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Brought to you by AdChina
January 2012
MEDIA SCENE 2012 CHINA DIGITAL
Sina Microblog: @AdChina易传媒
www.adchina.com/en/us
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Dear Partners,
We start off the year 2012 with great excitement. In the past five years, the category of
technology-driven internet advertising has grown from 0% to 8% of the total internet advertising
spending in China. We estimate this number to double in 2012. Our confidence is based on the
daily work we do for our clients, who are the largest 1,000 advertisers on the China market.
Last year we upgraded several of our products, such as the cross-media planning system
eTV2.0, and our clients‟ satisfaction has risen dramatically. They have responded by increasing
their project requests exponentially.
An important agenda of AdChina in the past two years has been to expand our advertising
operating platform both to the supply-side (media) as well as to the demand-side (agency and
advertisers) of the value chain in China. Today, 200 online and mobile internet publishers are
using our supply-side platform ASP, and 4 of the 6 largest international 4A media agencies in
China are using our demand-side platform ADP to manage their advertising operations.
We‟re launching this 2012 Digital Media Scene Report with the aim to provide a practical digital
outlook for the coming year for our clients: what are the new digital media trends in China and
around the globe? What are the investment opportunities that no one should miss? During the
process of preparing this report, we referenced a lot of domestic and overseas research
reports, interviewed our clients and overseas collaborators. We also sponsored a Harvard
Business School project on “the Future of China‟s Technology-driven Advertising” in Q4, 2011.
All in all, we hope you‟ll find this report useful.
Last but not least, we wish you and your loved ones a happy Lunar New Year and prosperous
Year of the Dragon. May you find great health, happiness and success!
Yours,
AdChina Team
Introduction
Jing Pan
VP of Marketing, AdChina
Sina Microblog: @Jing潘静
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The core advertising operating
system
A
g
e
n
c
i
e
s
-workflow mgmt
- Media planning/buying
- Cross-media planning
- Data collection
- Report & analysis
Ad operating system for
agencies / advertisers
Supply-side
P
u
b
l
i
s
h
e
r
s
-Workflow mgmt
-Publisher advertising mgmt
-Data mgmt
Ad operating system
for publishers
- Processing 1 billion requests / day
- Advertising placement on 400 PC
publishers and 10,000 mobile
publishers daily
- Matching the right ads with the
most appropriate audience
- Automated company workflow
mgmt
- Generating financial reporting data
for mgmt decision-making
AdChina is China„s leading integrated internet advertising platform. A leader in online advertising space in China, AdChina provides the
technology platform and creates the marketplace for publishers, agencies/advertisers, as well as other third party players with a
comprehensive range of digital advertising technologies, online user data solutions, and audience management systems. By end of Q3
2011, on a monthly basis, AdChina platforms have access to over 457 million or ~90% of total Chinese internet users across PC internet
and mobile internet. AdChina was founded in Silicon Valley in 2007.
AdChina is the leading technology-driven integrated internet
advertising platform in China
Demand-side
- 100 premium online
publishers are using ASP
- 80 mainstream mobile
publishers are using ASP
- 200 additional campaigns
per month
- 300 campaigns at any
given time
- 4000 historical campaigns
- 4 of the top 6 international
4A groups in China are
using ADP
For PC and mobile internet
A
d
v
e
r
t
i
s
e
r
s
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[ PART 1 ]
2011-2012 Digital Media Outlook
[ 1.1 ] General
[ 1.2 ] Display Ads
[ 1.3 ] Mobile internet
[ 1.4 ] Video
[ 1.5 ] Social Media
[ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5, Augmented Reality, NFC, QR code, Open Platform, Interest Graph
- Internet visitation through mobile devices accounts for 1% of the non-search & eCommerce total.
- APP marketing to become mainstream and LBS commercialization at the inflection point.
- 20% of the display ads to be placed through 3rd party platforms by 2014 in China. Dramatic
growth to happen in 2012 driven by client confidence based on proven result and cautious
economic outlook.
- Social media user growth to slow down. Social media marketing approaches and measurement
metrics to diversify.
- Coming soon: AdChina “Microblog Marketing Manual: Today & Future”
- Online video to grow significantly. TV and internet overlap exceeds 50% in the top 60 China cities.
- Chinese internet population exceeded 500 million in Jan. 2012. Driven by government policies,
short term growth comes from urban and long term from rural markets.
- Chinese internet advertising budget as percentage of total is ½ of that of the developed market.
We estimate dramatic growth in 2012.
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[ PART 1 ]
2011-2012 Digital Media Outlook
[ 1.1 ] General: Winning on internet = winning the current & future consumers
[ 1.2 ] Display Advertising
[ 1.3 ] Mobile internet
[ 1.4 ] Video
[ 1.5 ] Social Media
[ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5, Augmented Reality, NFC, QRcode, Open Platform, Interest Graph
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China internet population exceeded 500 million; rural growth drives long term outlook
- Government policies are the main drivers. “The National 12th 5-year Plan” indicates that information technology
construction for the rural areas is the main focus of rural development in China in 2011-2015.
- The urbanization process also accelerates the progress.
Bandwidth upgrade and 3-screen development brings opportunities for new internet
applications, hence drives urban internet growth in near term
- “Broadband China” strategy is part of “The National 12th 5-year Plan”. The internet bandwidth in urban cities will be
upgraded and the prices will drop dramatically. “3-screen project ”will continue to be important.
- Online video, cloud services, and internet TV will proliferate accordingly and change urban internet users‟ behaviors.
Data source: CNNIC China Internet Statistics2009-2012
Users(millions)
Mobile
internet
Rural
PC
internet
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Social media continues growth, mobile to drive social
- Growth for traditional social networking and microblogs will slow down. User
fatigue starts to appear.
- Mobile social isto take off. Weixin* as the killer APP, will lead the next social
networking tide.
- Consumer online video usage will increase dramatically in 2012, driven by: 1. higher speed and
lower price of broadband; 2. the Bureau of Radio & TV‟s administrative order to limit certain
entertainment content on TV.
- Advertisers will shift significant advertising budget from TV to internet video. However the online
video sites may not be able to absorb all the additional budget because most advertisers only
command the traffic from tier 1 and 2 cities, which only accounts for 30%** of the total online video
sites‟ traffic. 3rd party display advertising platforms which are able to offer solid cross-channel
media planning and data solutions will thrive with the opportunity
Online video to take the lead in digital advertising
Social media and online
video are not yet saturated
Social media
coverage
Online video
coverage
US data source:
comScore Nov. 2011
China data source:
CNNIC29th China
Internet Statistics
Jan. 2012
* Weixin is the mobile instant messaging application offered by Tencent weixin.qq.com
** AdChina platform data, Jan. 2012
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Winning on internet = winning current & future consumers
China’s netizens spend almost as much time on internet as on TV
Newspaper
avg. time spent
hours/day
Magazine
CMMS Summer 2007 – Summer 2011
TV
Internet
Broadcast
CNNIC 29th China Internet Statistics Report Jan 2012 StarcomMediaVest Group “China Yangtze Study: Oct. 2011
avg. time spent
hours/day (age:13-45)
TV
Internet
Younger users (age: 13-45) spend more time on internet than on
TV, especially in Tier 3 & 4 cities
28% of internet users are below 20 years;
30% are 20-30
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Internet advertising is under-invested in China
- Most Chinese advertisers think that internet marketing is a high priority. Their investment decision is
held back by the fact that there are not enough reliable digital marketing partners who can offer
measurable services as on TV.
- The mature internet advertisers are increasing their budget significantly in 2012 to occupy resources
and build customer assets on internet before more competition comes in.
- The London Olympics, proliferation of smart phones, and internet‟s expansion to the smaller cities and
rural areas will bring new opportunities to internet marketing in 2012.
China data source:GroupM “This Year, Next Year, China Media Forecasters” , Sep. 2010;
U.S. data source:eMarketer 2010 data, published in Mar. 2011
China’s internet ad spending as % of the total media budget is ½ of that in the US
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[ PART 1 ]
2011-2012 Digital Media Outlook
[ 1.1 ] General
[ 1.2 ] Display Advertising:Ad placement through 3rd party platforms to become mainstream
[ 1.3 ] Mobile internet
[ 1.4 ] Video
[ 1.5 ] Social Media
[ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5, Augmented Reality, NFC, QRcode, Open Platform, Interest Graph
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Global perspectives:
- Google to increase investment in display advertising, especially in 4 areas:
- Technology to simplify media buying and ad placement
- Ad space engagement capabilities
- Advertising evaluation mechanism
- Advertising operations system for media owners to effectively manage traffic monetization and media planning
China scene:
- After the rise and fall of eCommerce fever in 2011, advertisers now have a clearer perception on budget allocation and
KPI setting for brand advertising and performance-based advertising.
- After trial and testing, the Chinese advertisers have become used to looking beyond PV and clicks to evaluate digital
advertising. Branding lift and target audience coverage efficiency are to become standard metrics.
- Advertisers request display ads to be better combined with social media marketing.
eMarketer Nov. 2011
China display ad as % to total digital spending will grow to 43% in 2014
Display ads to become highest priority for Chinese advertisers
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Ad placement through 3rd
party platforms is a top choice
for US advertisers
- US advertisers widely recognize the value
of ad networks, DSPs*, and ad
exchanges for delivering better results
and saving budget.
- The generally low economic outlook
further promoted advertisers‟ adoption of
3rd party platforms.
*A DSP(Demand Side Platform) is a system that allows digital advertisers to manage multiple ads through one interface. Utilizing a DSP,
marketers can manage their bids for the ad space, the pricing, and the data that they are layering on to target their audiences.
- DSP is still in its starting stage in China.
- AdChina DSP is probably the only DSP
developed for China market with world-
class standards.
- 4 of the top 6 international 4A media
agencies in China adopted AdChina DSP
to manage their advertising operations in
the past 2 years. We estimate significant
growth in China‟s DSP business in 2012.
AdChina platform ad
placement is widely recognized
by Chinese advertisers - On average, every client has placed more
than 4 ads with AdChina.
- We estimate that at least 20% of the
internet ads will be placed through 3rd
party platforms in China by 2014.
ValueClick “Advertiser Survey 2011”
based on 400+ senior U.S. advertiser
Feb. 2011
43% advertisers plan to spend more than 25% of their digital
budgets in / through? ad networks
25% of advertisers planned to increase their ad network budget
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- The Chinese advertisers need the platforms to deliver ads to massive audiences and across
hundreds of websites easily. Publisher quality is a high priority.
Chinese advertisers utilize 3rd party display ad platforms mainly for branding
The Harvard Business School research students provided the following POV: - It‟s a massive offline market in China. Advertisers recognize 3rd party platforms‟ abilities to
maximize the reach to consumers, collect data and conduct eCRM to drive offline sales
- The Chinese digital market is sophisticated but not complex. Advertisers are good at
prioritization. That‟s why it‟s hard for the market space to support multiple types of 3rd party
platforms to develop. Chinese advertisers prefer platforms that can provide to them practical
solutions and proven track records.
Harvard Business School“China’s Technology-driven Advertising Study”, Dec. 2011
China branding ad network market will double every year till 2013
iResearch 2010-2011China ad network development report
May. 2011
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The top 3 factors in
choosing a media partner:
US advertisers value
data-driven advertising
capabilities
- Performance/ROI
- Audience targeting
- Price
- The ROI from behavioral targeting
may vary significantly depending on
the technological capabilities to
process large-scale data and conduct
multi-dimensional analysis
ValueClick “Advertiser Survey 2011”
Based on 400+ senior US advertiser
Feb. 2011
The top factors in choosing a media partner
Behavioral targeting (66%) is believed to be one of the most important
types of audience targeting
Harvard Business School“China’s Technology-driven Advertising Study”, Dec. 2011
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[ PART 1 ]
2011-2012 Digital Media Outlook
[ 1.1 ] General
[ 1.2 ] Display Advertising
[ 1.3 ] Mobile internet:It’s a war. And it’s starting now.
[ 1.4 ] Video
[ 1.5 ] Social Media
[ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5, Augmented Reality, NFC, QRcode, Open Platform, Interest Graph
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Mobile advertising has great potential. Tablets are the future stars
- Mobile internet user growth CAGR is much higher than PC internet in the
comparable period. Smart phone proliferation and decrease in telecom fees are
the main drivers.
- Tablet computer growth was significant in 2011 and provides new marketing
opportunities in the next few years.
- 1% of the AdChina online platform visitation (non-search and eCommerce) are
from mobile devices at the end of 2011. While the according number from the
previous year was only 0.04%. 44.5% of the mobile devices‟ traffic are from iPads
at the end of 2011.
- AdChina research indicates that 58% of the mobile users
are using smart phones.
- 74% of mobile internet users access internet everyday
using smart phone and 87% use installed mobile internet
applications
2007
50MM
Smart phone changing the world CNNIC 29th China Internet Statistics Report
Jan. 2012
End of 2011
356MM CAGR 48%
*Base: mobile internet users
AdChina “2011China mobile internet research report”
Jul. 2011
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APPs are already among
the most important
consumer touch points
APPs are highly fragmented
- Consumers use APPs as time fillers
and on a frequent basis
55% of app users use apps longer than 1 hour/day
9% heavy users use apps more than 5 hours/day
55% mobile users use more than 5 apps, up by 31% YOY
AdChina “2011China mobile internet research report”
Jul. 2011
App Store & Android Market Dec. 2011
- Number of apps on the global market :
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LBS might be the next killer marketing application
In 2011a lot of major digital media owners (Sina, Jiepang, Shanda, Tencent, Dianping, etc.) upgraded their
LBS services. New applications include:
- Coupon downloads
- eCommerce
- Location-based social networking
- Quick response (QR) code scanning
LBS: it’s beyond check-
in and sharing
- As user needs change, new
marketing opportunities around
LBS will emerge.
42% of mobile users use LBS* because of convenience
Convenience
Social needs
Fashion
Coupons
Enfodesk Dec. 2011
*A location-based service (LBS) is an information or entertainment service which is accessible with mobile devices
through the mobile network and which uses information on the geographical position of the mobile device.
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Chinese mobile internet
users are more willing to
receive mobile ads than
the US counterparts
- 61% of Chinese mobile users are willing to
receive ads for rewards or freebies.
- 53% of the Chinese mobile users used a mobile
coupon to purchase a product offline.
Google/IPSOS/MMA (Mobile Marketing Association) Our Mobile Planet Nov.2011
*Base: smart phone owners
who have noticed advertising on their smartphones
*Base: smart phone owners
Awareness of mobile ads
Statements
Actions after noticing a mobile ad
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[ PART 1 ]
2011-2012 Digital Media Outlook
[ 1.1 ] General
[ 1.2 ] Display Advertising
[ 1.3 ] Mobile internet
[ 1.4 ] Video:Cross-screen is the gold mine for digital marketing
[ 1.5 ] Social Media
[ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5, Augmented Reality, NFC, QRcode, Open Platform, Interest Graph
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Online video user base
continues to grow
- User composition of online video is much younger
than the general internet.
Online video is an addictive
medium - According to data from Youku.com (the largest online
video website in China), the online video users‟ time spent
on TV decreased by 63.3%, frequency dropped by 56.4%
after they started to watch video online.
- The longer a user uses online video, the more the media
behavior changes.
End of 2011
325MM CAGR 15%
67% online video users are below 30
Jan-Nov. 2011
Online video monthly time spent increased 57%
CNNIC 29th China Internet Statistics Report
Jan.2012
iResearch iUserTracker Jan-Nov. 2011
2007
160MM
CNNIC 29th China Internet Statistics Report
Jan. 2012
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Cross-screen usage increases year by year
TV and internet complement each other well in terms of reach
Internet complements TV reach during day time
TV complements internet reach during the night time
CMMS2009A~CMMS2010A
China National Resident Survey, 2008-2010
60 top Chinese cities, sample age: 15-60
TV & internet user overlap is above 50%
TV only users decreased year on year TV & internet overlap reached 63% in tier 1 cities
CC11SUAC Mar. 2011
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Interactive pre-roll
is coming - Interactive pre-roll works well with long video content and to engage young audiences.
- Interactive pre-roll is a hot new format on the US market in 2011. AdChina introduced the format to China in Q4 2011
after collecting enough data to prove its value to Chinese advertisers.
Pre-roll Interactive pre-roll
comScore Data for in-stream Video Advertising Jul. 2011
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[ PART 1 ]
2011-2012Digital Media Outlook
[ 1.1 ] General
[ 1.2 ] Display Advertising
[ 1.3 ] Mobile internet
[ 1.4 ] Video
[ 1.5 ] Social Media:The market is looking for a practical social media marketing book
[ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5, Augmented Reality, NFC, QRcode, Open Platform, Interest Graph
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Online social media user growth slowed down - Mobile social networking is reaching its critical mass. Weixin active users reached 30 million.
Social media marketing is at its
early stage in China
- Less than half of the advertisers use
social media for marketing purposes in
China while 80% do so in the US.
- Social media marketing is heavily
under-invested in China. reason of social media
marketing
usage of social media
marketing
Booz &Co Buddy Media
Campaigns to Capabilities
Social Media &Marketing
Oct. 2011
2011.10
350MM
Nov. 2011
390MM
iResearch iUserTracker
Jan-Nov. 2011
Grant Thornton
“International Business Report”
Nov. 2011
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- Limited by the availability of technology and tools, social media
marketing is mainly evaluated by the number of followers and forwards
currently
Chinese advertisers’ urging
question: How to effectively do
micro-blog marketing
Social media marketing metrics US advertisers are most
concerned about
Chief Marketer
“2011 Social Marketing Survey”
Oct. 2011
Coming soon: AdChina
“Micro-blog Marketing Manual:
Today and Future”
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Planning out of the box to unleash the power of social media marketing
- Advertisers need to build the strategy and working process to utilize social media to engage
with customers, conduct CRM, building word-of-mouth, and collect market insights
Booz & Co Buddy Media
Campaigns to Capabilities
Social Media & Marketing
Oct. 2011
US advertisers widely use social media for brand building
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[ PART 1 ]
2011-2012Digital Media Outlook
[ 1.1 ] General
[ 1.2 ] Display Advertising
[ 1.3 ] Mobile internet
[ 1.4 ] Video
[ 1.5 ] Social Media
[ PART 2 ] 2012 New Digital Technology Outlook SoLoMo, HTML5, Augmented Reality, NFC, QRcode, Open Platform, Interest Graph
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HTML5
STANDARD
SOLOMO MARKETING
NEAR FIELD
COMMUNICATION
INTEREST GRAPH
OPEN
PLATFORM
AUGMENTED
REALITY
QUICK RESPONSE
CODE
Social Mobile
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Mobile Connecting
online with
offline
Social Where word-
of-mouth and
viral content
fly
Local Generating
sales and
shopping
experiences
So-Mo: Connecting with the
consumers at real time
Mo-Lo: driving consumers to the stores
Lo-So: creating word-of-mouth
LBS to direct
consumers to the
nearby stores and
outdoor.
More and more consumers are
using mobile devices accessing
social media, checking out micro-
blogs and checking in to share their
thoughts and activities with friends.
Consumers today
are eager to express
themselves. Social
media is their stage.
Posting pictures and
checking-in to share
shopping
experiences are
common activities.
O2O
SoLoMo: connecting the digital and real world
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Two-dimensional code/quick response code:
scan it, and you’ll know
Consumers are scanning every code they can access
Newspapers Product
packaging
Webpages Fliers Outdoor TV Postcards
QR code scan enables
Mobile
payment
Accessing
product
information
APP
download
Online/Mobile
Shopping
Coupon
download
Sharing
on social
media
Check-in
Please try and scan the QR code
above : )
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Augmented reality: adding new possibilities to
marketing ideas
Combining with QR codes:
bringing life to the creative
Combining QR
scanning with LBS
- Through scanning the QR codes
on magazines, packages or other
media, the users will be presented
with animated content.
- Through scanning the QR code at
the store front or outdoor ads, users
can see virtual content added to the
environment they are in.
- There are limited mobile applications in China with augmented reality functions.
- The market is expecting the big fanfare event. AdChina targets to be the clients‟ technology enabler.
Augmented reality marketing is not widely adopted yet in China
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Near Field Communication: the future star
Fast and safe data exchange without touch or connection line
-The latest Android 4.0 system includes the Near Field Communication (NFC) technology named Android
Beam. Users can easily exchange webpages, maps, and game data at near range with each other.
- The NFC technology creates new creative possibilities to APP marketing and enables new interactive
experiences for consumers.
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HTML5: an upgrade to user experiences
HTML5 will dramatically enhance mobile experiences:
faster, bringing more powerful functions, and better compatibility
- According to AT&T, 85% of all smart phones being sold in 2016 will support HTML5
- HTML5 can help marketers to deploy the same creative or campaign easily on mobile devices with different
operating systems
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Open platform: integration & fragmentation
Integration - Through open platform, the user can utilize multiple
services through one single platform, i.e. sharing video
content to social media, and doing shopping on social
media.
Fragmentation - Open platform decreased the entry barrier for
developing applications, services, and websites. A
lot of new players will come into the market and
provide more choices to the users.
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Interest graph: the next hot thing
Vertical social networking: based on interest - Through interest graph, users can get to know people beyond “6 degrees
of separation”
Augmented social networking: stronger media influence
- Media based on interest graph push content to users according to their interest.
Such content could be highly valuable and attract loyal users.
- Fashion industry could be the first one to adopt this technology for marketing.
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Please follow us on Sina microblog:
@闫方军Alan
易传媒CEO
@郑靖伟
易传媒COO
@易传媒-celia
易传媒CMO
@程华奕
易传媒CTO
@王帅民
易传媒媒体副总裁
@Jing潘静
易传媒市场营销副总裁
Our World Class Advisory Board
@AdChina易传媒 @易传媒App营销方案 @易传媒LBS营销平台 @易传媒Solutions @易传媒CircleA @易传媒ASP
David Rosenblatt
-CEO, Double Click
-President, Google
Display Ads
-Board member, Twitter
Michael Galgon
-Principal Advertising
Strategist, Microsoft
-Founder, aQuantive
Rick Thompson
-Founder, Playdom
-CEO, Adify &Flycast
William A. Sahlman
-Senior Associate
Dean, Harvard
Business School