Welcome to the Digital Marketing Inner Circle

It is at this time of year when I am taking my vacation that I can sit back and reflect on the past year. This past 12 months for SinoTech Group has been our most exciting (in our short history) when thinking about where we started the year and where we finished it.

In terms of achievements, I am proud that we have attracted some of the brightest digital marketers in China. I know there will be some smiles from Lonnie and David as they too also think they have the ‘best and brightest’… but I really do see the talanted team we have. I talk about passion and ‘fire in the eyes’… when we hire and I have got just that … A CEO could not have a better motivated team… Much thanks to the exec’s at SinoTech that keep this all going. I guess the challenges for 2009 will be to continue to grow the middle management skills as we grow the number of staff… This level of leadership in my view is generally lacking in China.

If I think what was the most challenging projects we worked with in 2008, I guess it would come down to two; Zenith Optimedia who uses our Media Planning & Reporting platform and Sensis, who we did a complex digital consulting project. The challengers where different in each case; Zenith was tough given the timeframes of taking our media planning being used in China and deploying it throughout Zenith Optimedia in 13 countries. Sensis, was challenging because we were doing detailed financial modeling on a number of web sites and exploring new ways of increasing revenue – all this in a very short space of time.

The most rewarding partners to work with have been the folks at Publicitas and DMS. These are both highly professional organizations run by Moritz and Grant respectively.  All dealing with these companies have been done in a spirt of co-operation… Thanks guys.

So what did we learn from 2008? What has been the experiences for SinoTech Group?

Publishers:

1. Yet to embrace new ad revenue models (however some bright starts trying new approaches). Almost all still use a cost per day model (CPD)

2. Mostly resisting the move towards standard ad unit sizes (such as IAB)

3. The move towards using site analytics (mostly internally) but some now providing more metrics to agencies and advertisers

4. Pressure on vertical sites/shoulder properties to attract advertisers and increase sell through rates…. Tier one properties are holding steady or growing.

Advertisers/Agencies:

1. The trend for Media Agencies to do search, social and creative & Creative Agencies to move into doing search and social….. becoming harder to differientiate.

2. Consolidation brings oportunity

3. Global down turn brings opportunities- and pain

4. Global down turn also offers an out for many Brands looking to refocus and make change.

Final Thoughts… 2008 was a great year for SinoTech Group. We made some great progress commercially, had a lot of fun doing it and have the team to make 2009 even better.

Thanks for all the suporters of SinoTech Group….

Cheers and hope you have a great New Year!

Matt

Baidu.com Inc (NASDAQ: BIDU), the world’s largest Chinese language search engine, has begun a campaign to establish websites for half a million Chinese small- and medium-sized enterprises (SMEs) for free, CEO Li Yanhong said. “The global financial fiasco, in a sense, is an opportunity for SMEs to go online,” said Baidu vice president Shen Haoyu. “We are going to invest roughly RMB100 million in training SMEs with IT know-how so that they can be better prepared to weather economic hardship.” The Internet has become China’s largest trade platform after its cyber population rocketed 125 times to 253 million in 2007 from just 2 million a decade ago.

Source: http://www.sx.xinhuanet.com/rdsp/2008-12/14/content_15174232.htm

Baidu this month announced its new advertising product called “Brand-Link” which will generate content based on brand-related search phrases. Brands that subscribe to this new product will expect to find their listings among news, product information and promotional announcements.

When a searcher runs a query on Baidu for a brand name or catchword of an offline ad, Brand Link will show at the top of the search result page with multiple lines of text/image and hyperlinks. Its size is 3 or 4 times bigger than the normal paidsearch ad. The BrandLink advertisement area is separated from the common search results by a horizontal line with picture advertisements on the right side of the page, providing a space for the display of products (see below).

This new search model combines various display methods, including words, pictures and videos, which can improve the search experience of Chinese netizens using the search engine. As Google introduces new search engine products I expect we wil see Baidu continue to as a way to differentiate and this will allow both search engines new ways to segment the advertising base to generate revenues. For Search Marketing companies like SinoTech Group, these new products offer their clients with a number of ways to promote using the engines.

Reportedly, Baidu has attracted brands such as Lenovo, Dell, Samsung, Mercedes-Benz and Audi in using the new BrandLink product on Baidu.

China’s Focus Media (FMCN), said they expected charges resulting from the restructuring of its CGEN in-store advertising network and announced the termination of its remaining wireless advertising business.

In a statement, Focus Media said the termination will incur an additional one-time charge of about $20 million in the fourth quarter of 2008. The company also said that the 2008 performance of CGEN’s in-store advertising business has fallen short of expectations.

Focus Media’s wireless mobile business has been troubled by the so-called “short text massage spam,” documented in a CCTV program early this year. In the CCTV report, Focus Media acquired from unidentified sources the private information of 200 million mobile phone users, many of whom have complained about the deluge of short advertising messages.

Focus Media’s vice president Ji Hairong was quoted as saying: “the Chinese wireless advertising market is still immature, Focus Media needs more time to explore and adjust.”

“We faced an extremely challenging advertising environment towards the end of the third quarter and in the fourth quarter” stated Dr. Tan Zhi, CEO of Focus Media, a few weeks ago when the company reported its financial results for the third quarter of 2008.

Also, as previously announced on November 11, 2008, the company has now finalized its restructuring plan for its CGEN in-store advertising business. According to the terms and conditions in the share purchase agreement dated as of December 8, 2007, in addition to the initial payment of USD168 million in cash paid, Focus Media was to make additional payments of up to USD182 million, partly in cash and partly in Focus Media ordinary shares valued at the per share equivalent of USUSD53.42 per ADS. This was contingent upon CGEN meeting certain earnings targets during the twenty four month period following the closing of the transaction.

Because the 2008 performance of CGEN’s in-store advertising business failed to reach the minimum conditions required for any additional earn-out payment, Focus Media has terminated the earn-out provisions in the CGEN share purchase agreement and will make no further payments relating to CGEN acquisition.

As we are seeing in the press over the last few weeks, Focus Media has continued to experience a number of financial challenges. Any other comments or views on Focus Media?