2023 Internet Advertising Data Report in China Officially Released

On the afternoon of January 8th, the "2023 Internet Advertising Data Report in China" (hereinafter referred to as the "Report") and the "2023 Internet Marketing Development Report in China" (Blue Book) were released and the seminar was successfully held in the Beijing Normal University Building and the online platform. The conference was hosted by " Interactive Marketing Lab in Zhongguancun" and organized by School of Journalism and Communication of Beijing Normal University and Miaozhen Academy of Marketing Science. Many experts and scholars from the Internet industry and academia gathered online and offline to conduct in-depth discussions on the innovation and change of China's Internet advertising and marketing market in the past year.

In 2023, in the face of the complicated international situation and endless challenges, China has responded calmly and actively promoted the construction of a strong network country and digital China, and continued to achieve new results in stimulating the vitality of the digital economy, promoting the construction of a digital ecology, creating a clear cyberspace, and preventing cybersecurity risks.

The report studies and analyzes the Internet Advertising and Marketing market situation in 2023, aiming at exploring the new direction of the modernization and development of the Internet service China-style, and providing a comprehensive and continuous development synopsis of the Internet Marketing industry in China.

The report was released by Tan Beiping, a member of the Internet advertising data research team and president of the Miaozhen Academy of Marketing Science, with Yu Guoming, Changjiang Scholar Distinguished Professor of the Ministry of Education, delivering the keynote speech, and Cui Baoguo, professor of the School of Journalism and Communication at Tsinghua University, Zhu Chunyang, professor and doctoral supervisor of the School of Journalism at Fudan University, and Yao Xi, professor of the School of Journalism and Communication at Wuhan University, taking part in the seminar. During the same period, Ding Ding, Chief Editor of People's Daily Press, delivered a speech for the premiere of "2023 Internet Marketing Development Report in China" (Blue Book), and Ding Hanqing, Associate Dean of School of Journalism and Communication, Beijing Normal University, made a note on the premiere of the Blue Book.

1. Deep Application of AI Technology, Internet Advertising Market Size Shows Double-Digit Growth

In 2023, China's Internet advertising industry is characterized by diversification, innovation and intelligence, especially in the application of artificial intelligence (AI) technology. Currently, with the development of new technologies, especially the increasing maturity of AI technology, the Internet advertising industry is experiencing a technology-driven change, and AI technology has penetrated into all aspects of Internet advertising.The application of AI technology not only improves the accuracy and efficiency of advertising, but also promotes the development of advertising content creativity and personalization, which signals that the industry will usher in a new round of technological upgrading and business model innovation. The development of AI also promotes the reshaping of the industry chain of Internet advertising-related industries.

In 2023, China's Internet advertising market size is expected to be 573.2 billion RMB yuan, a growth of 12.66% from 2022. The market has once again shown growth after structural adjustment and optimal allocation of resources in 2022, indicating the resilience of China's Internet advertising market.

In 2023, China's Internet marketing market size is expected to be 675 billion yuan, an increase of 9.76% from the previous year, and the combined advertising and marketing market size is estimated to be 1248.2 billion yuan, an increase of 11.07% from the previous year.

In 2023, the market size of China's Internet advertising market grew by 31.26% compared with the market size of 436.7 billion yuan in 2019 before the pandemic, representing a four-year CAGR of 7.04%. (Three-year CAGR of 23.7% in 2019 compared to 2016). This shows that the pandemic had a significant impact on China's Internet advertising and marketing market, and the growth in 2023 carries a degree of recovery. In addition, Internet advertising and marketing has entered a structural adjustment cycle, which is also an endogenous reason for the significant slowdown in the four-year CAGR.

2. ByteDance is growing strongly and the internet landscape is being reshaped

In 2023, the competitive landscape of China's Internet giants was slightly adjusted, with ByteDance, which owns popular apps such as Douyin and Toutiao, surpassing Alibaba & Tencent to become the top company in terms of revenue.

Globally, as one of the top five Internet companies in the U.S., Meta had annual revenue of 116.6 billion dollars in 2022, compared with ByteDance's 85 billion dollars. However, judging from ByteDance's continuous upward growth trend, it is expected that ByteDance will most likely surpass Meta by 2024.

Among the TOP4 companies, ByteDance still maintains strong growth momentum, realizing a growth rate of 23.76% for the year. At the same time, ByteDance is also the second company whose advertising revenue scale reached over 100 billion yuan in recent 8 years. From the point of view of the growth rate of advertising business revenue scale, Kuaishou and Meituan have achieved about 20% growth, while Pinduoduo is the annual growth rate of more than 50%, compared with 2020 has been completed doubled, and there is a trend to enter the 20 billion yuan club, catching up with Jingdong and Meituan.

3. The rise of small program games and short dramas as a new growth point of the Internet

In 2023, China's domestic small program game market revenue reached 20 billion yuan, a year-on-year growth of up to 300%. This growth is attributed to the diversified cash-out modes of small program games, including in-app purchase payment, advertisement monetization and mixed monetization .

As emerging Internet advertising mediums, small program games and short plays not only show great potential in terms of advertisement placement, but also become important traffic entrances. Their rise has changed the traditional advertising industry pattern and provided new opportunities and challenges for advertisers.

From the media platform type revenue structure, e-commerce platform advertising revenue scale reached 207.006 billion yuan, still firmly occupy the top chair of the Internet advertising market channel type revenue, but video and short video platform combined advertising revenue has reached 143.308 billion yuan, become the second largest channel type of Internet advertisers to put, and still maintain high growth; and which short video platform advertising revenue compared to the previous year increased by 23.28%, the size of which has reached 105.840 billion yuan, its and e-commerce channels are the only two types of channels whose revenue scale exceeds 100 billion yuan, with the combined market scale accounting for more than 54% (e-commerce platforms accounted for 36.1%, short video platforms accounted for 18.5%), occupying half of the scale of Internet advertising revenue.

From the point of view of pricing method, there is a relatively large change in the market share of each type: Effective advertisements declined by 2.7 percentage point to 66.4% compared with the 69% market share in 2022, and the corresponding CPM advertisements market share increased by 2.6 percentage point to 28.5%, which indicates that Internet marketing has entered into a stage of structural adjustment, and advertisers' placement strategies have also changed.

4. Internet Marketing Management Policies Have Been Issued One After Another to Further Regulate and Promote the Healthy Development of the Industry

With the rapid development and change of the Internet advertising market, the State Administration for Market Supervision and Administration ("SAMSA") issued the Measures for the Administration of Internet Advertising ("Measures") on February 25, 2023, which was implemented on May 1, 2023, aiming to put forward more clear and detailed requirements for the regulation and supervision of the Internet advertising industry.

On April 11, 2023, the State Internet Information Office issued the Notice on the Public Consultation on , which is the first time that the State has issued a normative policy for the generative AI industry, which is bursting at the seams at the moment.

On January 1, 2024, the Regulations on the Internet Protection of Minors will be formally implemented. Particularly noteworthy is that the regulation explicitly stipulates that network product and service providers shall not utilize automated decision-making methods to conduct commercial marketing to minors. This provision of the Regulation primarily reflects the protection of minors' data security and privacy, as well as the determination to prevent minors from being subjected to undue commercial influence due to automated recommendation systems.

5. Food & Beverage, Personal Care and Mother & Child categories show a downward trend, while Transportation category maintains growth

In terms of industry and category, Food & Beverage and Personal Care & Mother & Baby categories showed a downward trend, from 64% in 2022 to 59.8% in 2023, with market concentration falling back to the 2021 level; in terms of the level of revenue growth, the Food & Beverage category showed a revenue growth of 10.3%, which was smaller than the industry's average level of growth, while the Personal Care & Mother & Baby category barely maintained its revenue level of 2022, with a small decline of 1.15%.

In terms of revenue growth scale, the transportation category maintained its good growth momentum in 2022 and became the category with the largest revenue scale growth in 2023, with its revenue growth contribution of 20.114 billion RMB yuan, representing an increase of 37.82% from 2022, which was larger than the growth contribution of 16.033 billion RMB yuan from the food & beverages category.

Due to regulation and market impact, advertising in the real estate category continued to decline, but the rate of decline began to narrow, having narrowed from 83% in 2022 to a decline of 34%, with the revenue size of the category falling to 2.042 billion yuan. Influenced by the real estate industry, the furniture upholstery advertising market also continued to decline in 2023, and its revenue size was 4.666 billion yuan.

Stable and far-reaching, and then have the ability to do something. Let's seize the opportunity of the times together, explore new methods of Chinese-style modernized Internet service society in continuous innovation and change, and promote the healthy and benign development of China's Internet marketing industry.

Attachment: "2023 Internet Advertising Data Report in China" (full version)