The State Administration of Radio, Film and Television has announced plans to prohibit TV stations from airing spots in drama programmes over 45 minutes in length, as well as during movies.
Broadcasters can currently run 12 minutes of ads per show, but while the duration of individual breaks is limited to 90 seconds they are not restricted in number. The new protocol thus seeks to ensure "the continuity of the viewing experience," SARFT said.
"There's a joke that says that when you watch ads, all of a sudden a TV drama pops up," Bi Yantao, an advertising expert at Hainan University, told the AFP. "Friends who work in television advertising have told me that China's television stations will incur at least RMB20bn in annual advertising losses."
Official figures suggest 98% of China's population have access to a TV. A poll by Sina, one of China's top web companies, of 10,000 microblog users found 85% supported the government's latest intervention.
"Consumers won't really be angry because no one likes commercials," said Tom Doctoroff, CEO of JWT North Asia. "But they will not be happy when content becomes even more watered down than it already is."
Shi Lan, from Dragon TV, based in Shanghai, argued the change in policy was due to hit the revenue levels of broadcasters. "It's unrealistic to say that the restriction won't cost us anything," she said. "But still, we plan to strictly follow the rules."
Ren Jianwei, from the Drama Channel, described the government's move as a "double-edged sword", adding: "It will certainly affect our ad revenue, but it will also attract more people to watch TV."
Seth Grossman, managing director of Carat China, revealed the agency was maintaining its forecast of 11.8% growth for the whole ad industry, although media rate increases on TV could cause brands to shift budgets to competing channels.
"The first impact will be on pricing," he said. "China is still a very high demand environment, and that's a classic inflationary pressure. This doesn't take money out of the Chinese advertising market. It will go elsewhere."
According to Zhao Yihe, head of research at Charm Communications, the ad agency, domestic firms spend the most on TV ads, but overseas players like Coca-Cola, Procter & Gamble and Sony also make big investments that may now need renegotiation.
He said: "I expect this to shave one or two percentage points off the growth rate of TV advertising next year, which we originally forecast to be about 15%."
Data sourced from AFP, Financial Times, Wall Street Journal, Bloomberg; additional content by Warc staff