Focus Media Holdings Ltd, China's largest listed advertising company, is bidding for the local IT consultancy iResearch Group, the company's latest move to carve a niche in China's online advertising market.

"We have been in talks for the acquisition since earlier this year," said Yang Weiqing, iResearch's general manager. "Besides Focus Media, we are also negotiating with other advertisers and consulting firms."

Yang and officials from Focus declined to reveal further details. It was reported earlier that the advertising company may pay as much as $10 million for the IT researcher.

Established in 2002, iResearch has become one of China's major IT consultancies. Focusing on the Internet, the company releases more than 50 reports each year, covering topics such as the shopping habits of local Internet users, the company said.

"iResearch's knowledge of Internet users could give Focus Media a boost for its online advertising business," said Sheng Wei, marketing director of Analysys International, a Beijing-based IT consulting firm.

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Shanghai-based Focus paid as much as $300 million in cash and shares this March to acquire Allyes Information Technology Co Ltd to enter the online advertising market.

The largest online advertising agent in China, Allyes provides services and technology that allows advertisers control creative production, ad tracking, targeting and performance analysis.

"Allyes and iResearch could be complementary to each other, if their understanding of media platform and user behaviour are combined to create more effective online ad solutions, " said Sheng.

Most of Focus Media's revenue still comes from sales of advertising on flat-panel televisions installed in office buildings, supermarkets and other public venues. But the company has been aggressively expanding into the Internet and mobile advertising sectors to seek new revenue sources.