Top Biz News
Advertising industry optimistic about 2010
By Yu Tianyu (China Daily)
Updated: 2009-12-14 08:04
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 The multi-media advertisement sector is increasing spending on new services offered by the digital world. [CFP] |
On a chilly November day in Beijing, Chinese entrepreneurs and their representatives braved freezing temperatures, swarming China Central Television (CCTV) headquarters to spend tens of billions of yuan for prime-time advertising slots next year.
Several CCTV celebrity presenters helped announce the auction results. Near the end of the day, one auctioneer nearly lost his voice, but still he kept shouting for higher bids.
The national broadcast giant raised bids totaling 10.97 billion yuan ($1.61 billion) in about 13 hours. This year's bids were the highest in 16 years, up 18.5 percent over last year's 9.26 billion yuan.
Industry insiders said the 2010 CCTV Prime Advertising Resource Bidding results were not only a strong sign for the country's economic recovery, but also good news for China's advertising industry.
Economic meltdown
"Advertising budgets really suffered last year because of the financial crisis," said Nick Brien, president and CEO of advertising giant Interpublic Group's Mediabrands.
He said the sharp pullback in consumer spending internationally had forced companies to adjust by cutting global advertising expenditures by 10 percent to 15 percent this year.
However, a survey conducted by Beijing-based CTR Market Research showed that advertising spending in China grew by 15 percent in 2008, reaching 441.3 billion yuan.
CTR predicted a 5 percent to 8 percent rise in 2009.
Since early this year, companies have tightened their purse strings due to the global economic meltdown.
A survey by ACNielsen showed that most advertising clients the company surveyed in Asia would curtail their expenditures in 2009, and that one-fourth would slash their budgets by more than 20 percent compared with 2008.
But Brien said some sectors seem to be robust, such as value-based retailers and food companies.
Xia Hongbo, director of CCTV's advertising department, said household products and construction materials are the fastest-growing sectors in terms of advertising expenditures.
The value of bids by each of those sectors for prime time TV slots in 2010 increased 200 percent year-on-year. Bids from the home appliance segment increased by 80 percent, and auto industry sector bids increased by 70 percent, he said.
Companies that aggressively bid for airtime are mainly from sectors closely related to people's livelihoods, such as home appliances, healthcare, and food and beverages, said Yao Jinyuan, chief economist of the National Bureau of Statistics.
Li Guangdou, an advertising industry expert, explained that, psychologically, consumers' decisions on purchases of household products are easily influenced by advertising, so advertising effectiveness for these products is relatively higher.
"But that doesn't apply to products such as real properties, for example," Li said.
Optimism
International advertising agencies are optimistic about China, regardless of the state of the global economy.
Buoyed by government stimulus measures, Chinese consumers keep shelling out large sums of money on showy purchases.
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According to a recent survey by ACNielsen, consumer confidence in China in the last quarter reached its highest level since mid-2007, driven by a strong improvement in local job prospects in western China and second-tier cities, as well as personal income increases across the country.
"China is a growth engine for many advertising companies domestically and internationally for the long term, so there is tremendous optimism here," Brien said.
"As increasing numbers of international clients are making China their priority and expanding their business in China, numerous opportunities are being created for advertising agencies like Mediabrands, which makes China our priority, as well," he said.
But Brien added that he does not see signs of recovery in the advertising market globally.
"I feel like we hit bottom by the middle of 2009, but I don't think ad budgets will come back right away," he said.
