Youku.com is displayed on a computer in Beijing. The website is China's No 1 with 35 percent of the country's online-video market. [Photo / Agencies]

The automaker has teamed up with Youku.com to make a series of adverts fit for the online crowd

HONG KONG - Until last year, General Motors Co's (GM) China marketers advertised the Chevy Cruze sedan with spy thriller-themed spots featuring Wentworth Miller, the star of the TV show Prison Break.

After Fox Entertainment Group canceled the series, Shanghai GM decided it wanted a new advertising approach, one with "real life, real people", said Joan Ren, general director for Chevrolet marketing, at the time.

So the company teamed up with Youku.com, China's most popular online-video operator, to create a new Web-based campaign featuring young urban Chinese. So far, Youku has shown 10 of the videos, most between 10 and 20 minutes long and made by a professional director, and they've received a combined 84 million views. Ren said she's pleased with Youku's production values and the authentic tone of the campaign.

"They don't allow low quality," Ren said.

That anyone now associates Youku with authenticity is a step in the right direction for Victor Koo, the site's founder and chief executive.

Koo is now focused on working with GM, Procter & Gamble Co (P&G) and other advertisers to create professionally produced so-called "Webisodes" such as Crest Pro-Health II, a P&G serial set in a dentist's office that has attracted 33.5 million viewers.

Youku is No 1 with 35 percent of the market in China for online video, said Eric Wen, an analyst with Mirae Asset Securities in Hong Kong.

Related readings:  GM piglets bring hope in organ transplant  GM's sales growth in China slows  Shanghai GM may get new chief  More 'aggressive' investment from GM

Youku raised $203 million from its December initial public offering on the New York Stock Exchange, but has lost $87 million since 2008 on sales of $86 million. It's also likely to lose $21 million on sales of $110 million this year, according to a March 1 report by Goldman Sachs Group Inc analysts. Nothing to worry about, according to Koo. "We are on the path to profitability," he said.

Investors seemed to buy that message and Youku's stock price has nearly quadrupled since the IPO.

The real question is how big can Youku get, said Wen.

Less than 4 percent of Chinese advertising goes to online video, compared with a third for TV, he said. That leaves plenty of room to grow.

"Breakeven is not a concern," he said. "There's a tremendous amount of profit down the road."

Tudou.com, China's No 2 site, on March 3 announced a deal with Walt Disney Co to show Desperate Housewives, Lost, Criminal Minds and Cougar Town online, while smaller rival Ku6 Media last year formed a partnership with Warner Bros and Sony Corp to stream movies and TV shows.

Koo will make more deals with studios while also creating more exclusive content such as the Web series for GM, he said.

"We are going to keep investing in Youku originals," he said.

Bloomberg News