Overview of Web Analytics Market in China

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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