O’seas advertisers break into China

Web's revs soar as Western firms bid for spots

SHANGHAI — China’s only national broadcaster — China Central Television — has seen its advertising revenue shoot up once again. Annual ad auction in November raised a reported 5.2 billion yuan (around $600 million), up 18% over last year.

The auction is a significant gauge for the advertising industry, which this year expects total revenues of around $18 billion, up 40% on 2003, according to the China Advertising Industry Assn.

In a marked change on previous years, foreign advertisers featured strongly at the top of the “bidding kings” list.

The format of CCTV’s ad auction — where the most popular slots on the station’s 12 channels are sold off — has traditionally not attracted foreign companies, unused to bidding for TV slots in an unpredictable market.

In previous years, local food processing and pharmaceuticals firms have topped the list.

This year, Procter & Gamble spent the most, a reported $46.5 million, on primetime slots. Local beverage firm Wahaha was the second-biggest spender at around $36 million. Unilever, Colgate and NEC were also high up on the list.

The growth of China’s advertising industry over recent years has surprised industry experts. CCTV’s revenue last year from the ad auction was already up by 18% on the previous year’s $400 million.

Just five years ago, total ad spend in China was less than $7.5 billion — today it is more than twice that.

This year has seen the rise of new forms of advertising media on the mainland, including increased use of “narrow ads” played on niche media like screens in the back of taxis and in hotel lobbies.

Online ad spending also jumped from around $59 million in 2002 to $130 million last year. That is expected to reach more than $200 million this year.

Under World Trade Organization commitments, China’s advertising industry is due to open fully to foreign advertising companies by the end of next year.

Since the end of 2003, foreign investors have been allowed to hold majority stakes in local ad companies. However, Rupert Murdoch’s Star TV Group already has a wholly owned ad company operational in China through a separate agreement that allows Hong Kong-registered companies to enter the market sooner.

Ironically, the good news about advertising revenue comes as CCTV announces plans to pull the plug on its 2-year-old West China Channel.

The service, set to close at the end of December, has suffered from low ratings, lower-than-expected ad revenue and bad satellite reception.

Launch of the channel was part of the government’s Go West campaign, designed to encourage investment in the poorer provinces of China’s vast western regions.

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