China's 2010 Ad Spending to Grow 10% After 13.5% Jump Last Year

Rising Demand for Limited TV Inventory Will Raise Rates and Send Advertisers to New Media, Says CTR Market Research

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BEIJING ( -- After a nose dive in early 2009, China's ad market rallied during the last three quarters of the year. Total measured advertising expenditure last year jumped by 13.5% over the previous year to $74 billion, according to CTR Market Research.

"China achieved the minimum annual GDP goal of 8% in 2009, and the advertising market remains at double-digit growth. However, in view of some government regulations that could impact TV advertising, we expect 10% growth for China's advertising market in 2010," said Tian Tao, CTR's VP in Beijing.

Television still leading ad spend
Television remained the dominant form of media with 15% growth. But new regulations implemented this year by the State of Administration of Radio, Film and Television (SARFT) will limit access to prime-time spots in 2010. The rising demand for limited airtime will boost rates during key time slots but send some advertisers looking for new media formats.

The growth of print media slowed last year, mainly due to a drop in ad spending in the real estate and transportation categories. Spending in outdoor media , however, picked up speed and grew 9% in 2009, partly because restrictions put in place during 2008 related to protecting official sponsors during the Olympic Games were removed.

All of the top five categories -- toiletries, business and services, foodstuff, beverages and pharmaceuticals -- enjoyed solid increases in ad spending. In the biggest jump, spending on beverages soared by 52% in 2009.

L'Oreal overtakes Olay as leading brand by ad spend
Ad spending for Procter & Gamble Co.'s Olay brand, formerly the most advertised brand in China, shrank 5% and fell to second place. It was overtaken by L'Oreal, for which ad spend rose 65% last year.

China's dairy industry, badly damaged by the country's melamine scandal in 2008, has started to recovery after a year of PR campaigns designed to rebuild consumer confidence.

Demand for big-ticket items is also up. Respondents' intention to purchase mobile phones and cars in the second half of last year doubled compared to the first half of 2009, according to the China National Resident Survey.

China has also seen a surge in sales of home appliances in second- and third-tier cities, leading to price wars in those markets. As a result, ad spending on home appliances grew 56% last year and CTR expects budgets to remain strong this year.

China's economic recovery in 2009, and the better-than-expected growth of its advertising market, will pave the way for "new heights for [that country's] advertising market in 2010, Mr. Tian said.

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