Advertisers changing strategy in China

20 April 2010

HONG KONG: Television remains the dominant advertising channel in China, but the lower cost of entry offered by other forms of media may cause many brands to adapt their approach.

According to Media Partners Asia, the consultancy, TV accounted for 85% of all adspend in the country in the first two months of 2010, boosted by Chinese New Year, which traditionally leads to an increase in demand.

Moreover, TV's broad reach, and a recent government ruling that limited the number and length of spots that can be shown at various times of day, has served to inflate prices.

CCTV, the state-run broadcaster, is reported to have been charging brand owners around 120,000 yuan per second to advertise during the forthcoming FIFA World Cup in South Africa.

As Hunan Satellite TV and the Shanghai Media Group have also recently reached deals to distribute their content to some smaller pay-TV rivals, the grip of the main channels is also tightening in this area.

"As long as advertisers continue to look for the optimum combination of cost efficiency and brand coverage, these dominant stations will continue to flourish," SiewPing Lim, vp of Mindshare China, said.

"For many advertisers, niche high-engagement media are seen as complementary to, not diluting, the primary media."

However, figures from CTR Media, the research firm, appear to show that the comparative expense of advertising on television may be encouraging marketers to look elsewhere.

The company reported that TV ad revenues rose by 9.4% in China in January and February 2010 year-on-year, compared with an uptick of 43% for radio, 26% for outdoor and 21% for newspapers.

The specific brands that have substantially raised their total expenditure in this period include Meidi, Joyoung and Suport in the appliances category and detergent brands like Libai and Diao.

By category, companies in the toiletries sector increased their outlay on TV by 41%, with newspapers up by 20% and magazines by 16%.

Elsewhere, beverage brands raised their investment in outdoor by 95%, with radio advertising budgets jumping by 61% and television by 35%.

The automotive industry also increased its radio adspend by 86%, with newspapers up by 67%, magazines by 47% and television by 20%.

In contrast, the TV ad sales derived from operators in the personal care and apparel segments tumbled by 56% in January and February this year.

"This may in part be due to a residual effect of the worldwide recession," Ivo Kavelj, operations director for VivaKi Exchange, argued.

"An alternative view is that the essential everyday items are needed regardless of the economic climate and, as such, may not need as much airtime as other products."

However, it was online that posted the largest improvement in revenues in the opening two months of 2010, up by 61% based on rate card estimates.

Renren, the popular social network, is just one website that is thought to have inflated its rate card charges to reflect this trend.

Overall, Media Partners Asia forecast that Chinese adspend would rise by 12.4% this year and 11.5% next, with TV lagging slightly behind these rates of growth in each case.

Events such as the Shanghai Expo and Asian Games in Guangzhou are expected to boost the market as a whole in 2010, it predicted.

Data sourced from Asia Media Journal; additional content by Warc staff