Good advertising

Perhaps the best barometer yet of China’s rapidly rebounding economy

Good advertising

CCTV reaches practically everyone...

A year on from the worst downturn in a generation, and financial commentators will grab at any indicators that seem to suggest a way back to happier times.

China seems to have weathered the storm better than most, although it likes to read the forecasting tea leaves as much as the rest of us. And last week, the advertising industry thought that it was picking up on some pretty clear signals.

The evidence was China’s state television broadcaster China Central Television (CCTV), which attracted over Rmb10.97 billion worth of bids at its annual auction for next year’s primetime slots. This was a 16-year record and a bumper 18.5% increase on the previous year.

CCTV sells its advertising slots in three different categories, but the auction for primetime is the most lucrative for the media giant.

The results have become something of a showpiece event and are announced at a ceremony hosted by celebrity news anchors.

This year the bidding was aggressive for key slots such as primetime news and drama, the 2010 World Cup, the Winter Olympics and the New Year Gala Show. The bidders came from a broad spectrum of industries and provinces, though the major players were the usual suspects from industry sectors like apparel, food and beverage, home appliances, automobiles, and pharmaceuticals.

Of course, purchases in some of these industries are discretionary ones. So analysts say the bidding points to a strong vote of confidence in the Chinese consumer. Bids from electrical appliances companies, for example, rose by 80%, while those from the home improvement and construction materials sector doubled. Fifty multinationals, including first-timer Pepsi-Cola, also participated.

“Chinese corporates, particularly the large companies and sector bellwethers, have a lot of confidence in China’s economic growth next year. As such they are willing to invest heavily in advertising,” the National Business Daily concluded.

According to Yao Jinyuan, the chief economist at the National Bureau of Statistics, there is a general consensus that China’s economic growth will be around 8% in 2009 following a 7.7% rise in the first three quarters of the year.

The top bidder was Mengiu Dairy, which splashed out Rmb343 million in total bids. Rmb204 million of this went on a single bid for airtime tied to a popular drama series in the first half of 2010.

Hangzhou-based Zhongce Rubber, another first-time bidder, won the slot preceding the primetime news for Rmb47 million. The state-owned tyre maker may be preparing for a domestic sales push – the US recently imposed a 35% tariff on Chinese tyre imports.

While the auction results confirmed CCTV as the dominant media outlet, the broadcaster will not want to become complacent. Other forms of media, such as the internet, outdoor hoardings and mobile phone advertising are growing rapidly. According to consulting firm Analysys International, the advertising spend on new media (Rmb27.5 billion in 2008) was four times what it was three years ago.

Provincial TV networks like Hunan TV are also gaining in popularity (see WiC38). Hunan Satellite TV’s flagship programmes Happy Camp and Tiantian Xiang Shang are selling advertising slots at prices comparable to CCTV’s schedule. Some have even come in higher

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