This morning I was kindly invited onto the show The Globalist on digital radio station Monocle 24 to talk about China’s latest restrictions on advertising.
The new rules, covered in Warc's news, mean a ban on the insertion of ads on TV dramas and movies more than 45 minutes long.
These have been much-discussed within China (see in particular the excellent coverage from the University of Hong Kong's China Media Project), as they appear to be part of a trend toward greater government interference in the commercial broadcasting sector. There is a lot of talk at the moment of ‘cultural reform’, and of encouraging broadcasters to run more ‘morally edifying’ content.
The background is a rapidly growing commercial TV sector. Many people with only a passing knowledge of China will have heard of CCTV, the state-controlled broadcaster that sits at the heart of China’s TV sector. But the last few years have seen the rise of provincial satellite channels – operators such as Hunan Broadcasting or Shanghai Media Group (despite their regional names and origins, their channels are distributed widely).
These channels do not receive government subsidy; they are commercially funded operations. And they have taken commercial freedom to heart, pursuing populist shows such as talent contests and dramas to build ratings and attract advertisers.
The central government has been slowly reining these channels in – it has limited the number of entertainment shows they can screen and limited the number of ads they can run. It has even banned certain shows it disapproves of, including smash-hit talent contest Super Girl. That said, these channels are still known for populist content stuffed with ads.
So it’s perhaps no surprise that the immediate reaction among consumers to the news was positive – some polls reported that 85% approved of the ad ban.
On The Globalist, I was asked whether the affected ad dollars – some $3 billion according to some reports – would be reassigned, and the obvious answer is yes. In such a competitive, fast-growth market, advertisers need to make sure they are winning and retaining customers. So where will the ad dollars go?
First off, there’ll be some frantic renegotiation before the rules come in on 1 January (especially for ads around the Spring Festival later in January). Once the dust has settled, we may see a shake-up of the TV formats on offer – more programme sponsorship, more product placement, more half-hour dramas that get round the ban. Fewer ad slots on TV may fuel further price inflation.
Second, we may see more interest in using online channels, particularly China’s video sites. The internet is a big entertainment medium in China, and many multinational companies such as Nestlé and Johnnie Walker have experimented with producing or sponsoring online content. We may well see more of this.
It’s important to remember, however, that multinational marketers have already been pushing in this direction, as TV has become more cluttered and more expensive. If you look at the recent auction of CCTV airtime, the top TV advertisers were local players. Perhaps this ban may even prod some of these local giants into experimenting more with their ad dollars.
Finally, it’s worth commenting on what this might mean for the TV sector, beyond an initial scramble to comply with the rules and a short-term revenue hit. The ad ban underlines that the government is serious when it talks about ‘cultural reform’ – but it’s not yet clear what the long-term impact will be on the kind of content broadcasters can commission and can sell advertising against.
The question is how commercial will China’s authorities allow commercial television to be. If the answer is ‘not much’, then expect the internet to become even more important as an entertainment medium, and expect advertisers to follow.