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

The decline of traditional media has driven away many advertisers, further cutting margins and weakening the profitability of advertising companies.

"Enterprises like the trend of disintermediation, mostly because it can lower their costs and offer more efficient ad delivery," said Cheng Manli, a media professor at Peking University.

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Last year, Lenovo Group Ltd, which had been a reliable income source for many ad companies, announced a cut in spending on traditional media to 40 million yuan ($6.4 million), from 100 million yuan a year earlier.

In January this year, manufacturing giant Haier Electronics Group Co Ltd eliminated its entire ad budget for magazines. In 2013, the industry saw a drop of about 2.7 percent in television commercials and 9.2 percent in newspaper ads, compared with a year earlier.

"It's the technology that has facilitated the trend," said Micho Spring, chairwoman of Weber Shandwick's global corporate practice. Five years ago, she wouldn't have needed to hire designers, producers and studios, but now the company has an entire team.

"We are creating content for our clients, and we are helping them strategize and distribute the content. I think in the world of marketing and communications, the shift we all see is that more marketing and advertising dollars are going toward public relations," she said.

China's ad agencies still produce a large number of online commercials for small or midsized enterprises, according to Chen.

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