Advertising Squeeze Continues, Slowdown Looms 广告支出初显放缓迹象

By newsdoug on August 18, 2011

Results show advertisers being squeezed Ad spending looks strong in the latest quarterly results of Sina (Nasdaq: SINA), Phoenix New Media (Nasdaq: FENG) and NetEase (Nasdaq: NTES), but big questions remain about the future as the portals continue to squeeze their advertisers for more and more money. Thursday saw a flood of earnings come out for major US-listed China firms, providing the perfect time to take a broader look at ad spending that is so crucial to many of these companies’ top and bottom lines. Leading Web portal Sina saw its ad revenues rise 26 percent, while NetEase saw a 16 percent gain and Phoenix ad revenues jumped a whopping 150 percent. (Sina results; NetEase results; Phoenix results) Sina and Phoenix both also said they expect advertising revenue growth to continue at a similar rate in the third quarter. But what’s interesting here is that Phoenix, the only company to provide more color on its ad revenues, said a major portion of its big ad revenue jump came from increased spending by existing advertisers who spent 82 percent more in this year’s second quarter on average versus a year earlier. Leading search site Baidu (Nasdaq: BIDU), which derives nearly all its revenue from advertisers, made similar comments last month, saying its customers spent 50 percent more in this year’s second quarter versus a year earlier. (previous post) This kind of sharp spending increase by individual customers reflects stiff competition as companies battle for market share, and a growing number of executives who are seeing their costs soar have said the trend is unsustainable. Barring a sudden collapse, which looks unlikely based on forecasts from Sina and Phoenix, the boosted ad spending looks set to continue at least into the third quarter. But I would expect to see a slowdown by the end of the year as fatigue starts to infect spent-out advertisers, followed by an accelerating downturn into 2012.

Bottom line: Results from Sina, NetEase and Phoenix New Media show healthy ad spending will continue through the third quarter, but advertiser fatigue will lead to a slowdown by year end.

新浪<SINA.O>、凤凰新媒体<FENG.N>和网易<NTES.O>最新季度财报显示，广告支出大幅增长，但由於各门户网站为了增加收入，继续努力从广告商身上赚取更多费用，未来仍将面临较大问题。赴美上市的大型中国企业周四纷纷发布财报，为更广泛地审视广告支出创造完美时机。广告支出对许多公司的营收和利润至关重要。今年第二季度，新浪广告收入增长26%，网易和凤凰分别增长16%和150%。新浪和凤凰均称，预计第三季度广告收入将有类似增幅。但有意思的是，凤凰称其广告收入大幅增长，主要归功于现有广告商提高支出，第二季度同比平均增加82%。中国搜索引擎巨头百度<BIDU.O>几乎所有收入均来自广告投放，上月也发表过类似评论，称其客户在今年第二季度广告支出同比增加50%。个人客户广告支出大幅增加表明，各公司正加紧争夺市场份额，竞争日益激烈。越来越多的高管注意到成本大幅上涨，称这一势头不可持续。除非出现意外情况，广告支出增长料将持续至第三季度。但我认为，这一增势年底将放缓，广告商支出将初显疲态，2012年广告支出将加速放缓。

一句话：新浪、网易和凤凰新媒体的财报显示，良性广告支出将持续至第三季度，但广告商疲态将导致广告支出年底放缓。