Jiang Hu, head of marketing for Chinese group-buying site Manzuo, claimed on his microblog yesterday that Manzuo will cease all out-of-home display advertising in north China through Chinese digital media and Internet advertising operator Focus Media (Nasdaq: FMCN) after Focus Media allegedly refused to sign a contract in a push to raise ad rates. Jiang said that after the two companies had agreed on pricing and Manzuo had signed the contract, Focus Media said it could not sign because the deal had not received government approval, then claimed that Manzuo was receiving a larger discount than other group buy sites and wanted to renegotiate pricing. Jiang said he does not trust Focus Media and believes they are attempting to artificially raise their prices.
Manzuo said that it renews its out-of-home display ad contracts with Focus Media every two weeks, but failed to reach an agreement this time. The company said it had already found an acceptable alternative and would begin circulating new ads on Monday.
At the start of 2011, both Manzuo and rival group buy site Lashou began investing tens of millions of RMB each in out-of-home display advertising with Focus Media.
Jason Jiang, CEO of Focus Media, has previously stated that the company plans to release a location-based interactive advertising model by Q4 2011 that will be particularly well-suited to group buy site advertisers.