Advertisers facing creative challenge

The Big Six in terms of size in the world are the US-based Omicom, London-based WPP Group, New York-based Interpublic Group, Paris-based Publicis Groupe, Tokyo-based Dentsu and France-based Havas Suresnes.

"Local Chinese brands are slowly starting to look to multinational agencies for more and more support," said David Hunt, general manager for the Shanghai operations of AKQA's, a New York-based advertising firm and a Chinese advertising industry veteran.

"In order to do that, they are going to have to work with multinational agencies because a lot of the local agencies don't have support overseas."

Merger mantras

Even as Chinese companies are looking increasingly to large advertising firms for overseas support, large holding companies like Publicis have made huge efforts to increase their presence in the Chinese market by acquiring domestic ad agencies.

Over the past five months, Publicis has purchased three Chinese advertising companies - UBS in February, King Harvests and Luminous in March, and Longtuo in May. The purchases are part of the company's long-term strategy to double its China presence by 2015.

Though the company's move is viewed by some industry experts as a late attempt to expand into China's promising ad market - many of its competitors have been present in China since the late 1980s - the recent flurry of acquisitions by the French firm indicates the crucial significance of the China market for the global advertising industry amid slow growth in Europe.

Acquisitions by Publicis may have been the most recent effort by companies to be in the limelight, but expansion efforts from multinational companies are something that have been going on steadily for years.

WPP, currently the largest foreign advertising agency in China with annual revenues of $1.3 billion, has acquired majority stakes in more than a dozen Asian advertisers during the past eight years.

"The reasons for increased interest, whenever it actually occurred, is the dawning realization that China is the second-largest advertising market in the world and growing at twice the rate of Chinese GDP growth," said Martin Sorrell, chief executive of WPP.

"China will surpass the US in terms of GDP eventually and it will be back to the future in the sense that some 200 years ago China and India accounted for 40 percent of world GDP, and they will do so again in a few years from now.

"Some believe the last couple of hundred years have been a blip in Chinese history and the country will return to supremacy, as before. I would agree."

While China may be a future source of fuel for global advertising revenue, the practice is nothing new.

There is evidence that advertising has been around in China since the Song Dynasty (960-1279), when basic inked paper messages would offer services such as acupuncture treatment. But China's real foray into the world of modern advertising began during the late 1970s when economic reforms began transforming the way goods were bought and sold.

But even then advertisements were basic, touting single line messages in a style that resembled the official slogans that were so common throughout China during that era.

Throughout much of the early 1980s, the presence of foreign advertisers was minimal. Those that took the risk to become pioneers were required by law to partner with Chinese companies.