P&G Reigns Supreme at China's Wild TV Upfront

'Ad Age' Takes You Inside China Central Television's 10-Hour Media Auction

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BEIJING, China (AdAge.com) -- On this day -- Nov. 18 -- Alfonso De Dios is king.

Procter & Gamble's associate director-media, Greater China, assumes his throne for 10 hours at one of the world's
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Photos: AP

A guard walks in front of the Beijing headquarters of China Central Television, where all eyes -- and media selling plans -- are cast toward the 2008 Olympics. The world games played a major role in driving up revenue at this year's TV upfront in China.

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Ad Age Photos From China's TV Upfront
Inside the Colorful World of CCTV Media Selling
strangest and most colorful media events, the China Central Television auction. There, with great grandeur, in one grueling day that generates 60% of its advertising income, China's national broadcaster sells slots for prime-time programming and special packages for the coming year -- and the promise of the Beijing Olympics helped it reap $862 million, up 16%.

Biggest spender: P&G
For the third consecutive year, P&G was the biggest spender, earning the soft-spoken Mr. De Dios the nickname "king of the auction."

The 39-year-old executive, who previously worked at JWT and P&G in Manila, the Philippines, laughs about the attention he draws at the auction, but from the minute he arrives his stature is clear. His team -- Jason Lai, senior media manager, Greater China, and four executives from Starcom, which manages P&G's media buying in China -- are whisked past the line of people waiting to go through the metal detectors and seated in the front and center of the packed auction room, in a hotel owned by CCTV next door to its headquarters in Beijing.

10-hour media auction
This year, Mr. De Dios allowed Advertising Age to join his group for a front-row view of the 10-hour auction, which sometimes looks more like a variety show: It is hosted by CCTV's actors and news presenters, applause prompters give it a game-show feeling, and the tapping of the gavel by the auctioneer is preceded by a drum roll.

"It's really a spectacle, but I guess it takes a media company to blend entertainment and business like this," said Amy Ballis, as she gazed around the crowded room. She is relocating to Guangzhou in January 2007 as Starcom's agency-of-record director for P&G from Chicago, where she has a global role on the Philip Morris account at Leo Burnett Co.

If a bit corny, the auction represents enormous business for CCTV, through a mixture of silent paper and open bids for time slots such as weather sponsorship or naming rights for special programs. In the silent bids, representatives place paper bids into a red box on the stage. In practice, the entries aren't sealed and they are ceremoniously held up to cameras before they are dropped into the box.

Hot dairy time slots
The day is peppered with genuinely exciting moments, when competitors such as the owners of China's two largest dairy brands, Yili and Meng Niu, hotly compete for coveted time slots. Any packages that exceed the 100 million RMB ($13 million) mark also drive the crowd wild. One of the most sought-after packages, for instance, was a 15-second spot during a popular drama for the first six months of 2007, including the Chinese New Year period. That slot sold for about $13 million.

Committing $53.4 million to CCTV over the coming year, P&G was the top spender once again, followed by some of China's largest domestic companies, Wang Lao Ji, Meng Niu and Mingshen. Colgate-Palmolive, the only other non-Chinese advertiser at the auction, spent just over $6 million.

"I'm happy with the results; we were looking for good value and got the time slots we really wanted," said Mr. De Dios. With his low-key style, he prefers the silent paper bids, and deliberately avoids high-profile packages likely to spiral into a bidding war.

Radically different from U.S.
The CCTV auction system is radically different from the way advertisers buy airtime on media in other countries, said Jack Klues, chairman of Publicis Groupe's media division, as he witnessed his first CCTV auction. In the U.S., "there are several TV networks that are more or less equally strong, so advertisers pit sellers against each other. But in China, CCTV has the power, so the system pits advertisers against each other."

Although Mr. De Dios complains that the system does not let advertisers plan media more than 18 months in advance, it has its advantages. The results are transparent, and reshuffling the process this year allowed CCTV to trim about six hours from the process to finish at 6 p.m.

"They have really improved the length and pace," said Mr. De Dios. He and his team only escape the harsh stage lights, noise and buzz of the auction room for bathroom breaks. They even eat in the front row. At lunchtime, delegates receive boxes with ham sandwiches and fruit. Midafternoon, bags of KFC are passed out.

Financial industry improvements
Improvements in China's financial industry have also streamlined the process. Advertisers sign invoices immediately after winning a bid and pay the following day by wire transfer. That's a big change from the early days, when advertising executives would turn up with suitcases full of cash and an entourage of armed guards.

Although public, much of the auction is carefully managed by CCTV. The first bid, for instance, is never left to chance. This year, round one -- naming rights for an Olympic-countdown package -- went to Lenovo, the only Chinese company that is a global sponsor of the 2008 Olympic Games in Beijing, for about $4 million.

"That was a good start for CCTV, and set the tone for the day. They'll definitely make more this year than last year," said Mr. De Dios during an afternoon lull as he munched on chicken wings.

$862 million from 200 advertisers
As he expected, the auction ultimately generated $862 million from 200 advertisers, easily passing CCTV's goal of $826 million, and a 16% increase above last year's sluggish result. CCTV's rates have been rising even though viewership is falling due to better competition from provincial channels, a trend that worries CCTV executives.

This year's strong performance is largely due to interest in the Olympics and the programming specials CCTV is creating to hype the sports event, but the disparity between CCTV's rates and its appeal to viewers is the reason only two foreign companies take part in the auction.

"Most multinationals don't have as many brands in as many different categories as we do," said Mr. De Dios, "so it makes more sense for them to buy time for certain provinces and cities rather than on a national basis."

'Giving face'
Media experts say the auction is really about ceremony, "giving face" to partners and making CCTV look good.

Besides linking their brands to the Olympics, Chinese companies buy slots at the auction "to make a big show, to further government relations or to gain credibility and stature before an IPO," said Rob Hughes, managing director, MindShare, Beijing.

While P&G is the king of the auction, the real winner is always CCTV.
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