France's JCDecaux expects sales in China to surge to over 1 billion yuan (US$124 million) next year from zero in 2004, lifted by a series of major acquisitions, the firm's top China executive said.
That rapid growth comes as the world's second-biggest outdoor advertising firm chases global rival Clear Channel Communications Inc. in a US$1-US$2 billion market expected to grow 20 to 25 percent annually in the next few years, said Brian Kam, executive chairman of the company's two-year-old Chinese operation.
JCDecaux had boosted its presence in the market over the past year through a series of major contract wins and acquisitions.
Two of its biggest deals have been the purchase of a 73 percent stake in Media Partners International for US$92 million, and the purchase of MediaNation for over US$50 million.
Earlier this month, the company also made headlines when it won a 15-year exclusive contract for subway advertising in the northern city of Tianjin, following on similar wins in Beijing,
Shanghai and Hong Kong.
"This year we've taken some windows of opportunity that will help build a good platform for development in China," Kam said.
"Combined revenue for 2006 will be well over 1 billion yuan."
Kam said ad sales for 2005 were difficult to work out because of varied and intense acquisition efforts and diverse contract timetable.
Kam expects that flurry of activity to boost China to one of JCDecaux's top 10 markets globally next year ¡ª or one of its top five markets if
Hong Kong and
Macao are included.
"We'll be quite busy in the next year or two consolidating what we have already, and at the same time working on organic growth and new projects," said the China-born Kam.
JCDecaux, Clear Channel and U.S. media giant Viacom Inc. are the top three players in the global outdoor advertising space, which runs the gamut from billboards to bus and subway advertisements.
Kam said the industry's top five players now controlled about 25-30 percent of the China market, adding that he foresaw JCDecaux commanding a share of about 10 percent next year.
But the top five players would typically control a much bigger share of about 70 percent in more developed countries, reflecting the high degree of fragmentation that still exists in China, he added.
Clear Channel was the Chinese industry's earliest major entrant through its Clear Media venture, which saw profit rise 22.5 percent to HK$35 million (US$4.5 million) in the first half of 2005 as revenue jumped 26 percent to HK$307 million.
Viacom is a relative latecomer to the ad market, announcing in October a deal to buy a 70 percent stake in Magic Media, which sells advertising rights on the
Beijing bus system.
Tom Group Ltd. is the market's other major overseas player, with about 13 percent of its HK$1.42 billion in revenue in the first half of the year coming from outdoor advertising.
Two other wild cards in the China equation are Focus Media and Target Media, both of which are stealing ad dollars from traditional advertising and broadcast media through their networks of small-screen TVs in office building lobbies and convenience stores.
