Analysis of China¡¯s major industries

Wireless ad: Heralding an Epoch of Profit for WAP
Focus Media(NASDAQ:FMCN)spent US$30 million on its purchase of Digital Galvez in March 2006 and formally entered the wireless ad market by establishing Focus Wireless. In the same month, China Mobile initiated its own ad service based on Monternet in collaboration with Fractalist. In early July, China Unicom followed suit by letting its merger subsidiary Uninewspace start actual operation. Rivals on the wireless front Fractalist is fortunate in having gained both fame and more than 100 million registered Monternet customers through its cooperation with China Mobile. China Mobile has 260 million users while its registered Monternet users amount to more than 1 billion with an average record of 3 million daily users.
There is another wireless space apart from operators¡¯ own wireless platforms; 80 thousand independent WAP sites. CEO of 3G portal Deng Yuqiang says, ¡®Monternet has only a limited space for ads, its server page has only a few pieces of advertising and it couldn¡¯t cast ads on SP web pages but we have 50 channels to place them¡¯.
People from the industry have said that there would be an excellent platform for ad transmission if the present WAP resources could be reorganized. Now, Focus Wireless is working on just that. Its CEO Xu Maodong announced that Focus Wireless has incorporated more than 20 of the independent WAP sites with the biggest volume in its ad publishing platform, including leaders of the sector such as Kongzhong, Joyes, MOABC and WAPtx.
Xu believes that China Mobile is the first-choice partner for an ad agent, for Monternet has undeniable advantages. He said Focus Wireless is making active efforts to win over China Mobile. ¡®We are an open-minded agent, and will target every platform of value, whether it is an independent WAP or an operator. Now we have made substantial advances in cooperation with China Mobile¡¯. The Contest of the Modes There is no uniform mode in the present wireless ad service.
Similar to internet ads, China Mobile will place its ads on Monternet¡¯s WAP pages with auxiliary devices like SMS, MMS and Voice service while Focus Wireless has two means, PULL and PUSH and China Unicom has four modes including WAP, SMS, Voice and Built-in. To complete its ad service, it also plans to offer 10 forms of cell phone advertisement including Coloring Ring Back Tone (CRBT).
PULL and PUSH are actually the two basic modes of operating an ad service: the first involves receivers actively looking for or clicking ads; the other sends ads to receivers.
¡®PULL is our core service for the moment, and receivers have to click for reception in PULL. Even when operating in PUSH mode, we send only upon customers¡¯ approval. There is no obligation¡¯, said Xu. In fact, WAP PUSH is a common practice within the industry. China Mobile and China Unicom also have this service besides Focus Wireless.
But the most important factor in their competition is the precision with which they can choose the users to whom an ad should be delivered; what gives the mobile phone medium its special advantage in this area is its distinguishing feature of the ¡®one2one¡¯ capability. Competent analysis of phone users is the key to this exact delivery and many players now claim to have systems which can predict the personality and consumption patterns of users by analyzing their basic information and their behavior. For instance, China Mobile BOSS (technology support of Fractalist) can select the users to receive an individual ad according to their usage and payment record, their location by region, the sections of their number, their user category and other criteria based on its records of use. At the same time Focus Wireless has its own patent devices for this purpose which it calls its ¡®Radio Frequency Identification System¡¯ and ¡®Audience Characteristics Digging Platform¡¯. In this competition Focus Wireless enjoys another advantage in having records of wireless internet users. iResearch survey figures show that the number of WAP users amounted to 72 million in 2005, and Focus Wireless has used its special technology to accumulate phone numbers and UA from nearly 70 million users accounting for 90 per cent of all WAP users. Profit hope for independent WAP For Focus Media and mobile operators, a wireless ad service is just a threshold to a new source of profit; but for 80 thousand more independent WAP sites, wireless advertising means a lot more. For a long period of time, the need to develop sources of income has been a heavy burden on free WAP sites. Although 3G, 3gpp and WAPtx are currently very popular, the attention has not translated into practical earnings. The problem of what business mode should free services adopt has veilled the sector from the beginning. But now, wireless ad services can turn their volume into real cash.
BenQ putting one advertisement on 3G portal in March 2006 initiated 3G portal¡¯s ad service . Deng Yuqiang said the ad was clicked more than 600,000 times on the first day and he was very pleased with the response. Soon after that brands like Lenovo and Samsung also joined up as ad clients of 3G portal. Deng was very confident of the advantage of the medium for advertising. Although screen size is a limiting factor, it can also be an advantage since customers get more focused on one or two items on each page rather than browsing blindly as on the internet. He believes customer analysis will enable his company to increase the accuracy of ad delivery and achieve a better result for advertisers.
Deng said that the speed at which his ad service was growing had doubled since its inception in March; average sales earnings amounted to half million per month and he estimated that they would reach 3 million per month at the end of this year. Deng did not doubt that an ad service is a reliable means for independent WAP sites to make a profit no matter what kind of business mode will emerge; and 3G portal is aiming to balance income and expenditure in 2007 thanks to its mobile ad service.
Besides 3G, big WAP sites like 3gpp, WAPtx and MOABC, have all started their own ad services. For more information, please refer to www.researchchina.n

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