Phoenix New Media clips vice-president amidst advertising slowdown
Phoenix New Media and other smaller web firms dependent on advertising revenue are suffering disproportionately in China's sharp advertising slowdown.
Investors still took notice of the announcement, with Phoenix shares tumbling 4 per cent in Friday trade in New York. That sell-off was just the latest in a long decline for Phoenix New Media shares that dates back to April, when the company's financial results started to deteriorate sharply. Since that time, Phoenix shares have lost more than half of their value and now trade at about a third of their 2011 IPO price.
CCTV's revenue at the auction rose by around 11 per cent, but much of that was driven by aggressive spending by makers of traditional Chinese liquor known was baijiu. Without the baijiu makers, who target an older audience and seldom advertise on new media like Phoenix, growth would have been relatively flat for the year – a huge slowdown for an industry that has posted double-digit growth every year in the last decade.
There's not much detail in Phoenix's latest announcement of Wang Yulin's departure, though it appears that many of his functions will be taken over by the company's CEO and COO, hinting the move may be as much to save money as it is strategic. But regardless of what's happening behind the scenes, this new move is just the latest indication that China's advertising slowdown is coming faster and harder than many expected, posing an exceptionally difficult challenge for smaller, second-tier Internet players like Phoenix.
Bottom line: Phoenix New Media and other smaller web firms dependent on advertising revenue are suffering disproportionately in China's sharp advertising slowdown.