According to industry observers, Sina will use the acquisition, worth more than US$1 billion, to position the company to help marketers move their budgets from traditional to digital media.
The deal gives the internet company ownership of Focus Media’s out-of-home assets including its LCD display network, comprising 120,000 outdoor digital screens in more than 90 cities across China. The deal hands Sina 52 per cent of Focus Media’s revenues and 73 per cent of its gross profits, as judged by the first nine months of 2008.
Focus Media, meanwhile, will maintain an independent online advertising division, cinema network and some traditional billboards.
The move reflects Sina’s ambitions to become a diverse media provider. According to Sina CEO Charles Chao in a statement, the acquisition reinforces the company’s position in new media advertising.
CultureFish Media CEO Lonnie Hodge argues that the move is well-timed because it allows Sina to sell itself as the landing spot for advertisers looking to make a transition from traditional advertising into online advertising.
“I think it’s brilliant and I think the timing is perfect for Sina because it’s looking beyond its normal audience to create a whole new marketplace, and it’s going into places where its competition is not. It can now can offer everything,” he said.
Hodge added that the acquisition’s steep price tag may have been worthwhile as online adspend is estimated to grow as much as 20 per cent in China this year. “It’s stupid not to have something to help people who are looking to make the transition into online. Then Sina’s regained revenue can be used to empower its online R&D.”
According to Lawrence Wan, general manager of OMG Digital in China, the deal may spark a “year of consolidation” between companies who work in digital - “whether that’s video or social networking or a portal and a company using LED screens.”
He added: “Intuitively the deal makes sense from a revenue perspective - just grab a partner and you can merge the digital and outdoor worlds and that will help overcome the challenge of focusing on offline media players for ads. Initially, it won’t impact the way agencies and clients buy media but it will if everyone starts doing this.”
The announcement comes a month after Sina reported a 64 per cent year-on-year spike in third-quarter revenues.
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The deal gives the internet company ownership of Focus Media’s out-of-home assets including its LCD display network, comprising 120,000 outdoor digital screens in more than 90 cities across China. The deal hands Sina 52 per cent of Focus Media’s revenues and 73 per cent of its gross profits, as judged by the first nine months of 2008.
Focus Media, meanwhile, will maintain an independent online advertising division, cinema network and some traditional billboards.
The move reflects Sina’s ambitions to become a diverse media provider. According to Sina CEO Charles Chao in a statement, the acquisition reinforces the company’s position in new media advertising.
CultureFish Media CEO Lonnie Hodge argues that the move is well-timed because it allows Sina to sell itself as the landing spot for advertisers looking to make a transition from traditional advertising into online advertising.
“I think it’s brilliant and I think the timing is perfect for Sina because it’s looking beyond its normal audience to create a whole new marketplace, and it’s going into places where its competition is not. It can now can offer everything,” he said.
Hodge added that the acquisition’s steep price tag may have been worthwhile as online adspend is estimated to grow as much as 20 per cent in China this year. “It’s stupid not to have something to help people who are looking to make the transition into online. Then Sina’s regained revenue can be used to empower its online R&D.”
According to Lawrence Wan, general manager of OMG Digital in China, the deal may spark a “year of consolidation” between companies who work in digital - “whether that’s video or social networking or a portal and a company using LED screens.”
He added: “Intuitively the deal makes sense from a revenue perspective - just grab a partner and you can merge the digital and outdoor worlds and that will help overcome the challenge of focusing on offline media players for ads. Initially, it won’t impact the way agencies and clients buy media but it will if everyone starts doing this.”
The announcement comes a month after Sina reported a 64 per cent year-on-year spike in third-quarter revenues.
See Opinion
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