U.S. online advertising company AdForce announced Tuesday that it signed a three-year partnership with Media999, a major Internet-advertising network run by Texas-based SoftMedia Consulting Group. The deal gives AdForce a strong position in Asia's competitive Internet-advertising market.
"The Asian market is the fastest-growing group of Internet users, outside the United States, and represents a tremendous opportunity for Internet advertising," said AdForce CEO Chuck Berger in a statement. "Media999, one of the largest Internet ad networks in Asia, is an important partner because of its unique knowledge and understanding of the Asian market."
The Asian market's size is appealing, and China is a major target for U.S. companies looking to move into Asia. According to a Gallup/Fortune poll, 14 percent of China's 1.2 billion people have heard of the Internet. In addition, Computer Electronics estimates that seven million Chinese will be online this year. That number is expected to increase to 44 million by 2003.
"The missing component in our strategy was that we needed a relationship with a large network, and we wanted one that was, for lack of a better expression, indigenous to the market," says Dee Cravens, VP of worldwide marketing for AdForce. The company launched AdForce Asia in September, and already has contracts with clients like Sina.com, 24/7 Asia and CompuServe.
The partnership with Media999 makes sense because while it sells the ad space, AdForce can deliver online ads. The deal gives AdForce access to popular Chinese Web sites and their increasing inventory of Internet advertising space, and offers Media 999 a more efficient way to serve ads.
Media 999 had been using Spinbox Technology to deliver ads before the partnership with AdForce. "Spinbox couldn't keep up with our growth," says Melissa Griffin-Henson, director of corporate operations for Media999. "AdForce will be able to scale, and it's a good partnership because we aren't competitors."
According to AdForce officials, the company will make a big push in China as it expands internationally. AdForce claims a 50 percent market share in Asia, and its relationship with Sina.com also makes it an attractive partner. When users look for particular words on Sina's search engine, AdForce's recognition of over 350 Chinese characters lets it serve appropriately targeted ads to consumers.
SoftMedia Consulting Group provides more than 300 million ads to over 6 million Asian Net users per month. Cravens says he wouldn't be surprised to see that figure jump to 1 billion ads a month this year. Media999 specializes in online advertising and has 97 employees in Beijing, serving clients in China like Sohu.com, Hewlett-Packard and MCI.
Forrester Research predicts that in China, $16 million will be spent this year on online advertising and $440 million will be spent in 2004. AdForce and Media999 did not state revenue expectations, but if Internet spending there continues to grow at its present rate of around 200 percent per year, they are likely to see hefty revenues.
Each of AdForce's main competitors has an Asian presence. DoubleClick has a number of sales offices in Asia. Last year, 24/7 Media partnered with China.com to develop its Asian network. Recently, it started using its own ad-serving technology, 24/7 Connect, and plans to integrate it into overseas operations later this year.