Last week, we learned of a ban on TV advertising luxury goods in China issued by SARFT that is preventing luxury goods advertisers from reaching their consumers through television (and billboards) during one of the most lucrative times of year (with Spring Festival and Valentine’s Day both traditional drivers of luxury sales). So what’s a luxury advertiser to do? Turn to the internet.
As this Seeking Alpha report suggests, the luxury goods ad ban could be great news for Baidu (NASDAQ:BIDU), as luxury brands may turn to the web to get their messages out. Baidu is one of the Chinese web’s biggest advertising providers, and it certainly stands to benefit both in the short term and the long term from this TV ad ban, as vendors who buy successful ad campaigns online will be more likely to stick with web ads in the future instead of returning to TV when and if SARFT’s ban is retracted.
But Baidu is far from the only company that could benefit from a luxury advertising influx. Video streaming sites like Youku (NYSE:YOKU) could also see big bumps as luxury advertisers whose TV spots now can’t be aired move their money into digital video ads. And of course, many of China’s other web portals offer more traditional advertising solutions that luxury advertisers may be interested in. Ads on popular e-commerce sites could see a price spike. Even Baidu nemesis Qihoo could see an influx of cash via ad buys in its search results.
Of course, until we see this quarter’s financial results, it will be impossible to tell just how much of an impact SARFT’s ban has actually had, and who has gotten the biggest advantage out of it. I wouldn’t be at all surprised to see a lot of Chinese internet companies, and especially Youku and Baidu, see a numbers bump as a result of the ban. I expect that Youku and other streaming video sites may end up getting the best of this new ad influx, but of course I’m just speculating.
Whatever happens, it’s got to be good news for China’s web ecosystem, and that’s a happy surprise. Usually SARFT busies itself with trying to ruin the internet, so it’s nice to see that for once a SARFT regulation could actually be helping out Chinese web companies.
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