Overview of Web Analytics Market in China

  |  July 5, 2011   |  Comments   |  

Why do Chinese marketers invest only less than 1 percent of online ad budget in analytics?

Mainland China has expanded its online ad market scale from 20.7 billion RMB in 2009 to 35.6 billion in 2010, with a growth rate of more than 70 percent and 50 percent in the next three years (Source: iResearch Dec. 2010). Considering the appreciation factor of the RMB ($1=¥6.4, BOC Jun 2011), China is getting close to one quarter of its U.S. counterpart (U.S.$26 billion, IAB April 2011) and will reach half of that in 2014. Furthermore, China and the States share almost the same percentage of online advertising (12 percent to 13 percent, iResearch Dec. 2010) compared to the total advertising market.

However, the difference between the two giants is the amount of investment and utilisation of web analytics tools. The $500 million to $600 million annual U.S. web analytics market is seeing double-digit growth and advertisers including just about any huge brands and SMEs invest around 5 to 7 percent of total e-marketing budget on analytics (Forrester Research, May 2011).

In Mainland China, marketers seem to be stuck in the era of the Internet counter, investing 0.3 percent to 0.5 percent of online advertising budget on analytics-related activities, most of which are 'good-enough' internal tools.

Chinese marketers are becoming more mature, but third-party web analytics solutions still have yet to be massively used. Firstly, the free Google Analytics tool maintains a high level of barrier to entry; others can only charge clients if they provide more functions in at least the same user friendly way. Secondly, foreign web analytics solutions do not always work in China market particularly because of the 'Great Firewall' and market integrity issues, etc. Even Google Analytics has left marketers disappointed after their servers were moved outside of Mainland China.

Finally, Chinese marketers are very demanding in having value-added services, but otherwise they have very strong intentions (inclinations?) to DIY. Those solutions that just offer a complex dashboard without services and insights cannot survive in the market.

In my opinion, there exists three levels of web analytics related products and tools: lightweight online counter (CNZZ, the former Yahoo Analytics LineZing now integrated into Taobao, etc.), mediumweight products for pure analytics goals (most of them are free such as Google Analytics), and heavyweight total solutions (e.g., Omniture and Gridsum Dissector [Disclosure: I work at Gridsum]), which can truly help marketers targeting China optimise their online businesses.

Based on the SEMPO web analytics study in the region, we also realised the rapid development of 'precise ad' providers, such as AdChina, Langtaojin, MediaV, and Taobao. Through integrating different kinds of qualified media resources, they offer advertisers different channels and experience as well.

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Michael Xu

Michael Y. Xu has more than 15 years of digital marketing and financial services experience serving Fortune 500 clients and China's top-tier state owned enterprises in both North American and Northeast Asian markets. He joined Gridsum, China's leading online business optimization company, in early 2008 as senior vice president of business operations. Michael manages Gridsum Technology's strategic cooperation, business development, and marketing teams, while determining how Gridsum Technology would use partner connection to deliver the best results for clients and the entire ecosystem. Under his leadership, Gridsum Technology successfully initiates solid partnership with iCrossing and Microsoft. Michael worked in the Strategic Investment Department of Sinochem, China's top national oil company with 19 times entries into Fortune 500, from 1994 to 1999, where he got deeply involved with major transactions, including China Unicom, Shanghai Grand Hyatt, Suzhou Industrial Park, WEPEC, and Zhejiang Aoshan National Petroleum Base. He then joined one of China's leading real estate companies as financial controller. Michael is currently the board of director of SEMPO and the co-chairman for SEMPO's Greater China Working Group and Member of Global Committee. Through his coordination, SEMPO Greater China formed in-depth partnership with Baidu, China's top search engine. He also speaks at conferences on online business optimization and SEO/SEM. Michael received his MBA and MS degrees from California State University in 2003, and his BA degree in Accounting from Renmin University of China in 1994.

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