GroupM, WPP’s media arm, has declared a new normal for China’s ad market, trimming its 2016 growth forecast from 9.1% to 6.6% in its latest This Year Next Year report, published this month.

The same might be said for competition between traditional and online media in China, especially TV and OTT video, as increasingly wide-reaching regulation creates a more level playing field between the two.

After being gradually reined in over successive years, one of online video’s big market advantages – a more relaxed content regime – is starting to disappear.

New rules for drama content brought in at the start of the year, for example, apply to both online and offline TV.

Streaming video sites, previously able to air edgier fare that mainstream media wouldn’t touch, now have to compete for viewers on a more equal footing, by making better but more restrained shows.

At the same time, TV viewing appears to be stabilizing, after losing share to online alternatives.

OTT video sites were big beneficiaries of rules that came into force at the beginning of 2015, which stopped new dramas from running on more than two provincial satellite TV channels at the same time.

Many medium and smaller channels, without sizable content budgets for original programming, were hit hard.

Evening ratings (between 9:10 pm and 11:30 pm) on provincial satellite channels dropped by 13% year-on-year. Overall TV ratings, meanwhile, came in at 6.7% lower compared with 2014.

Those audience losses seem to have bottomed out, at least for now.

cautious marketers

Advertisers are becoming increasingly wary about China’s economic outlook, due to weak domestic demand and rising global uncertainty, GroupM observes, and will be looking for better value from their ad buys as a result.

Meanwhile, profitability remains a challenge for the biggest video sites, although they have the support of large, well-capitalized internet groups.

As SVOD options become more popular, OTT video platforms may start to incorporate advertising in some of their ad-free services.

These paid tiers are especially popular among a young, university educated audience that advertisers are keen to reach.

OTT majors are also facing slowing growth rates for online video advertising, from 41% projected this year to 23% forecast for 2018, according to local forecaster iResearch.

That’s still way ahead of TV, and set to close the gap in spend.

The overall pattern of ad growth is unchanged in China, with online dynamism providing almost all the current momentum.

Nonetheless, Chinese internet growth is slowing in sympathy with the economy, GroupM notes, while diminishing returns for advertisers are also beginning to set in.

That’s a new normal that all stakeholders in the market will have to contend with.