Edited by Societe Generale Securities: "online Advertising maintains High growth rate, CR3 concentration decreases-- Quarterly tracking report of 2018Q3 Advertising Industry"
Advertising is the core mode of online and offline Internet companies and media companies. Societe Generale Securities pointed out that China's online advertising revenue as a whole still maintained a high growth rate, but byte jumps and other platforms driven by algorithm distribution have emerged as a new force, and the concentration of industry CR3 has declined in the first three quarters of 2018. From the perspective of sub-areas, e-commerce, search and social networking remained ahead in the first three quarters.
In terms of 2015-2018Q3, the growth rate peaked in Q1 in 2018 and declined quarter by quarter in 2018, but 2018Q3 still grew by 38.27% year-on-year. In the context of the economic downturn, brand advertising is under pressure, strong media or effect advertising growth is good, and individual growth is moving towards structural differentiation.
BABA, Baidu, Inc. and Tencent occupy the top three in the market, with byte jumping as a new force. In the first three quarters of 2018, the advertising revenue of BABA's core retail e-commerce alone reached 88.966 billion yuan, while Baidu, Inc. and Tencent reached 60.715 billion yuan and 41.046 billion yuan respectively, with CR3 reaching 65%, down from about 72% of CR3's market share in 2017.
From the perspective of sub-areas, e-commerce, search and social networking remained in the lead in the first three quarters, with advertising revenue reaching 101.74 billion yuan, 65.644 billion yuan and 48.214 billion yuan respectively. The market shares of 2018Q3 e-commerce, search and social networking are 34.59%, 21.71% and 17.07% respectively, compared with the 2017Q3 year-on-year changes of + 0.05pct,-5.05pct and + 1.12pct, respectively. On the other hand, the algorithm distribution class (byte beat, Qutoutiao) has emerged as a new force and seized more advertising budget. BABA's share of e-commerce advertising fell, but Pinduoduo and Meituan made up for it.
With the attribute of "high frequency must go through anti-interference", offline media focus media ranks fifth in the volume of the company's advertising, but its market share decreases slightly. This is mainly due to the fact that as advertisers pay more and more attention to results, the relative status gap between offline media and Internet media is widening. Societe Generale Securities pointed out that in the relatively poor economic situation, elevator poster advertisements with more "effective" attributes have a faster growth rate. The expansion of the company's frame media, the latest vertical screen, and the acceptance of BABA's strategic investment are all measures to face the effect of advertising, which is expected to maintain a strong offline media position.
Societe Generale Securities believes that the overall advertising boom is closely related to the economic cycle, and advertising growth is expected to be about 2% for the whole of 2018. It is structurally optimistic about the online advertising boom, the development of effective media, and the strong media whose relative status has improved. The current life circle media ushered in a period of effective digital change, and the improvement of conversion rate is worth looking forward to. Focus on: Tencent, Weibo Corp, Pinduoduo, Meituan comment, Qutoutiao, XIAOMI Group, Byte Jump (unlisted), and focus Media, etc.