Data | Online advertising revenue exceeded 67 billion in Q2 2016, data drives advertising value increase!

In Q2 2016, the quarterly market size of online advertising in China was RMB 67.16 billion, up 34.5% year-on-year and 27.2% month-on-month, still maintaining a relatively fast growth level.

Among the different forms of online advertising in China, search advertising accounts for 29.6%, a decrease of nearly 5 percentage points compared with the same period last year, and a decrease of 2.8 percentage points compared with Q1 2016, showing a large fluctuation; the proportion of e-commerce advertising has increased compared with Q1 2016, but has slightly declined year-on-year; the proportion of video advertising has reached 12.5%, with a strong momentum of development, and is getting closer and closer to the share of brand graphic advertising; in addition, performance-based advertising has received more attention and favor from advertisers in 2016, and advertisers of small and medium-sized enterprises have achieved better results in performance-based advertising, which has helped push the share of other forms of advertising to 11.4%.

In the second quarter of 2016, the scale of China's online advertising market exceeded RMB 67 billion, maintaining a steady growth rate of more than 30% year-on-year. Affected by advertising-related policies and hot events, the share of search advertising has declined to 29.6%. As e-commerce websites have launched various shopping festivals and other promotional activities, the share of e-commerce advertising has increased compared with 2016Q1. At the same time, the share of video advertising and performance-based advertising formats has also continued to grow.

iResearch believes that in the second quarter of 2016, due to the continuous improvement of big data technology and the innovative development of advertising and marketing products, video advertising, e-commerce advertising and performance advertising have greater opportunities for development. With the holding of major events and international conferences such as the Olympic Games and the G20 Summit in the third quarter of 2016, various marketing methods will help the scale of online advertising to continue to grow. It is expected that in the third quarter of 2016, the share of search advertising and brand graphic advertising may rebound, but video advertising and performance advertising will still be the main growth points of online advertising.

In Q2 2016, the revenue of Chinese search engine companies was RMB 22.99 billion. The year-on-year growth rate was 14.8%, reaching the lowest level since Q1 2009. At the same time, the month-on-month increase was 16.3%, lower than 25.1% in the same period last year, and the growth rate slowed down significantly.

In the second quarter of 2016, the quarterly advertising market size of China's search engine industry was RMB 19.9 billion, with a year-on-year growth rate of 16.6%, a record low, temporarily ending the long-term high growth rate of more than 23% year-on-year. At the same time, the month-on-month increase was 16.3%, lower than any historical level since 2009.

Quarterly review: In Q2 2016, the revenue market size of Chinese search engine companies was RMB 22.99 billion, a year-on-year growth rate of 14.8%, reaching the lowest level since Q1 2009. iResearch believes that the continued fermentation of the "Wei Zexi" incident in the second quarter of this year brought about a delayed effect. The State Administration for Industry and Commerce issued the "Interim Measures for the Administration of Internet Advertising" in July, which for the first time defined Internet paid searches as advertisements, strengthened the rectification of medical advertisements and improved customer screening standards, resulting in a significant drop in revenue for Baidu, a core company in the industry, compared with expectations at the beginning of the quarter.

iResearch predicts that due to the impact of stricter regulations, the cold reception will continue for at least two to three quarters, and the future development of search advertising will maintain a relatively mild growth trend, with an estimated year-on-year growth of around 20%. In addition, affected by this incident, search engine companies need to consider actively seeking new business growth points.

In Q2 2016, the quarterly market size of online video in China was RMB 15.18 billion, a year-on-year increase of 77.8% and a month-on-month increase of 35.5%. In addition to the seasonal increase in the overall market, the rapid expansion of terminal sales of some video companies also brought about significant revenue growth.

In 2016Q2, advertising revenue was still the main source of income, accounting for 55.5%. High-quality content is the most important factor in attracting users to video websites. The launch of popular exclusive content such as Go Fighting and Running Man has brought significant increases in the advertising revenue of video websites. At the same time, the proportion of paying users increased slightly to 18.2%, and users gradually developed the habit of paying.

In Q2 2016, the scale of China’s online video advertising market was RMB 8.38 billion, a year-on-year increase of 47.5% and a month-on-month increase of 44.3%. With the exception of last quarter, advertising revenue has maintained year-over-year growth of more than 45%. The release of the "Interim Measures for the Administration of Internet Advertising" has further demonstrated the advantages of video interstitial advertising, and video advertising revenue will continue to grow at a relatively high rate in the future.

This quarter, the online video industry's mobile revenue exceeded 5 billion for the first time. As the size of the mobile advertising market continues to expand, the growth rate has slowed down, but the year-on-year growth this quarter still more than doubled, reaching a growth rate of 118.6%. In line with the shift in user habits, advertising revenue has gradually shifted toward mobile devices, with mobile advertising revenue accounting for 60.8%.

In Q2 2016, variety shows and other video content gradually eroded the audience share of TV dramas. The share of TV dramas and movies in terms of viewing time both decreased, accounting for 50.4% and 8.6% respectively this quarter. Variety shows increased slightly to 16.9%, maintaining a relatively stable growth trend.

In Q2 2016, major video websites, represented by iQiyi, accelerated the pace of charging for content, and exclusive content was the segment with the most payment advantages. Among the top 10 online video coverage in April 2016, all were exclusive content, including 7 exclusive variety shows and 3 exclusive TV dramas. Among them, "Descendants of the Sun" brought a considerable number of paying users to iQiyi. Since 2016, user payments have accounted for more than 15% of video companies' revenue and have shown a sustained growth trend.

In addition, the user effect brought by exclusive programs is very obvious, and its marketing value has attracted much attention from brands. The continued increase in advertisers' advertising for exclusive content has also brought growth momentum to the advertising revenue of video companies.

iResearch believes that high-quality content remains the most important part of online video competition. Judging from the development trend, the appeal of exclusive variety shows to users is gradually surpassing that of exclusive TV dramas, and the competition for high-quality variety show resources will become more intense in the future.