Focus Media (A): Building a Chinese Media Giant Harvard Case Solution & Analysis

In 2003, Focus Media initiated digital outside advertisements in China, setting LCD screens in places in leading commercial buildings that had high traffic and waiting times, for example lobbies and elevator. The firm leased space from building owners, and sold advertising, running 12 minute loops with 30 second advertisements. This was much more effective than normal television advertisements, and provided advertisers with a targeted method to get middle and high income consumers. Simply targeted consumers saw the advertisements, as low-income folks didn't come to these buildings, and consumers preferred seeing ads while they waited in comparison to having nothing to do (in contrast to television advertisements, which they believed to be a hassle). Once a company was created in this marketplace, possessing a majority of building contracts, it was tough to dislodge. Focus Media invested heavily to quickly to gain control of this market. It was shortly rewarding, and got other companies in related businesses.

Focus Media began acquiring other advertisements businesses, and went public on Nasdaq in 2005. By 2007, it had revenues of more than $500 million, more than $250 million in cash, a market capitalization of $6.5 billion, and was contained in the Nasdaq 100 non financial firms. In light of this fast, successful growth, the company looked to the future with confidence. There were ideas that it might acquire SINA, the top Chinese Internet portal. Expansion to other nations was a possibility. In light of this success, the case asks students to contemplate how the business should best proceed.

PUBLICATION DATE: March 09, 2009 PRODUCT #: E330A-HCB-ENG

This is just an excerpt. This case is about INNOVATION & ENTREPRENEURSHIP

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