BEIJING (AdAgeChina.com) -- On "special assignment" for Ad Age China, four of China's top media buyers--senior execs at Aegis Media, GroupM, OMD and Zenith Media--filed first-person accounts from today's CCTV auction.
Derek Kwok, Zenith Media's managing director, China
As expected, there was no empty seat in the CCTV auction venue this morning. However, unlike in the past, CCTV scheduled the bidding for sponsorship of the main special event of 2010 -- the World Cup -- upfront this year.
CCTV playfully put its female host "up for bid" to warm up the event. A dinner with Dong Qing, also the host of the 2009 Chinese New Year gala show, was won by a bidder for 10 million "Yuan Fen" (a term meaning kismet in Chinese). The result of the next real bid was good: CCTV's total World Cup-related bid was 105% higher than the total base price.
The second bid of the day was won by Sichuan Lang Jiu Co., which paid RMB 111 million for the title sponsorship of CCTV's Chinese New Year gala evening, a 56% increase increase from last year. Coveted 7.5" billboards on CCTV-1 sold for RMB 2.4 billion, a 32% increase year-on-year.
Later in the day, Mengniu won the bidding for another hotly contested slot, sponsorship of CCTV's popular TV drama hour during the first half of the 2010, for RMB 204 million. The show goes on...
K.F. Lee, Aegis Media's CEO, Greater China
At 8:18am, we're here at the Media Centre for the 2010 CCTV bidding. It's cold, but there's a real buzz in the air. We grab a Starbucks and gather the Carat bidding team together for the long day ahead. Patrick Stahle, our CEO, Asia/Pacific, has joined us to give support to the Carat China team.
This year's theme is "Look at me, Look at China!" and the CCTV anchors start out by gamely announcing the rules of the game for today. CCTV first whets our palates with some tasty appetizers, the 2010 World Cup, the Winter Olympics and the CNY festival broadcast.
Baijiu brands win the bidding for two of the first three properties. The liquor marketer Lang Jiu bids RMB 33.3 million to sponsor a World Cup show, another spirits marketer, Yang He Jiu, offers RMB 70.09 million to sponsor CCTV's Young Singer contest.
Finally, the Chinese electronics manufacturer, Midea, sponsors the Winter Olympics "Best Moments" for RMB 20.1 million.
This year, the winning bids are shown electronically within seconds of the result, which makes keeping track a little easier and keeps the energy at a high level.
The second course is served and it's a real treat, the title sponsor for SMS voting at the annual Chinese New Year broadcast, watched by 99% of the nation. Lang Jiu brings a flush to a few faces with a winning bid again! RMB 110 million!! A couple of hours in, and Lang Jiu has already spent over RMB 140 million.
The Carat team huddles for some quick analysis. Average inflation is running around 15%, but some spots are clearing more than 50% inflation. Phew! We break the media banquet for a spot of real lunch and discuss the tension emerging between leading Guangdong-based appliance brands, Midea and Gree, for key spots.
After lunch, we move into the prime time dramas and we see a change at the top, as the dairy brand made famous by the Super Girl talent contest on Hunan Satellite TV, Mengniu, takes the top spender spot away from personal care brand, Nice.
As the day progresses, advertisers seem to be getting more rational. Leading marketers like food and beverage leader, Master Kong (also known as Kangshifu) are buying prime inventory but at inflation less than 5% over the previous year. Leading multinationals like Unilever and PepsiCo definitely seem to be getting more aggressive on CCTV while Coca-Cola's tactics seem quite consistent at the high standard they always set.
Yes!! Carat's war room erupted in cheers as we grabbed a prime spot at a much lower price than we expected for Master Kong. Accurately estimating inflation and demand is part art, part science.
Now it's 10:16pm, the auction has wound down, and at the end of a long day, here are some final observations:
First, inflation was higher than most expected. We think it will end up at 15% year-on-year inflation, which just shows how strong the belief in the Chinese economy remains.
Second, what's interesting is that in the open bidding, prices only rose about 6%. I think it shows that marketers are getting more experienced at the CCTV auction game and have a clearer understanding of the value of CCTV for their brands.
Third, domestic brands were far more active than the international brands. These brands have a laser-like focus on expanding distribution into the interior provinces and CCTV provides a great value to them.
Joanne Law, OMD's deputy managing director, China
I am at the CCTV auction as I write this and I can sense that sentiments on the whole is very positive. There aren't any "crazy bids" at the moment as prices are (as of now) fairly reasonable. What stood out was a bid on CCTV's inside drama, which broke the record at over RMB 200 million versus the bid price of RMB 129 million last year (and previous years) for this segment program.
My guess is that the majority of the big spenders will be local brands. In terms of a revenue target, it could possibly be higher than last year. CCTV is estimated to get RMB 1.5 billion today for ad time during 2010 vs. last year's 0.92 billion, with the percentage increment mainly driven from 15 – 20% inflation.
Someone's just walked past and commented that advertisers this year seem more conscious about the bidding price and most of them benchmark prices against last year as well.
In terms of the impact on provincial satellite TV (PSTV), provincial TV (PTV) and local TV stations, although the bid is relatively more vibrant vis-a-vis last year's, the pricing and the bid result is up to expectations and within a reasonable amount vs 2009.
Therefore, the auction should not have much impact on the rate card policies of PSTV, PTV and local TV stations. In fact, the more critical factors affecting terrestrial TV rate card policies are the new advertising regulations, which restrict the number of advertising minutes in a break.
Bessie Lee, CEO China at WPP's GroupM
I left the hotel earlier than usual to beat the traffic. I'm not taking any chances with President Obama still in town today, but I arrived earlier than expected.
GroupM reserved three rooms for our clients and staff to work on the bidding. By 8am, most of the clients who were planning to bid arrived. We went into the bidding room at 8:15 am and event started exactly on time at 8:18 am, a most auspicious time.
The atmosphere was the same as previous years, with everybody in keen anticipation for the auction to start. CCTV got everyone in the mood with their top TV hosts all out in full force on stage to welcome everyone. GroupM has its own section for its clients and agencies to the front right of the stage.
The overall bidding this morning was more aggressive than I have seen in previous years. Bids for the World Cup 2010 and the Chinese New Year Gala shows and News programs time slots were fiercely contested by local enterprises. There was one slot that had two Chinese electronic appliance giants, Midea and Gree, fighting to win.
There are a couple of reasons to explain the bidding frenzy this year...the first-tier provincial satellite TV rates have gone up in 2009, due to better programming and higher viewership. With the recent passage of SARFT Article 17 (which will result in less commercial TV airtime available in 2010), TV rates for these provincial satellite TV channels will be expected to inflate even higher next year, making CCTV rates and coverage look very competitive and cost efficient, hence the much higher demand and limited supply at today's CCTV auction.
Even the pre-bidding negotiation with advertisers were more controlled and regulated than previous years as a result of the limited supply. Just looking at this morning, the auction was very much dominated by the local enterprises like previous years but we have more multinationals bidding this year for the reasons above.
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