Domestic brands boost Chinese ad market

09 June 2009

BEIJING: The economic downturn is starting to have an impact on the Chinese advertising market, where domestic brands are reported to be increasing their spending at a faster rate than their multinational rivals. 

China Central Television, the main state-owned broadcaster, saw adspend levels rise by 5.8% in the first fourth months of 2009, to 148 million yuan (£13.5bn; €15.6bn $21.6bn), according to figures from CTR Media Intelligence.

Major multinational advertisers on Chinese television in April included L'Oréal, Kentucky Fried Chicken and Procter & Gamble's beauty brand, Olay.

Domestic pharma specialist Jiangzhong, beverage manufacturer Wahaha – a joint venture between Hangzhou Wahaha Group and Danone  and FMCG company MasterKong were also in the top ten TV advertisers for that month.

Overall, CTR predicts that the national ad market will expand by between 5% and 8% this year, but also argues that the current situation is not without complications.

Tian Tao, vice president of the company, said: "The uncertain trend in China's ad market comes from the uncertainty over when the global recovery will come."

Eric Cheung, cfo of China Mass Media, a TV advertising company, similarly said that from 2005 to 2007, there was "60–70% visibility before year-end for the next year" with regard to potential spending levels, but this has declined markedly.

As such, he now pegged this figure at "30–35%", and added that "visibility is still poor now for the second half – on average you can only reasonably estimate two months ahead."

Despite this, however, many domestic brands have begun to increase their marketing spend.

Shenan Chuang, chief executive of Ogilvy & Mather in China, stated that "domestic brands increased their ad spending by 22% in the first quarter, while foreign brands only added 1%."

Data sourced from Financial Times; additional content by WARC staff