CCTV auction seeing baijiu bids down, auto speeding up

The annual landmark advertisement auction by China Central Television drew active bids from companies targeting China's consumer market. Provided to China Daily

The winds of change are blowing. If the auction of advertising airtime on the Chinese national television system, or CCTV, is the bellwether for the nation's consumer market, then bidding for 2014 means that times have indeed changed.

First of all, government offices, which had been big consumers of expensive goods, have bowed to Beijing's anti-corruption campaign and are refraining from squandering public funds for their personal uses.

Secondly, the urban middle class has unquestionably become the key player in the consumer market. Businesses are leading focused marketing drives targeting this stratum of society.

Third, automobiles are no longer simply the privilege of officials nor rich people's toys. As such, they are making their way into mass media advertising programs just like toothpaste and shampoo.

Fourth, despite its still immense influence and healthy advertising revenue, television broadcasting, as represented by CCTV, is losing share in ad revenue growth to the rising digital and Internet media platforms.

Even stronger winds are coming, industry specialists predict, which will further alter the landscape of China's advertising market.

CCTV's 2014 advertising airtime auction was held in mid-November in Beijing.

And, compared with the past few years, two distinct differences were apparent: the absence of high-end baijiu (Chinese liquor) companies and the meteoric rise of the automotive industry.

According to data released by Charm Communications Inc, the total spending by the beer and baijiu industries in the auction came to 674 million yuan ($110.6 million). while last year, the spending by the baijiu industry alone totaled 3.66 billion yuan ($600.8 million).

Charm is a large local advertising agency that focuses on TV and the Internet. It offered services for many of the year's bidding winners, such as Bosideng clothing, China Telecom and Dongfeng Peugeot Citroen.

In China, expensive baijiu is not only a liquor, it's also a status symbol. High-end baijiu companies used to be big spenders at CCTV's auctions. For instance, 2013's top bidder was Jiannanchun, a prominent baijiu brand.

But with the changing of Party leaders and the setting of new policies to fight corruption and cut governmental consumption, the demand for high-end baijiu has dropped sharply. That will be the case for the foreseeable future. The industry is facing a difficult time.

As a result, high-end baijiu companies must carefully consider the most effective use for their advertisement budgets and deliver their ads on the most closely targeted media platforms.

Chen Gang, a professor of advertising from Peking University, said that the Chinese advertising industry is restrained by many factors. The macro-economy is one of the most influential ones.

Chen said expensive baijiu and high-end catering industries were the sectors that were most affected by the macro-economy and the new policies. "The government's new policies have squeezed the bubble out of the consumer market. Combating extravagance and waste will adjust the consumer market and make it return to a real one," he said.

"Baijiu, especially the high-end baijiu industry, has decelerated sharply this year. Now they are advertising on the radio, which was impossible in the past," Chen noted.

On the other hand, the demand for automobiles is huge. For many Chinese, buying a vehicle is not a dream anymore. The idea of a car has changed from being a luxury to something the average person can afford.

According to huxiu.com, a business information provider, automobiles are China's next consumption hot zone after real estate, and competition among carmakers will be fierce.

So, the auto industry can be said to be entering an "era of integration," in which all players will not only focus on precise marketing - ads on the Internet, for example - but also will pay attention to brand-building on such mass media as television.

Therefore, it is noteworthy that automotive companies were the most impressive performers in the auction. All the major brands were present: Nissan, Volkswagen, Honda and Chrysler, along with some local ones.

Shanghai Volkswagen committed 26 million yuan for the exclusive right to have its name associated with entertainment program Star Employee. Shanghai Volkswagen is a joint venture of SAIC (Shanghai Automotive Industry Corporation) and Volkswagen AG.

One local bidder was Hualing Xingma Automobile Co Ltd, a heavy truck and special automobile manufacturer. It won a coveted daily 5-second ad slot during the 7 pm evening news.

Liu Hanru, Hualing Xingma's president, said he believes advertising on CCTV will help build his brand. "Our company will invest 100 million yuan on CCTV's platform in the first half of 2014." Liu said.

Television is not a typical advertising platform for industries like heavy trucks, so the appearance of Hualing Xingma showed that the industry is confident in the consumer market next year.

Other companies bidding in the auction came from the consumer lifestyle and services sectors, including beverages, food and health.

In the personal care product niche, global giant L'Oreal was at the auction for the first time. Local brands Nice, LaFang and Chando also retained a strong presence.

As opposed to previous years, CCTV declined to reveal specific bid information, such as the total amount of bids and the number of companies taking part, and would only say that the total bidding "exceeded" last year's and that "a few hundred" companies participated.

Another difference was that about two-thirds of the ads were sold through advance signed subscriptions over the past two months.

Although lacking specific data, industry analysts estimated that total bidding for 2014 came to around 17.5 billion yuan, up about 10.8 percent over last year's 15.8 billion yuan.

According to CCTV, the number of ads from signed subscriptions totaled 178 this year, way above last year's 99. There were more than 200 ad slots in this year's auction, plus 67 slots relating to new media.

He Haiming, director of CCTV's advertising center, said including advertising rights to the 7 pm evening news program, considered the nation's most influential news show, attracted "budget proposals [that were] higher than others".

Advance signed subscriptions, on the other hand, are "designed for different size and type companies", He added.

Although advertising resources in the auction were less than before, the daily 7 pm evening news still distinguished itself. According to Shanghai Morning Post, a 10-second ad slot plus a 5-second ad slot went for 4.1 billion yuan for the year.

CCTV also announced it will promote a new program called Quality Billboard next year. It is a program showing both good and bad-quality products and the companies that produced them. The purpose of the show is to guide consumers and lead the industry's healthy development.

CCTV Channel 1 will create new news programs at the three prime times of morning, noon and evening. News channels also will adjust their programs, and the evening news will be the one adjusted most.

CCTV also will promote new entertainment programs. Most were in the auction and attracted a lot of attention from advertisers.