BEIJING: Brands hoping to derive the greatest benefits from their TV advertising in China must carefully weight their spending between local and national channels.
Writing in the Harvard Business Review, Max Magni and Yuval Atsmon of McKinsey reported there are over 3,000 TV stations in China, making it the “world's most fragmented market" in these terms.
Major corporations typically direct a substantial portion of their media budgets to CCTV, the state broadcaster, which operates 19 channels and is responsible for around a third of all viewing time.
The attraction of this strategy is obvious given CCTV's audience is in the range of ten and 20 times that of its more niche rivals and its charges are only two-to-four times larger.
As such, the cost per thousand of utilising China's biggest network is essentially five-to-ten times lower than is the case for its more smaller competitors.
Despite these advantages, a nuanced approach is necessary, as evidenced by the fact that 60% of adults in Shanghai regularly tune in to the 16 stations run by the Shanghai Media Group.
Similarly, people in Suzhou devote half of their TV consumption to six dedicated channels, while in cities like Guanghzou, where dialects differ, CCTV takes just a 5% share.
"National TV isn't the only medium you should use. Many consumers prefer to watch regional and local TV," said Magni and Atsmon.
"Ads on CCTV may reach only half the target audience in, say, Shanghai, but you will save 40% by using it instead of relying entirely on local channels."
Procter & Gamble, the consumer goods giant, is one organisation that has struck the correct balance in its TV advertising plan, according to McKinsey‘s analysis.
Pay-TV services offer another viable alternative, as in areas like Changsha the 19 stations belonging to Hunan Satellite TV hold an equal footing with CCTV in terms of viewing hours.
Unilever, the FMCG specialist, made highly effective use of product placement in Ugly Wudi – a Chinese version of Ugly Betty – which was aired exclusively on Hunan Satellite TV.
On average, instalments of this series generated an audience of 73 million people, helping brands such as Dove increase popular awareness levels.
A final option is to focus on areas where TV ad rates are cheaper in order to "establish a dominant share of voice inexpensively", before moving on to more costly locations.
Carlsberg, the brewer, employed this model in western Chinese metropoles like Chengdu and Xian, and doubled its share from 3% to 6% as a result.
In the process, Carlsberg strengthened its position relative to Tiger and Heineken, which often looked to coastal regions where marketing clutter is more common.
"In China, picking the battles you want to fight is almost as important as choosing the TV channels on which you want to advertise," Magni and Atsmon argued.
"Our surveys show that they trust brands that advertise on TV; won't consider those they haven't seen on the air; and believe that brands that can afford to advertise on TV must be backed by successful companies."
Data sourced from Harvard Business Review; additional content by Warc staff