Focus Media Basking in the Near-Term Glow

The firm's strategy looks like a recipe for fat sales growth. But some argue Focus Media's prospects are over-hyped.

"It's sort of an investor darling right now," says Shaun Rein, managing director of the Shanghai-based China Market Research Group. Yet he questions the effectiveness of Focus Media's ads in office buildings, which are broadcast on LCD screens in lobbies and near elevators to be viewed by waiting patrons.

"Consumers might look at the screens, but they don't actually retain anything," Rein contends. "There's too much ambient noise. And a commercial may be 30 seconds long, but people get pushed into the elevator after 10 seconds so they don't really get what the commercial's about."

Though ads are supposed to be targeting well-heeled businesspeople, Rein recently spotted Focus Media screens running ads on the 20-yuan ($2.53) airport minibus in the southern Chinese city of Shenzhen. "They say they're targeting rich people," he says. "But the bus mostly carries young people, people who are at the lower end of the income scale or who just want to save money." Rein has also seen Focus Media screens in plenty of less-than-prime office buildings.

Another potential problem: Rein believes the cost of maintaining the company's liquid crystal display (LCD) screens will be higher than expected, because of China's ambient pollution as well as regular wear and tear.