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China Broadcaster's One-Day TV 'Upfront' Raises $2.5 Billion

Auction Attracts Top Local Marketers But Multinationals Play Minor Role In Bidding

By Published on . 2

Credit: Anita Chang Beattie

National government broadcaster China Central Television raised a record $2.5 billion at its annual one-day auction of prime-time advertising, an 11% jump over last year. The sale of the most sought-after spots for 2013 was again dominated by local marketers, with multinationals playing a minor role at the event in Beijing.

The CCTV ad auction is widely seen as a barometer for China's economy as a whole. Advertising executives were cheered by the 11% figure, considering the state of the global economy and China's growth, which had slowed to 7.8% in the first half of 2012.

"Some clients will focus on CCTV because it's still the biggest in China, covering every lower-tier market, even tier five and tier six markets. So maybe they will cut down on some budgets for (provincial satellite television) if their budgets are limited," said Kevin Zhou, general manager of Mindshare Shanghai.

Advertising will continue to have an important role to play as the Chinese government implements policies aimed at spurring domestic consumption. The country recently underwent a major leadership transition, but the new regime is expected to continue to adopt a business-friendly outlook.

Credit: Anita Chang Beattie

Up for grabs at the auction on Sunday were CCTV's most high-profile advertising slots: those before and after the news and weather, and some linked to popular programs. Advertising for CCTV's Spring Festival Gala, a live Chinese New Year extravaganza which attracts 800 million viewers, was not part of the event.

The top bidder was Chinese liquor brand Jiannanchun, spending more than $97 million, according to state media reports. Another spirits company, Wuliangye, spent nearly $80 million to sponsor the countdown to the nightly news; juice maker Huiyuan paid $54.5 million for naming rights to a popular talent show.

Among multinational brands, the top spender was Dongfeng Peugeot Citroen Automobile, a joint venture between a Chinese company and the French automaker, according to Charm Communications, an agency that represents many of the companies seeking to buy ad time at the auction. Charm said Volkswagen and P&G were the next biggest multinationals, though overall rankings and amounts spent were not available at press time.

Last year, FAW-Volkswagen, a JV carmaker, was the top bidder with international ties, at No. 7 overall with $45.6 million in bids.

"There's quite a bit of nervousness from people about what the market will be like in 2013. And once you bid at the auction, it's a commitment," said Doug Pearce, China CEO of Omnicom Media Group. "For many (multinational) clients, they may avoid the (auction) option and prefer to buy as we go through the year."

From 2003 to 2008, P&G was the top bidder at the CCTV auction, but multinationals are shifting their budgets to provincial satellite television, digital and other media. However, CCTV remains a powerful presence -- it's the top TV outlet in China, where about $104 billion was spent on TV advertising in 2011, according to data from Nielsen. In comparison, $18 billion went to newspaper advertising, $3 billion to magazines, and $2 billion to radio.

The CCTV auction is a surreal and thoroughly Chinese experience. It kicks off at 8:18 a.m. on Nov. 18, because eight is considered a lucky number in Chinese culture. No matter that Nov. 18 fell on a Sunday this year, the conference center was festooned with roses as usual and completely packed for the auction that ran more than 12 hours.

The auctioneer deftly steered participants to higher amounts, with top bidders -- many of them apparently brokers -- raising placards after receiving instructions over the phone.

Entertainment between rounds of bidding included an opera quartet, a couplet rhyming contest and prize giveaways to bid winners. Former NBA player Stephon Marbury, now a much-loved member of the Beijing Ducks, threw basketballs into the crowd. Nonstop cartoon sound effects punctuated the event.

CCTV is helped by government regulations on TV advertising enacted in January this year, barring commercial breaks during dramas and restricting "overly entertaining" programming in popular formats such as dating and variety shows. The clampdown had a major effect on provincial satellite TV outlets which tend to focus on consumer-friendly content.

As an arm of the central government, CCTV's politically correct programming will never run afoul of censors. But the broadcaster has taken steps to make its inventory more attractive to advertisers. Digital is a particular threat, with online advertising in China expected to grow as much as 50% next year.

CCTV has begun offering multimedia bundling -- along with TV spots, marketers can also receive bonus advertising on online video and mobile apps.

One of the hottest CCTV properties this year is a program introducing viewers to regional cuisines throughout China. The package for buying ad time on the show includes online video advertising and below the line exposure via road shows, Mr. Zhou said. CCTV has also discussed licensing the program with non-CCTV online video platforms.

"This is a very special and very new package for CCTV bidding," Mr. Zhou said.

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