Five Ways CCTV's Auction Makes Life Harder for Advertisers

Record Spending at the Auction Means Higher Rates, Shorter Ads and a Greater Need for Diverse Media Plans, Says DDB's Asit Gupta

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SHANGHAI (AdAgeChina.com) -- China Central Television's auction for prime-time ad space last November set another record. The annual auction, which is a benchmark for other TV stations looking to set rates for next year and a barometer for the overall health of China's ad market, rose 18.5% over the previous year's haul.

While brand owners scurry to re-cut their marketing plans and budgets for 2010, five consequences have emerged that will have a long-term effect on advertisers in China.

1. The shift in spending to digital and interactive media will accelerate
With the cost of national reach via TV galloping, brand owners will increasingly look at using other high-reach media like digital. Expect digital media spend to grow at an even higher rate compared to 2009.

Multinationals will lead the way here, so it was not surprising to see Procter & Gamble Co. happily ceding its position as the top bidder in past years to local companies. P&G actually bid less in the latest auction than it did in November 2008.

Local brands still see national TV as an easy way to build the brand, while foreign advertisers are clearly looking for a more holistic media mix.

Not all of the digital spend growth will be measured media as social media will continue its rapid ascent.

2. Higher media rates will lead to shorter ads
With TV still important for brands to have salience and trust, brand owners will look to maintain their TV presence with optimized spending.

This might mean shorter copy lengths, which is already quite common with local players who tend to spend a lot more on shorter copy lengths (15", 5") than multinational advertisers.

Multinational players will also shift more money to shorter copy lengths, which will have implications for creative development and ad testing.

Do you brief and test a 30" when you spend the bulk of your media money on 15" to 20" spots? Is there a big enough normative database of 15" across categories with the big ad-testing companies like Millward Brown and IPSOS?

3. Shorter TV spots mean marketers need new formats for story-telling
With shorter copy lengths, the ability to weave a story in a TV spot is reduced and we will see more straightforward executions focusing on product information and directing consumers to online media where they can engage and learn more. We will also see more branded content like Unilever's short film last year for Lux shampoo starring Catherine Zeta-Jones, which aired in Japan, China and Taiwan. This type of engaging content finds its own viewership and creates earned media for the brand, but it increases the upfront investment in production.

4. Mobile will (finally) come of age
With Google's launch of the Nexus one handset and Apple's purchase of Quattro, a mobile advertising company, the mobile space is heating up globally. Growing smartphone penetration with 3G connectivity offers multimedia capability and targeted communication. Even in China, mobile might find 2010 to be the tipping point. The recent launch of iPhone and more importantly 3G growth will really make mobile a high reach audio visual media, which will be hard to overlook.

5. Marketers will get serious about shopper marketing
Shopper marketing in China to date has largely meant in-store promoters pushing product samples and promotions at wary shoppers and merchandising management. Enlightened brand owners will start looking at strategic shopper marketing, as modern retail continues to grow its share of shoppers in China. In the U.S., Walmart's more than 3,500 stores reach more consumers than the highest rated TV show. While we are some distance from that kind of reach via any one retail brand in China. the trend is clear with retail consolidation and media fragmentation.

Asit Gupta is head of strategic planning for DDB Group in China, based in Shanghai.


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