Focus Media to Benefit from Sina Ad Rate Increase

21st Century Business Herald, 1/10/08

While Sina's (Nasdaq: SINA) share price rose 8% on news it was increasing its ad rates 30% in 2008, an industry insider believes the bulk of the increase will have to be passed on to Focus Media and WPP.

Sina vice president Du Hong estimates the two ad agencies contribute "no more than 40%" of Sina's ad revenues, the industry insider has said that of the RMB 3.4 bln in online ad revenues collectively generated by Sina, Sohu, Tencent, and Netease, over 70% come from ad agencies under Focus Media and WPP.

The insider also revealed that in Q4 2007, when Sina and Sohu were setting ad rates for 2008, ad resellers under Focus Media and WPP requested Sina improve the 30% discount it normally provided them to 50%. To continue meeting revenue estimates, Sina and Sohu therefore had to increase ad rates.

In addition, he said Focus was now in talks with Japan's Dentsu, considering a merger of Focus' six subsidiary online ad agencies with Dentsu's business in China, with the new company to be named Focus Wang Jing Online Advertising Company. WPP is also planning to consolidate Huayang Lianzhong and Century Harmony with Mindshare.

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