Although China's Internet economy boasts the world's second largest population of netizens, it remains underdeveloped, as shown in a mere 1% share in the global web advertisement market.
By late April 2004, there were about 79.5 million netizens in China, second only to the US, according to data provided by the China Internet Network Information Center, CNNIC. At the same time, a recent market survey conducted by Shanghai Research Co., Ltd. showed that in 2003 China's market for Internet ads amounted to US$130.12 million–a rise of 120% over the previous year. Despite this fast growth, however, China accounted for only 1% of the global web ads market, which was valued at US$11.5 billion last year.
In 2004 China's Internet ads market is expected to grow at an annual rate of 67%, but that would be against a 91% growth for the global market, which would be valued at approximately US$22 billion this year, predicted Shanghai Research.
Centralized distribution of customers and the small size of ads spending by each customers were mainly responsible for the poor performance of the ads market in China, according to the firm.