Charm Communications, the mainland advertising company, is exploring merger and acquisition targets at home and abroad to strengthen its advertising business. The Nasdaq-listed company said it was confident about the prospects of higher profit margins available from online video advertising. 'We have looked into internet-related companies [as potential merger and acquisition targets]. However their current valuations are high,' said chief financial officer Zhou Wei. 'We are also interested in companies that have complementary technologies or are good at search-engine marketing.' Beijing-based Charm, founded in 1995, forecasts China's advertising spending in traditional media in 2011 will grow by 15 per cent from last year's 580 billion yuan (HK$693 billion). Internet advertising is expected to surge by 44 per cent from 35.6 billion yuan in 2010. Total advertising spending placed through or with the company reached US$637 million last year, up 70 per cent from 2009, according to its financial reports. In the first quarter of this year, Charm's net income grew 19.6 per cent from a year earlier to US$8.2 million, according to its un-audited financial report. Business revenue grew 48 per cent to US$62.3 million. It projected year-on-year growth in revenues of 45 per cent and a 25 per cent increase in net income for the second quarter of this year. 'Most of our clients are domestic companies,' said Zhou. 'We are different from foreign advertising companies that just provide advertising solutions. We often participate in clients' marketing schemes, from planning and managing advertising campaigns to creating and placing advertisements.'