BEIJING (AdAgeChina.com) -- China will avoid the curse that often afflicts host nations of the Olympic Games -- an economic slowdown after the games leave town.
For China, there is "no real sign of a significant hangover for the remainder of 2008," said Alex Abplanalp, the former head of ZenithOptimedia in China, who now runs China Media Consulting in Shanghai.
"Many non-Olympic-related advertisers held back media activities during the whole Olympic period, in the lead up and during the games, to avoid the intense advertising clutter."
Hosting the 2008 Olympic Games will boost China's ad market by 22% this year to $35 billion, according to WPP Group's GroupM media division.
19.5% growth expected in 2009
GroupM forecasts 19.5% in ad spending in 2009 to $42 billion and predicts China will overtake Germany in 2010 to become the world's third-largest ad market, trailing only the U.S. and Japan.
"The rising domestic demand and limited supply of airtime will be at the root of the thriving ad economy over the next post-Olympics years," said Lucy Zhang, futures director at the GroupM knowledge center in Shanghai.
Consumption in China's largest and most developed markets, its so-called first and second tier cities, "appears to be showing few signs of slowing, following the rising incomes and consumer price inflation," she said.
Nielsen has similar expectations, pointing out that China's ad market grew 17% to $30.7 billion in the first half of 2008. It expects China to sustain that momentum after the games, "with the year ending in the range of 15-20% growth rate, said Rita Chan, Nielsen's Shanghai-based executive director, media service in China.
The research company is "optimistic" about China's ad market in 2009 as well, "expecting it to be another year of a double-digit growth," Ms Chan said. Companies selling "fast moving consumer goods, pharmaceuticals and telecom services will continue to be the big spenders on advertising."
Carat is less optimistic
Another forecaster, Aegis Media's Carat division is a little less optimistic. Last month, Carat cut its 2009 forecast to 10.9% growth in 2009 from 13.2%, largely because of the devastating earthquake in Sichuan province in May 2008.
Even so, the market is still expected to see double-digit growth next year, a rate "still well ahead of predictions for the developed world," said Singapore-based Patrick Stahle, Aegis Media's CEO, Asia/Pacific.
Consumption in China's largest and most developed markets, called first and second tier cities, show few signs of slowing and multinational advertisers like Unilever and Procter & Gamble are reaching out to hundreds of smaller cities and towns across China.
New consumers in those markets "will attract more funds from marketers aiming to get additional market share," Ms. Zhang said.
Other factors besides China's overall economic growth are spurring advertisers to spend. Now that the Olympic Games are over, the country's regulatory advertising environment will loosen up again, attracting advertisers back into the marketing arena.
During the Olympic Games, for instance, most outdoor advertisers were shut out of Beijing to protect Olympic sponsors from ambush marketing. Nonsponsors such as Mizuno, Fila and Burger King are starting to roll out major campaigns in an effort to get back in the game.
"This is especially true of brands that purposely went off-air during the hectic Olympic period. To avoid losing the battle in share of voice, they are coming back online to support their brands," said Matt Brosenne, international business director at CSM Media Research in Beijing.
Olympic sponsors continue to spend
And the Summer Games' 60-plus official sponsors and partners aren't going away.
"Olympic sponsors will continue to spend at higher levels than the same period last year to maximize sponsorship benefits through to the end of the year," Mr. Brosenne said.
Coca-Cola, for example, launched a nationwide TV campaign, "Thank you, China," as soon as the Olympic Games ended last month. It was created by Red Lounge in Shanghai.
"Following the Olympics, Coke is definitely planning to continue investing in advertising for the Chinese market," said Kenth Kaerhoeg, a Coca-Cola spokesman in Hong Kong.
But not everyone agrees there is no reason for concern next year.
Mr. Abplanalp said 2009 is "less clear-cut" due to economic uncertainty in the U.S. and Europe. Pressure will be intense on multinationals in China to deliver higher revenue and profits in 2009 as they look for additional growth from the "BRIC" markets -- Brazil, Russia, India and China -- to compensate for shortfalls elsewhere.
General Motors Corp., for instance, is "very appreciative that we are doing so well, over 30% growth in sales year-on-year," said Steve Betz, general director for Chevrolet at Shanghai General Motors, a joint venture between General Motors and Shanghai Automotive Industry Corp.
There are "concerns about how the U.S. market is flowing and in the shift from trucks and SUVs to cars, since that has been our bread and butter in the past," Mr. Betz said, a development that is offset by strong sales in China and other developing markets like Brazil.
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