SHANGHAI (AdAgeChina.com) -- China was already a major focus for global marketers, but news that the country's ad market will grow 6.9% this year, far above Carat's earlier forecast of 4.6%, means the spotlight will get even hotter.
The increased global focus is creating meaningful changes in China's media landscape. The rapid growth of satellite television stations is putting pressure on local and provincial stations to raise the quality of their programming or risk losing their local audiences.
Higher quality satellite programming means better ratings and increased brand awareness in second-, third- and fourth-tier markets, driving incremental sales growth beyond the traditional tier one centers.
Opportunities for branded content are allowing brands to be a natural part of the story rather than a force-fit brand placement. The proliferation of digital outdoor media options is allowing two-way interaction in even the most traditional of media spaces like bus shelters or office elevator lobbies.
And, in a story consistent globally, the transformational power of digital is reshaping the way consumers engage with media, whether it be mobile search, social media, or online gaming.
But 2009 has been an exhausting year as well. The change from positive expectations at the outset of the year to pessimism around the end of the first quarter meant many advertisers were unwilling to make commitments.
Rather than plan ahead, media strategies became more tactical and "efficiency" became the buzzword of the day. Despite assurances from global CEO's that China would be the "last place to cut ad spend," the global economic crisis clearly reached into the previously impenetrable China marketplace.
The tide is turning again, sort of. While 2010 will clearly be better than 2009, it will not be a rapid return to the irrational exuberance of the first part of this century. Efficiency will still be on the tip of the tongue for advertisers, but marketers are beginning to look at 2010 plans and show a willingness to make annual commitments once again. They are also taking a look at programming opportunities that might not happen until the second half of 2010. That's encouraging.
On the downside, next year will bring new challenges for marketers. High-profile events like the 2010 World Expo in Shanghai and the Asian Games in Guangzhou will be inflationary for these two key cities just as the Olympic Games were for Beijing last year.
Outdoor media will be particularly impacted by tightened regulations designed to rid the cities of unsightly clutter. While these changes will create a more attractive and appealing advertising environment, they will also create a spike in media rates in what are already high-cost cities.
A significant percentage of quality sites, like eminent domain near major roads and schools, have also been taken over by city officials for Expo promotion or public-service ads linked to the Expo's theme of "Better City, Better Living."
The regulatory environment is also about to change in 2010. China's State Administration of Radio, Film and Television (SARFT) recently issued a raft of new regulations aimed at curbing the amount of airtime given over to commercials. The regulations set maximum advertising allotments per hour during both on- and off-peak times, require a minimum number of public service announcements during peak periods and outline the maximum number of ad breaks during TV series scheduling.
For example, under the new rules, no commercial can be longer than 90 seconds during any TV show, while the overall length of ad breaks will be limited to 12 minutes for each one-hour slot.
Speculation is running rampant as to the impact on ad rates, especially in prime time, if the overall inventory supply is reduced. The key variable is demand and, for now, demand remains strong for quality programming.
SARFT also banned ads for a number of products such as chat/dating lines, home shopping/direct shopping if not aired on dedicated shopping channels, and dairy products with words or VO 'Breast milk replacement.'
While good news, 6.9% growth represents the lowest increase in ad spending in the past decade and 2010 will likely be another slow year. It's the best of times...but also the worst of times albeit a 'worst' that would be cause for euphoria around most of the globe.
Seth Grossman is Carat's managing director for eastern China, based in Shanghai since 1994.
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