One of the biggest media events on the mainland takes place on 18 November, as CCTV auctions off its primetime slots for the next year.
The event is an important barometer for China’s TV market. Lasting a full day, it can feature fevered bidding on the most popular slots. As media agencies and advertisers draw up plans for the day, what should they be expecting?
1 CCTV has been selling its primetime ad resources by auction since 1994. The primetime airtime resources include the dozen minutes of TVC spots before and after the nationwide news and weather reports, as well as special events such as the Youth Singing Competition and the annual Chinese New Year’s Eve Gala. Title sponsorships are also on offer, a new one this year being on CCTV-2 for economics.
The attraction is the reach on offer - especially for the CCTV-1 channel, which has over 90 per cent of coverage in China.
2 About 400 firms and their media representatives have registered to attend the auction, but only about 100 to 200 companies will be successful. CCTV has no pre-commitment scheme where existing advertisers can receive discounts.
Dick Wu, negotiation director of OMD Beijing, believes banks may have a strong presence this year. Other big local enterprises such as milk brands Mengniu and Yili, both still recovering from the melamine scandal, are expected to spend heavily. Local car brands are also expected to be major players this year.
International brands are increasingly making their presence felt. Last year’s top bidder was Procter & Gamble, spending more than Rmb 500 million (US$69 million).
3 In terms of agencies, big local players such as Charm Communications, which represents several state-run enterprises and local clients, such as jacket brand Bosideng, will be out in force. San Ren Xing, which represents Yili, and Vision CN, which handles Mengniu, are also expected to bid aggressively.
International media players such as Starcom (P&G), Mindshare (KFC), Carat (Master Kong) and Dentsu (Toyota) will also be fighting for a spot. Many networks partner with local media agencies as they have more flexibility in the CCTV bidding. For example, OMD is partnering with Charm and China Media Exchange is working with Vision CN.
“Some of the local agencies’ bosses have a very close relationship with CCTV’s senior management, and so have more insider information from CCTV’s top management and Government officials,” says Derek Kwok, MD of ZenithOptimedia China. What’s more, if advertisers buy space then decide not to use it, the local agencies can help them to resell it.
For some CCTV channels advertisers have to go through local players. Beijing Future Advertising Company has the exclusive rights to book space on CCTV-8 (for drama) and CCTV-5 (for sport).
4 Media industry professionals predict that the CCTV auction will exceed last year’s revenue of Rmb 8 billion, and is likely to reach Rmb 8.8 billion despite slowing growth in China and talk of restricted budgets.
“The overall net inflation rate is five to 10 per cent, and tends to be negotiable,” says Kwok. “Television stations are becoming more flexible for advertisers in term of choosing TV spot time and placing more versions of TVCs.”
5 However, David Wolf, CEO of Wolf Group Asia, believes there is a growing feeling in Chinese media circles that this could be the “last hurrah” for the auction, with tougher times and fragmenting audiences meaning a fall in spend next year.
One senior media agency source suggests that advertisers may begin to question the value of an auction designed purely to maximise CCTV’s revenues. “CCTV’s total viewing share is on the decline. The peak it enjoyed during the Olympics will not be repeated in the foreseeable future,” he says. “Advertisers are tightening their belts. In the face of this, buying inventory via bidding in an auction environment is counter to the psyche of a sensible marketer.”
Nevertheless, Wolf says CCTV has no obligation to publish the results of the auction. “What will be interesting if spend does go down is how it will spin the outcome.”
What it means for…
Media owners
- The CCTV auction will give an indication of the mood of advertisers — particularly among the MNCs hit in their domestic markets by the downturn.
- Other TV stations in China will be watching with interest as they try to judge which way the TV market will go next year.
- The auction will have a bearing on other media outlets. Continued inflation may see advertisers look for alternative ways to reach consumers; if TV prices begin to come down, new advertisers may move into the medium.
Marketers
- CCTV’s key draw is its national reach. Gaining slots during its primetime shows is a good way of building broad awareness.
- For marketers focusing on tier one and two cities, however, the double-digit price inflation seen at recent auctions has made CCTV less preferable to more targeted local stations.
- Growing competition from local stations is making CCTV more flexible about the options open to advertisers.
The event is an important barometer for China’s TV market. Lasting a full day, it can feature fevered bidding on the most popular slots. As media agencies and advertisers draw up plans for the day, what should they be expecting?
1 CCTV has been selling its primetime ad resources by auction since 1994. The primetime airtime resources include the dozen minutes of TVC spots before and after the nationwide news and weather reports, as well as special events such as the Youth Singing Competition and the annual Chinese New Year’s Eve Gala. Title sponsorships are also on offer, a new one this year being on CCTV-2 for economics.
The attraction is the reach on offer - especially for the CCTV-1 channel, which has over 90 per cent of coverage in China.
2 About 400 firms and their media representatives have registered to attend the auction, but only about 100 to 200 companies will be successful. CCTV has no pre-commitment scheme where existing advertisers can receive discounts.
Dick Wu, negotiation director of OMD Beijing, believes banks may have a strong presence this year. Other big local enterprises such as milk brands Mengniu and Yili, both still recovering from the melamine scandal, are expected to spend heavily. Local car brands are also expected to be major players this year.
International brands are increasingly making their presence felt. Last year’s top bidder was Procter & Gamble, spending more than Rmb 500 million (US$69 million).
3 In terms of agencies, big local players such as Charm Communications, which represents several state-run enterprises and local clients, such as jacket brand Bosideng, will be out in force. San Ren Xing, which represents Yili, and Vision CN, which handles Mengniu, are also expected to bid aggressively.
International media players such as Starcom (P&G), Mindshare (KFC), Carat (Master Kong) and Dentsu (Toyota) will also be fighting for a spot. Many networks partner with local media agencies as they have more flexibility in the CCTV bidding. For example, OMD is partnering with Charm and China Media Exchange is working with Vision CN.
“Some of the local agencies’ bosses have a very close relationship with CCTV’s senior management, and so have more insider information from CCTV’s top management and Government officials,” says Derek Kwok, MD of ZenithOptimedia China. What’s more, if advertisers buy space then decide not to use it, the local agencies can help them to resell it.
For some CCTV channels advertisers have to go through local players. Beijing Future Advertising Company has the exclusive rights to book space on CCTV-8 (for drama) and CCTV-5 (for sport).
4 Media industry professionals predict that the CCTV auction will exceed last year’s revenue of Rmb 8 billion, and is likely to reach Rmb 8.8 billion despite slowing growth in China and talk of restricted budgets.
“The overall net inflation rate is five to 10 per cent, and tends to be negotiable,” says Kwok. “Television stations are becoming more flexible for advertisers in term of choosing TV spot time and placing more versions of TVCs.”
5 However, David Wolf, CEO of Wolf Group Asia, believes there is a growing feeling in Chinese media circles that this could be the “last hurrah” for the auction, with tougher times and fragmenting audiences meaning a fall in spend next year.
One senior media agency source suggests that advertisers may begin to question the value of an auction designed purely to maximise CCTV’s revenues. “CCTV’s total viewing share is on the decline. The peak it enjoyed during the Olympics will not be repeated in the foreseeable future,” he says. “Advertisers are tightening their belts. In the face of this, buying inventory via bidding in an auction environment is counter to the psyche of a sensible marketer.”
Nevertheless, Wolf says CCTV has no obligation to publish the results of the auction. “What will be interesting if spend does go down is how it will spin the outcome.”
What it means for…
Media owners
- The CCTV auction will give an indication of the mood of advertisers — particularly among the MNCs hit in their domestic markets by the downturn.
- Other TV stations in China will be watching with interest as they try to judge which way the TV market will go next year.
- The auction will have a bearing on other media outlets. Continued inflation may see advertisers look for alternative ways to reach consumers; if TV prices begin to come down, new advertisers may move into the medium.
Marketers
- CCTV’s key draw is its national reach. Gaining slots during its primetime shows is a good way of building broad awareness.
- For marketers focusing on tier one and two cities, however, the double-digit price inflation seen at recent auctions has made CCTV less preferable to more targeted local stations.
- Growing competition from local stations is making CCTV more flexible about the options open to advertisers.
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