Online promotions to face more scrutiny in China

Domob Mobile Advertising Network stand at the Global Mobile Internet Conference last year in Beijing. Revenue from the Internet advertisement market in China jumped 36.7 percent year-on-year to 90 billion yuan in 2014.[Provided to China Daily]

Online advertising will be subject to more scrutiny in China, after a top regulator said on Wednesday that the government would come out with more rules to supervise the sector.

Zhang Guohua, head of the advertisement supervision department at the State Administration for Industry and Commerce, said his department will take more steps to curb illegal and fake online advertisements.

"Those who break the rules will face strengthened supervision and higher fines," said Zhang during the launch ceremony of China's first national mobile advertising regulation in Beijing.

The newly introduced regulation focuses on the technical side of the mobile adverting industry, but Zhang said that more rules and regulations targeting the content of online advertisements are expected to be rolled out soon.

Zhang said a data center dedicated to monitoring Internet advertisements is under construction in East China's Zhejiang province. "The center, which is expected to be completed this year, will check all the advertisements on China's 100 major search engines and portal websites," he said.

Zhang's speech came one day after a well-known toothpaste brand owned by multinational firm Procter &Gamble was fined 6.03 million yuan ($960,000) for its false TV commercial, the biggest amount that China has imposed on misleading advertisements.

The Shanghai Administration for Industry and Commerce said on Tuesday that toothpaste brand Crest exaggerated the whitening effect of one of its products, by photo-shopping the advertisement.

Zhang said that though the online advertisement environment is getting cleaner and more regulated, a sizeable proportion of online ads are still of dubious nature.

"More than 30 percent of the online ads in sectors like medical treatment, medicine, health products and cosmetics are in violation of certain rules and regulations," he said.

Compared with the shrinking market of traditional advisement channels, such as newspapers, the revenue from Internet advertisements has been soaring over the past several years.

Statistics from the State Administration for Industry and Commerce showed that Internet advertisement revenue in China jumped 36.7 percent year-on-year to 90 billion yuan in 2014. "If you take the advertisement revenues of search engines and e-commerce platforms into account, the size of the online advertisement sector is expected to have exceeded 200 billion yuan last year," said Zhang from SAIC.

Wei Xiangchao, an analyst with Beijing-based Internet consultancy Analysys International, said that with smartphones becoming an integral part of everyday life, mobile advertising is set for robust growth in the coming years with several innovative options to do promotions via location-based technology.

"A more detailed regulation is good for the sustainable growth of the online adverting sector as every player can have a unified benchmark amid competition," he said.

Zhu Guang, vice-president of the Beijing-based Baidu Inc, said that mobile Internet brings plenty of opportunities for advertisers. The advertisement revenue generated by the mobile apps of Baidu has exceeded the amount generated by the company's search engines on personal computers at the end of 2014.