Consumer China

Losing Focus

  • Published 06 Aug 2009

With Sina's acquisition delayed and looking increasingly unlikely, Focus Media might have to launch a strategy rethink to turn around its weakening performance.

It's ironic that Focus Media Holding's (FMCN:Nasdaq) shortcoming is that it is actually too focused. The out-of-home advertising platform provider holds a near monopoly on the domestic commercial building advertising network. Its digital and non-digital advertising displays in office lobbies and elevators comprise over 50% of the company's sales. Nevertheless, this network is also the most saturated of all the out-of-home advertising platforms. The segment grew only 11% last year, compared with 156% growth in China's public transport advertisement sector – where Focus Media has no presence. With Sina's proposed $1.37bn (Rmb 9.36bn, €951m, £808m) deal to acquire the company's LCD, elevator and in-store advertising frame network looking further delayed or altogether unlikely; Focus Media has little room to manoeuvre in its key target market and turn around weak first-quarter performance.

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