Winning against the smartphone

There are places even the smartphone juggernaut doesn’t reach. 

That’s the key to the success of China’s Focus Media. It has built a business in what it calls lifestyle media, offering in-building, in-store and cinema video to urban audiences.

Industry stats highlight its success. China’s total ad market shrank by nearly 3 percent in 2015. While other traditional media segments contracted, cinema ads grew 64 percent and commercial buildings 17 percent, according to CTR. The trend has continued in the first half of 2016, with cinema up 77 percent and building video screens by 23 percent.

It may seem counter-intuitive, but Focus argues that in the mobile internet age the advantages of outdoor have become even stronger. 

“The biggest disadvantage brought by the internet to the audience is a number of choices,” says chief strategy officer, Cindy Yan Chan. Consumers spend a lot of time on their phones, and social, video and live streaming apps “intensify the trend of fragmentation”.

Focus’ next stage of expansion will be driven by new technologies and new markets. 

With WiFi, iBeacon and NFC technologies built in, Focus’ screens push out messages to nearby phones: users scan QR codes or use the shake function, or the LCD ad can connect directly to social media. Chan refers to a Focus Media campaign called “520 Loving You”, working with brands such as DiDi, DianPing and XieCheng. During the event, users could shake their Wechat near Focus’ LCD screens to get bonus points and coupons offered by participating brands.

The company is about to deploy a new screen with face recognition, online payment and gesture technology. “It brings better interactive experiences for advertisers and consumers.” Chan says.

Another new ploy is a cloud- and LBS-based ad platform, taking advantage of its Baidu analytics partnership. This uses big data to understand consumers’ interests, identify their daily routes and deliver targeted, location-based ads. 

Focus is also investing in new online personal finance and entertainment companies. It has put Rmb 100 million in Shuhe Technology, which has developed finance tools, and injected another
Rmb 300 million in games firm Yingxiong Esports. 

Offline still strong

Traditional media have resurfaced again as effective brand channels because they are “mobile-free spaces and moments in time where they can still gain full consumers’ attention”, Chan says. 

Elevator passengers, for example, might feel mobile use is impolite or regard it as “waiting time”. In the lift lobby only 11 percent of people use their phones while waiting, while 74 percent watch the LCD screens, a Millward Brown study found.

In contrast, Chan observes, Focus Media ads are “low-interference, unavoidable” and run on high rotation. “It’s difficult for regular advertising to play an effective role,” Chan says. “The ads are better when you have no means to block them.”

Focus Media’s strength is astute deployment of its outdoor media properties, enabling it to take brands deep into China’s middle classes.

In the face of a weak ad market, the company is clocking up healthy numbers. In Q3, it posted a 31 percent rise in net income and 13 percent boost in revenue, with revenue up 19 percent for the first nine months. Its business comprises four segments: LCD screens in high-end offices and apartments, paper and electronic posters in elevators, in-store screens and pre-show cinema ads. 

Focus is also developing some of its own video content. “We are a media company that owns our advertising platform,” Chan says. “We are planning to produce short videos and help our clients do brand naming and brand placement.”  

Quality catchment 

Focus Media has a catchment radius that includes many of China’s most attractive consumers. Its LCD network extends to high-end apartments and 90 percent of the top office buildings in the four Tier-1 cities, effectively reaching 108 million people. 

These better-educated, well-paid mainstream consumers are willing to spend more for higher quality products and services and brands. 

“Quality brands still get the consumers’ purchase premium. And brands are trying to upgrading and looking for those high-level customers,” Chan says. 

But it’s not just about getting into the buildings. Focus can offer a degree of precision in targeting following a deal struck with Baidu last year that gives it access to geographical search data results and analytics. If a building’s residents are searching for sports and birth-related topics, ads will be weighted towards athletics and baby gear. 

Its Infosys+ OOH system measures performance, applying the same metrics to outdoor media as it does to TV: ratings, GRP, reach and frequency.

While Focus Media’s growth has largely been a result of its China operations, the company has plans to move outside its home market. “We have plans to expand abroad, starting with India, Vietnam, Malaysia and so on,” Chan says.