BEIJING, March 21 -- Focus Media, the advertising
giant behind outdoor ads nationwide, has recently found itself the focus of
attention instead.
Through ads put out in elevators, supermarkets and
cell phones, the Shanghai-based, NASDAQ-listed company became a runaway success
and has maintained more than 150 percent revenue growth annually.
But media reports recently exposed what many now see
as the dark side of the ad agency. Focus Media Wireless, the mobile advertising
subsidiary of Focus Media, has sparked a furor for sending more than 100 million
spam text messages to cell phone users in the country, every day, without their
consent.
In a CCTV television show on March 15 - which also
happened to be World Consumer Rights Day - a general manager with the subsidiary
told a reporter that the company has in its possession the private information
of more than 200 million cell phone users in China, accounting for close to half
of the country's mobile phone users. This means it has about 80 percent of the
domestic short message advertising market.
The remark infuriated the Chinese public, as most
cell phone users have reported horrible experiences from receiving unsolicited
ad messages daily, ranging from auto ads to sales promotions.
Many also fear that their private information may
have been intentionally leaked or even traded without their consent, amid a lack
of laws and regulations for privacy protection in the country's mobile telecoms
industry.
The incident comes at a time when the authorities are
cracking down on cell phone spam messages, and amid an increase in public
complaints over the issue that have subsequently put pressure on regulators.
A survey by the China Internet Society in 2006 showed
cell phone users in the country received at least eight spam messages a week.
Analysts believe the number is much higher now.
Focus Media's shares plunged more than 25 percent on
Monday, after speculations that the company might lose its service provider
license spread.
Partly due to the public outcry, China Mobile, the
larger of the country's two mobile operators, announced on Wednesday it was
shutting down Focus Media's message service port, the major access route for the
group to send a large amount of short messages at huge discounts.
That could hit Focus Media's fledging mobile
advertising business, which is now seen to be on a roll as it takes advantage of
the lack of privacy protection laws for the industry.
In the fourth quarter of last year, Focus Media's
mobile ad business hit $16 million, an increase of 356 percent over 2006.
Liu Bin, an analyst from research firm BDA, estimates
that China's short message-based ad market last year reached nearly 700 million
yuan ($99 million), with Focus Media taking more than half of that pie.
"I think about 60 to 70 percent of Focus Media's
mobile advertising revenue last year is coming from spam messages," he said.
Some analysts blame China Mobile for indulging ad
firms short text messages, a segment which has become a cash cow for the
operator.
According to the Ministry of Information Industry,
the country had 547 million mobile phone subscribers by the end of last year,
together sending more than 592 billion short messages in that time.
China Mobile also said it had received about 4,000
complaints each day over spam messages before March 15.
A statement from the company reported the number of
daily complaints has now decreased to 2,000, but did not provide details on the
reduction.
However, many see the lack of regulation and
effective measures as major obstacles to effectively curb spam messages.
Similarly, there are concerns that ad companies could continue to take advantage
of legal loopholes to flood cell phone users with unsolicited messages.
Still, Daniel M. Wu, Focus Media's CFO, said in
earnings conference calls on Wednesday that the company's mobile business in the
near future will be hit by the incident.
"We expect our mobile handset advertising business to
be affected in the next quarter, given that we will put in place very strict
control, in terms of what good business conduct we need to carry out for Focus
Media," he said.
Established in 2003, Focus Media runs China's largest
out-of-home advertising network, with revenue reaching 185 million U.S. dollars
last year. It entered the mobile advertising market in 2006, helped by a slew of
acquisitions.
(Source: China Daily)
China Mobile apologizes for mass
spreading of spam text
BEIJING,
March 20 (Xinhua)-- China Mobile has apologized for its management loopholes
that allowed the spread of spam text messages to nearly half of the country's
cell phone users.
The country's largest mobile operator has vowed to block
short messages originating from the seven condemned online advertising firms on
Wednesday.
The seven online advertising firms, which included the
Nasdaq-listed Focus Media, arbitrarily sent commercial text messages to over 200
million cell phone users whose personal information was fully controlled by the
companies, through the two operators, China Mobile and China Unicom. Full story
