China's shift to digital accelerates

22 November 2013
SHANGHAI: The refusal of China Central Television to disclose the results of its recent annual ad auction has fuelled speculation about the rate at which advertisers are switching from TV to digital channels.

The past few years have seen steady double-digit growth in the value of bids for prime-time advertising slots – 15.5% in 2011, 12.5% in 2012 and 11.4% in 2013 – but this year the director of CCTV's advertising centre would only say that growth was in line with the country's economic development. During the third quarter this stood at 7.8%.

CCTV said it had not released figures this year because the format had changed and accurate comparisons could not be made with previous years.

Charm Communications, a Beijing-based advertising company, highlighted some significant category falls, reported the Wall Street Journal. Charm said the biggest drop had been in alcohol, where it estimated ad buys had plunged 85% partly due to a government austerity drive that has made drinking spirits less acceptable.

Other sectors experiencing marked declines, according to Charm, included finance (down 51%), IT (down 28%) and beverages (down 12%).

While the slowing economy will have been a factor, observers have concluded that the country's biggest broadcaster is also feeling the effects of the population's rapid adoption of digital life.

Steven Chang, CEO of ZenithOptimedia Greater China, recently remarked of the emerging middle class, a prime target for advertisers, that they spent almost as much time on digital media as on TV but added that advertisers were not allocating budgets accordingly. "About 45% of their time is devoted to the internet, but money invested to that end only takes up about 16%," he said.

Liquor company Sichuan Swellfun explained its switch away from CCTV where it has spent millions in the past. "We are a premium brand with a more targeted consumer base and CCTV is not the right way to talk to our consumers," said managing director James Rice. "CCTV is like carpet bombing," he added.

But there were still some firms spending heavily in this year's auction, including, Shanghai Daily reported, drinks maker JDB Group, home appliance retailer Gome and e-commerce giant Tmall.

It also quoted Li Guangdou, head of a Beijing brand consultancy: "Advertisers are becoming cautious when trying to secure advertising slots on CCTV, although they're still showing confidence in the Chinese economy, and the growth trend is generally in line with China's overall advertising market." 

Data sourced from Wall Street Journal, Shanghai Daily; additional content by Warc staff
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