While Billboard isn't the first American media company to launch in China, it's part of a trend of firms looking to spread their footprint in the country — and seek new sources of advertising revenues. The U.S. remains the largest advertising market with $189 billion spent on total media in 2015, according to eMarketer, but China is in second place. Last year, companies spent a total of $73 billion on advertising in the country.
Conde Nast launched Vogue China in 2005 with state-owned China Pictorial Publishing House and has since expanded to include Chinese editions of Architectural Digest, GQ, GQ Style, Self, Vogue Collections and Conde Nast Traveler. Vice Media also has been in the country for several years through several different digital properties. It's even had some episodes of its The Creators Project air on state-owned China Central Television.
What's fueling advertiser interest is China's rapidly expanding middle class. A Credit Suisse report found that China now has middle class citizens than America. As of October, there were 109 million Chinese in the economic group, defined as households making the equivalent of $50,000 to $500,000 in U.S. dollars. Twice as many Chinese citizens as Americans have joined the middle class since 2000, though the growth rate has been slowing in the last few years.
Companies want to get in front of these Chinese consumers, who have a strong affinity for name-brand goods. To do so, they want to advertise with trusted media brands, opening opportunities for American media outlets willing to set up shop in the country. Vice's China outlets, for example, have worked with AB InBev, Intel, Diageo and Reebok.
"When we got a global brief before, it would ask for the U.S., U.K., France, Germany, Spain and maybe Japan," said advertising agency KBS global CEO Guy Hayward. "Now it says USA and China. They are the must-haves. Everywhere else is a nice to have. ... Europe remains a valuable market, but it's stagnant. If you're looking for fast growth, you need to go to China."
While Hayward said that companies overall are still only dedicating less than 10 percent of their advertising budget to China, interest is growing. Some of the international companies working with its London office have expressed just as much interest in advertising in China as in the U.S., he pointed out.
"The U.S. is still top of mind for most brands," Heyward said. "They generally still are the biggest market. What China offers is growth. Most global brands are spending a lot of time in China just to figure it out so they won't miss out on a huge growth opportunity."