Advertising agencies look for new model in the era of the Internet

Disintermediation-or cutting out the middle man-may jeopardize an otherwise promising future for advertising companies and force them to strive for new business models in the near future, said experts.

"I do believe that ... advertising companies have been losing influence in China's service industry," said Chen Gang, head of the School of Journalism and Communication at Peking University.

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In the next five to 10 years, traditional forms of advertising (newspaper ads and TV commercials, for instance) face fundamental change, Chen said.

"Therefore, advertising companies must devise solutions to keep up margins, as conventional methods will no longer work," he said.

"To a certain extent, we are all struggling and mulling the next move," said T.B. Song, chairman of Ogilvy & Mather Greater China.

The increasing speed of technological development has generated a variety of replacements for traditional advertising companies.

"For example, today a large Internet corporation can act as a business enterprise, or a media organization or even serve as an advertising agency," Song said.

He gave the example of Baidu Inc, where parts of the company can completely take over the functions of advertising agencies.

E-commerce and big data analysis, introduced by IT companies, can accurately and efficiently target customers and confirm outcomes, he added.

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