In-taxi media firm Touchmedia reportedly ceases China operations

SHANGHAI - Touchmedia, which placed advertising in taxis via headrest-mounted touchscreens, has been undergoing liquidation proceedings since June this year, according to multiple former employees and an internal memo (see below).

The company's screens are now being removed from taxis in Shanghai, according to domestic media reports. 

Campaign has reached out to Micky Fung, executive chairman and CEO of Touchmedia, for direct confirmation but has not yet received a response.

Melvyn Goh, executive director of M Media Ventures, who was hired last year as Touchmedia's chief strategy officer to help Fung in a strategic advisory capacity, confirmed "difficulties" but referred questions about liquidation to Fung.

Goh's turnaround plan was to remodel the business by reviewing taxi fleet numbers inside China and converting businesses outside China to a licensing model.

Channel Power's acquisition of a majority stake in Touchmedia's Hong Kong business in January this year was part of that licensing move. "This is so Touchmedia can enhance efficiency and have greater focus," said Goh. 

In the mainland, Touchmedia has been in long-term contracts with local taxi operators, including Dazhong Taxi and Haibo Taxi to rent the space behind taxi headrests for its touchscreens.

The company has said it has 50,000 units installed in taxi headrests in seven cities in China: Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou, Qingdao and Hong Kong. The company stated its reach at 70 million passengers per month, and touted average trip time of 22 minutes.

"Strategic advisory is one part, but cash-flow management, execution and implementation is another," said Goh. 

Touchmedia had recently launched a movie trailer "channel" in its local touchscreen network. The company wanted to reinforce the long-form video advertising format that is more than two minutes, which competitor Focus Media could not replicate, since waiting times in office lobbies and other outdoor areas rarely exceed two minutes.

Goh said he does not believe the hypothesis that ride-sharing or taxi-hailing apps are reducing taxi-time for Chinese commuters, "even if it's the general perception". 

When asked what he would advise Touchmedia to do if given another chance, he stated he would not change the above strategy, but would put fleet rentals on a revenue-sharing or equity-swap model. That may suggest the rental costs may have been prohibitive to the business' growth.

Also, he added, the company CEO has to have direct access to clients and agencies, and establish more strategic partnerships with taxi hailing companies, push location-based interactivity, programmatic advertising and real-time data analysis.

On how to improve in-taxi advertisements, he advised focusing on the commuter journey from the moment the customer hails the cab until they exit the cab, and on integrating the experience with the user's mobile phone. "How do you push all the messages you want from the screen to the phone without being intrusive in that 22 minutes of captive time?"

"As to why a company fails, at this moment we don’t know the full picture and we cannot use the word 'fail'," he added. "The Touchmedia strategy was actually showing signs of working if we forget the debt bit."

Goh praised Fung as a "true blue entrepreneur" who gave up a lot to build the business. "If there is anyone that has incurred the most losses, it would have been him," Goh said. "I think nobody has any idea what he has gone through." 

China is not for the faint-hearted, Goh said, adding that it can be especially difficult for anybody who wants to take the entrepreneurial route in media. "The media industry is the toughest operating environment in China and needs frequent revisitation of strategy," he said. 

Campaign has reached out to Channel Power about whether it will continue operating the touchscreen network in Hong Kong.

Below, the memo circulated to employees, which reads:

Hello everyone!

Due to market reasons, the company's (上海触屏广告) operating performance has not been good; sales and profits have seen a sharp decline for many years. The company is in serious financial crisis, so the company has made the following decisions:

First, as of 30 July 2016 the company will stop operations. A working group responsible for follow-up matters will be set up.

Second, all employees’ social security contributions will also end 30 July 2016.

Third, staff salaries will be paid until 30 July 2016, with personal tax and personal social security paid by the company.

Sincere thanks for the support and help from all employees over the years! Because the company is facing a dilemma and cannot give employees their ideal compensation, we express deep regret! We wish that employees find the right jobs for themselves as soon as possible after they leave the company, thank you!