Two Factors Promote Growth in Sina's Online Advertising Business

Online advertising's proportion of total revenues continuously increased

Since Q2 2005, Sina online advertising's proportion of total revenues continuously increased. In Q2 2005, the proportion is 44.3% and in Q2 2007, the number increased to 68.9%. In Q2 2007, revenue from online advertising increased 40% year over year, 30% sequentially to US$ 41.2 million. Meanwhile, influenced by China's wireless value-added market and the reduction of marketing for Interactive Voice Response services (IVR), the downward trend of Sina's wireless value-added business will not change. Other business revenues decreased 11.1% year over year but increased 23.1% sequentially. The increase mainly came from its search engine business.

According to data from iAdTracker and iUserTracker, there're two main reasons for the rapid growth of Sina's online advertising revenue:

The number of advertisers increased 21.8% sequentially

iAdTracker data shows that the number of Sina's advertisers increase substantially. In Q2 2007, the number of advertisers reached 884, up 38.3% sequentially. The advertisers are mainly from real estate, automobile and IT industries. The increase of advertiser amounts promotes Sina's online advertising revenue directly.

Continuous increase of traffic and user stickiness

According to iResearch, the increase of Sina's advertisers is mainly due to two reasons. First, Internet-based economic develops and led to a growing number of advertisers' marketing strategy leaning to online marketing. Second, Sina has a large amount of sticky users. Data from iUserTracker shows that monthly duration of Sina's main channels, especially blog, community and financial news, all increased. iResearch believe that the increase of monthly duration reflects the increase of user stickiness. The increase of traffic and user stickiness is a sold foundation for the growth of online advertising business.

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