pornography being seen on the Internet.

Where it could become an issue for Marketers is on the web publisher side. Those Marketers doing Media Buying should note that sites could be inadvertently blocked because of the content being flagged by Green Dam. This is nothing new; all material on the Chinese webosphere is subject to State controlled censorship, where the punishment is usually getting your site shut-down.

In addition to the moves by MIIT ,  the Ministry of Health of China published the “Regulation on Internet Medical and Health Information Service Management”, which states that websites are prohibited to spread pornographic contents under the guise of sexual research or education. The regulation, which will also be effective from July 1, 2009, points out that the health channels of comprehensive portal websites in China should not provide sexual research content services, and medical and health websites engaged in sexology research should only be open to relevant clinical and research professionals. What

Search Marketing programs (SEM) should not be effected although the whole Internet porn situation has certainly hit Google. Google.cn has also removed some of its search functions, including searching for overseas content and searching with associated terms as a result from last weeks crack down.

So from our assessment, the Advertising (creatives) and Search side will be little effected. Media buying will mean monitoring some site on the 1st July for filtering by some PC’s running the software. But frankly, most media buying by agencies is done on Portals or Tier 1 verticals. These should be fine although some health channels on Portals could be caught under the Health Ministry guidelines. Consider spot buying if you are needing inventory in these content sites rather than a contract buy (for a longer time frame). I expect it will take a few months for Websites and the Government to align on what is required and what is acceptable.

Let me know if you have any comments of views on Green Dam.

These are probably some of the most frequent questions posed to me by Western journalists wanting to get insights on the Agency landscape in China. The simple answer from my perspective is that 4A’s will certainly survive and will continue to provide value to the Brands they represent in the short to mid term (talking of next 5 years or so). However, what is unquestionable, without doubt-  is the need for continual evolution within the Agencies to accommodate the new digital marketing trends and directions.

Within China we have representation from all major 4A Agencies and although their revenues have suffered under the Global economic downturn, it has also provided them with a catalyst for making some important structural and organizational change (I have done a number of posts on the impact of the recession so won’t cover that off again).

Below,  I have outlined the key areas I think will/are emerging for Agencies:

• Accountability and visibility into the advertising ecosystem will continue in China.
• The full-service agency will return.  With the divide between media and content blurring, the two disciplines try to get back together.
• Performance led campaigns; where the outcomes and actual response rates will dictate creative real-time approaches as opposed to the much more difficult to measure “Agency led campaigns”.
• Creative teams (typically art director and perhaps a copy writer) will now include an analyst that will interpret advertising results to be implemented into creatives.
• Consumers of digital advertising will be paid (micro payments) or receive personal benefits, vouchers, discounting etc  for engaging with ads and brand experiences
• Digital solutions will routinely include multiple digital channels (always with a Social Media Marketing component) and be integrated across Mobile, Internet and offline.
• Media planning and buying will become more complex (premium buys); highly personalized, targeted and little buying done in the way of  ‘run of network/site’. Real-time Audience segmentation will drive purchase decisions and rates paid. Demographics will finally die. Targeting of messages will be much more about context – “when” and “how” rather than “who”.
• Tracking and measurement technologies will increase (detail in next para).

I think the single greatest change will be the impact that technology has on every facet of the Agency business – the messages, the media, the consumers, the research and the results.  The successful Chinese digital agency will need to embrace and leverage technology for some of from the most routinely manual processes (like media planning) to analysis and reporting on large/complex campaigns.

As technological advances will enable people to consume the media they want, when they want, where they want and how they want. That kind of control will only increase with the digital convergence, which will further blur the lines between TV, the internet, mobile phones, music players and devices yet to be developed or thought about.

Future Chinese digital agencies will look like today’s investment banks, with asset allocation, tools and experts, measurement and research teams and links to a variety of in-house and out-of-house specialists. Agencies will be evaluated and paid on measurable performance metrics that are predominantly outcome based. The creative guys will create engaging experiences (ads that personalize in real-time), rather than simple banner ads.

The agencies that commit to evolving will be best placed to navigate the future. After all, it is not about knowing exactly what the future is. It is about being ready for it. If you have any different views or ideas please comment below.

Marcelo and his team at GroupM produce a highly informative blog which presents regular updates on search and general tips on SEO/SEM (see Q9 for a link). He also offers us a first! - an interesting insight on what he sees as the next big thing - natural language indexing (see Q4). Enjoy!

Name: Marcelo Silva

Works: GroupM Search, Australia

Job Title: General Manager

1. How, where and when did the digital industry find you?

First digital role in 1996 as Group Advertising Manager, Ozemail. Selling banners and sponsorships with my good friend Graig Galvin.

2. What is your current role and what do you actually do?

Responsible for the Search P&L across the 5 GroupM brands including Outrider, Mindshare, Maxus, MEC and Mediacom. The team consists of approximately 40 search specialists.

Along with the financial responsibility training and education is a large part of this role.

3. If you could have any job, what would it be (can be in and/or outside the industry)?

A musician - travelling the world and playing music would be nice.

4. Take a punt on the ‘next big thing’ in digital?

A couple of years back, as a marketing director; I conducted focus groups for the youth market. What became apparent was the use of language within these segments, resulting in some very insightful findings. In particular was the use grammar. E.g. Abbreviations (messenger use), sentence structure and other idiosyncrasies.

I predict ‘natural language indexing’ as the next big thing - given the variations in language across multiple segments and sub groups. It’s becoming increasingly complex for marketers to effectively communicate with their target markets and being relevant will result in more successful campaigns. I envisage this will expand across video and other digital forms.

5. Where do you see the digital industry in the next 5 years? (any forecasts and challenges)

1. Becoming the lynchpin of the entire communications mix

2. More convergence and the proliferation of user generated content.

6. How do you see other media evolving in the next 5 years?

Adapting and leveraging their core assets will be key for traditional media. For example, figure heads from TV, radio and other traditional media are blogging, Tweeting and experimenting with other social media tools. This adaption extends their brands to a wider, younger and fickle audience. For example, I hear Oprah has 1 million followers on Twitter and even the Pope is on Facebook and YouTube!

7. Where do you see the digital industry going in the next 12 months? (Particularly in light of the evolving financial situation)

Generally speaking digital will continue to be integrated into the overall mix, especially search marketing. Despite the GFC digital will be commanding a greater share of the overall pie.

Of some concern though, marketers still utilise search as a standalone direct response mechanism. Search can also build desire and should be maximised during the brand awareness phase!

Across the board I can only see upside. I recently judged the IAB award entries and I found my contemporaries to be smart, passionate and most of all patient. I think the industry is in good hands and clients are finally seeing the light.

8. Did you ever have a big digital idea you wish you pursued (or someone else’s idea you wish was yours)?

I’m a big fan of the *Memetrics offering and multivariate testing in general. When I was at ING Direct we were one of the first blue chip brands to trial the XOS tool in Australia. The results were phenomenal and subsequently the approach was rolled out to other ING international offices.

*Denise added: Memetrics Holdings Pty Limited provides testing and optimization solutions for digital marketers internationally.

9. Where do you get your industry information from?

A combination local and international sources:

- Online, magazines and papers

- I better say Google otherwise my wife will kill me.

- The Outrider blog: www.outrider.com.au/blog

10. What industry groups or networks are you a part of?

AIMIA & IAB

In an interesting rumor circulating about the Sina/Focus deal comes from a post by JLM Pacific Epoch. On their blog this morning they quote a story out of Sina.com about an investment banker saying the merger between Sina (Nasdaq:SINA) and Focus Media (Nasdaq:FMCN) has broken down due to problems with the transaction process rather than government hurdles.

The Sina news continued to say, ” According to the insider, executives and middle management have left Framedia, Focus Media’s elevator frame advertising subsidiary and a major focus of the merger agreement, compounding poor financial performances from both companies and dissatisfaction among Sina shareholders”. The insider also noted that six months after announcing the merger, neither Sina nor Focus Media stock is significantly higher, causing concerns at Sina as to whether the acquisition will pull down Sina’s stock price.

The Ministry of Commerce’s (MOFCOM) Anti-Monopoly Bureau refused to disclose details of the Sina-Focus Media merger review process, said another Sohu report.

Focus Media CEO Jason Jiang said in mid-May that the company’s merger with Sina is under review from MOFCOM and would be finalized by the end of June.

But given the poor performance of Focus Media in Q1, it is not surprising that the Sina shareholders would be unhappy. Most in the Internet community have questioned this deal openly and frankly I was unable to provide a strong commercial rational for such a deal being conciliated.

Any other views or ideas on this deal or no deal?