Losing the battle for eyeballs

In November state broadcaster CCTV ran a feature targeting 45 property developers for failing to pay at least Rmb3.8 trillion ($624.1 billion) in tax between 2005 and 2012. The report – which named major players like SOHO China and Vanke as tax-dodgers – pulled few punches, even quoting experts as saying that some of the companies would run out of cash if they were forced to pay their outstanding tax bills.

But instead of rallying the public against the developers, CCTV once again found itself as the target for critcism, with many questioning the claims against the property firms. “The CCTV report lacks basic knowledge regarding tax theory and practice,” says Hou Like, an analyst at China Galaxy Securities. “Large property developers are audited by the Big Four accounting firms – they would not miss expenses amounting to more than tens of millions of yuan.”

CCTV’s report also provoked Ren Zhiqiang, a high-profile developer with more than 16 million followers on China’s Twitter-like service, Sina Weibo. “I am looking into the matter of publicly suing CCTV,” he blogged. “They don’t report on matters regarding peoples’ safety in a timely manner, but make an effort to create rumours and undermine the reputation of companies and industries.”

Then again, the threat of legal action from Ren will probably bother CCTV management less than another recent development: the results from the sale of the channel’s primetime advertising slots.

Each year the broadcaster holds a 10-hour silent auction in which companies compete for ads. The process has long been viewed as a barometer of business confidence, with the auction generating publicity for firms which make the winning bids.

Not this year, however. On this occasion CCTV has declined to reveal the actual figures from the auction (although it did say that 2014’s slots garnered more than 2012’s record amount).

Why hold back on the complete data? “This year we are not going to reveal the total amount from the auction. I think the reason is we want to stay more low-key. This is the first time in 20 years we did not publish the advertising figure,” a CCTV staffer told China Times.

(The Global Times cautions that the auction in mid-November is not indicative of the broadcaster’s total revenues from advertising, as 70% of CCTV’s 2014 slots were sold between September and October. Nevertheless, the live auction, which mainly targets bigger-budget customers, offers the most coveted slots during primetime programming.)

Some analysts detect a different motive for the refusal to give the full picture on the auction, claiming that CCTV has stayed mum because it has surrendered its leading position to the search engine, Baidu.

The gap in advertising revenues between Baidu and CCTV has been closing for some time. Earlier this year, the search engine reported that its ad sales last year were up 53.5% to Rmb22.2 billion ($3.64 billion). In the same period, CCTV’s advertising revenues were Rmb26.9 billion, still higher than Baidu, but growing at a much slower rate (by less than 15%).

If these percentages were similarly skewed this year, 2013 may be the first year that Baidu makes more in ad revenue than CCTV.

This signals a broader trend – that the broadcasting behemoth is ‘losing the living room’ to new internet players. In a recent survey by research firm ZDC, about 45% of the respondents said they had stopped watching TV, while 23% said they watch every day, and only 21% watch frequently. The other 11% only watch TV on weekends.

ZDC says it surveyed a representative sample of 900 people, and that the results are indicative of a widespread shift as more Chinese watch programmes via online streaming services such as Youku and LeTV (see WiC209).

That means that advertisers are reconsidering how best to market to a Chinese public spending more time on the internet than watching TV, says the Wall Street Journal.

Questioned by the same newspaper, CCTV said that it wasn’t releasing this year’s auction results to prevent other media outlets “confusing consumers” and “wrongly interpreting” the data. But advertising veterans say it’s more likely that the broadcaster doesn’t want to highlight falls in viewership and stalling revenue growth. “The clothes of the emperor are disappearing and they can’t let that show,” says Tom Doctoroff, the Asia head of JWT, a large advertising agency that’s part of the WPP stable.

It’s a global trend, mind you. Advertising spend on the internet outpaced TV in the US for the first time in 2011, when $31.7 billion was spent on online ads. In the UK web advertising surpassed television in 2009 (though the UK market is skewed because the BBC doesn’t run ads).

CCTV has other revenue headaches too, like the growing competition from rival satellite stations. In a high profile case, Zhejiang Satellite TV made Rmb1.3 billion from an ad auction for its popular talent show The Voice of China in early November. The price was up more than 30% from the previous auction. Hunan Satellite TV also earned Rmb1.8 billion in bids for its premium slots.

Despite the incomplete data, CCTV’s auction still offers a few insights on China’s latest consumer trends. For instance, high-end liquor brands like Kweichow Moutai, and Wuliangye, last year’s top bidders, have kept a much lower profile during this year’s auction.

The 21CN Business Herald opines this is partly due to the crackdown on wasteful spending by public officials (see WiC215) and 21Food.com, a food and beverage site, agree that slowing sales have forced the liquormakers to rethink their advertising budgets.

Instead of bidding for the best slots on CCTV, they’re looking at advertising online more, seeing it as a more targeted way to reach an audience, as well as avoiding unhelpful headlines about bidding record amounts for primetime exposure.

As it looks to fight back against its competitors for advertising dollars, CCTV does have one major consolation: next year is packed with major sporting events. The broadcaster owns the exclusive rights for the FIFA World Cup in Brazil, the Asian Games in South Korea and the Winter Olympics in Russia.

The schedule will interest the biggest brands – for instance, Nike is reported to have spent Rmb46 million on getting exclusive rights to associate its brand with programming for the World Cup.

But what may pique the interest of media analysts more: the company set to advertise most during the tournament is none other than Tmall, Alibaba Group’s hugely successful business-to-consumer site. The online retailer is said to have paid Rmb142 million for spots during CCTV’s coverage of the footballing extravaganza, no doubt hoping to draw viewers away from the television schedule and onto the internet for a bout of online shopping.

That might seem like a paradoxical situation but for cheerleaders of ‘old’ media it offers a little hope that traditional television can still make money from the online world.

“The fact that Tmall is advertising on CCTV suggests that no matter how big the internet gets, it still can’t replace the traditional media,” suggests Li Guangdou from China Quality News.

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