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Ad auction bucks the trend

By Zheng Yangpeng (China Daily)
Updated: 2008-12-01 10:10

Sohu website advertisement outside a public bus in Nanjing, capital of Jiangsu province. The latest CTR Market Research report shows that Internet commercials are developing at the fastest pace, and will be those who suffer least because of the global financial crisis. [China Daily]

Amid fears that advertisers will tighten their purse strings due to the grim economic outlook, China Central Television's (CCTV) recent 2009 prime-time advertising auction bucked the trend.

At the auction, major advertisers spoke with daring bids, which topped 9.2 billion yuan ($1.34 billion), a jump of 15.4 percent from last year's 8.03 billion yuan.

With the world's largest audience, CCTV has a decisive lead in ad revenue. Its annual live auction has been dubbed China's "brands Olympics" and "the barometer of China's economy".

But experts have cast doubt on this "barometer".

"It's just rhetoric," says Chen Gang, advertising professor with Peking University, "You can't find a second media like CCTV in China, so it does not represent the overall ad market."

In Chen's opinion, several factors contributed to CCTV's ad triumph.

First, its influence soared this year, thanks to the coverage of major events like the May 12 Sichuan earthquake and the Olympic Games.

Second, it experienced more comprehensive development. CCTV-1 used to attract 70 percent of the total ad revenue, now it only accounts for 30 percent.

Third, its professional advertising service exceeds most other media outlets.

Fourth, if advertisers are going to adopt a "focus" strategy, the "focus" is CCTV.

"Leaders' accomplishments tend to snowball, while those who are weak tend to be even weaker," says Chen.

Media: Different landscape

But distinctions do exist between different media.

"TV has been relatively unscathed by the economic meltdown," Derek Kwok, the China managing director of Zenithmedia, a leading media buying company, tells China Business Weekly.

Chen agrees. "Growing numbers of companies are being targeting in less-developed counties and rural areas. TV is the most effective way to reach these markets."

The latest CTR Market Research report shows the TV ad revenues reached 206.3 billion yuan in the first three quarters of this year, accounting for 79 percent of total ad revenues (excluding the Internet).

However, the most eye-catching outlet is the Internet. "Now, Internet advertising is developing at the fastest pace, and this will be the area that suffers least," says Chen.

Chinese domain names will be adopted over the next year, which will add further momentum to Internet marketing, says Chen.

Internet ads are unique in terms of interaction. "It is not only a kind of ad, but a way of communication," says Chen, "I think in the near future, the marketing strategy will see a fundamental change, in which a company will put its website at the center of its marketing package, integrating a variety of channels."

Kwok is also bullish about Internet ads, expressing particular enthusiasm about search engines, social network service and vertical websites.

In contrast to the Internet, print media presents a totally different landscape.

Asked about how much economic woes have impacted ad sales, a manager at a popular national newspaper's ad department declined to offer specific figure, only saying its top executives are estimating the toll.

Indeed, analysts generally expressed pessimism regarding print media. The soaring price of newsprint and the impact of Internet ads are taking their toll. "Real estate companies, auto makers and retailers are print media's major advertisers. Now, they are suffering," says Kwok.

Advertisers: a fragmented vision

Advertisers also have different outlooks.

Companies that bid for airtime in the CCTV auction were from sectors closely related to consumer lifestyle products and services, such as beverages, food, medicine and health.

This is in line with CTR Market Research's report, which shows companies making cosmetics and daily necessities, such as soap and toothpaste, spent most in the first three quarters of the year. Olay, a Procter & Gamble (P&G) face care brand, increased its ad spending by 22 percent to become number one in the ranking.

Nice, a leading brand of soap and washing powder, spent 305 million yuan to sponsor CCTV drama programs in 2009 that cost it 229 million yuan in 2008. "This is within our planned range," said Dong Liying, an executive in Nice's marketing department.

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