CCTV Prime Time Auction Misses Revenue Target
BEIJING --- Revenue from the annual CCTV auction for advertising slots fell well short of its RMB6 billion (US$741 million) target for this year. Intense competition in the advertising market saw the November 18th auction bring in a total of RMB5.8billion (US$716 million), which will have disappointed CCTV ad bosses who had set targets US$25 million higher (CMM Passim).
While CCTV blamed increased competition from popular provincial and local television stations like Hunan Satellite TV, responsible for the phenomenally successful Super Voice Girls TV talent search, media analysts maintain the slow-down in growth is due to a general trend in the ad business, which has seen advertisers becoming increasingly reluctant to spend the bulk of their budgets on expensive national TV and turning to new media platforms as an alternative.
The annual auction has increasingly been seen as a barometer for the domestic Chinese advertising market and this year's shortfall is made all the more significant by the fact that for the first time in 2005 CCTV had extended its auction to include specific programs, such as the World Cup football tournament next summer.
The slow down in the growth of advertising revenue generated by the auction is not unique to CCTV. In fact, according to a report published by the Communication University of China (CUC) in September, the market share of advertising in traditional media including TV, radio and print will see its first all-round decline in 2005 since China's reform in the late 1970s.
According to the state-owned news agency Xinhua, the report from CUC's School of Advertising Studies shows traditional media, which used to take 80 per cent of the advertising market share, took only 45 per cent of the market in 2004. The report states that the advertising market share of TV, newspaper, broadcast and magazine were 38.8 percent, 23.1 percent, 3.0 percent and 7.4 percent respectively in 2004, and are predicted to drop to 38.7 percent, 22.1 percent, 2.8 percent and 6.9 percent in 2005.
"Companies are being forced to turn to new media as their profits fail to follow their ad investment in the traditional media," Huang Shengmin, head of Advertising Studies at the university was quoted as saying.
Media buyers will be hoping that the results of the auction will put a stop to the rapid inflation in advertising rates being charged by TV broadcasters, which at its peek saw the price of prime time advertising increase by as much as 30 percent in a twelve month period.
The mainland's largest mobile phone operator China Mobile gained the title sponsorship for two World Cup programs at the CCTV auction, including the World Cup Live and World Cup Top Score shows for which the company paid RMB103 million (US$13 million). However, the broadcaster's target for the World Cup sponsorship was estimated to have been set at about RMB110 million (US$13.5 million), RMB7 million (US$864,000) higher than offered.
Advertising slots in two other prime-time CCTV programs garnered a total of RMB101 million (US$12.5 million) with Hangzhou Minsheng Pharmaceutical Group Co. Ltd. buying the exclusive sponsorship credits for the 2006 Spring Festival Gala Program by bidding RMB 45.08 million (US$5.6 million) and Jiangsu Longliqi Group Co. Ltd., bidding RMB 56.06 million (US$6.8 million) exclusive sponsorship rights to the 2006 CCTV Young Singers Television Competition.
The highest bid at the ad auction came from US-based Procter and Gamble for the second year running, with an offer of RMB394 million (US$47 million) slightly less than the amount it spent last year. FMCG rival Unilever surged into second place, with its RMB249 million (US$31 million) spend, more than four times greater than its top offer last year.
While the number of multinationals taking part in the auction continued to rise the remainder of the top 10 largest-spending firms were domestic companies, led by Yangshengtang, Bright Dairy and Yili Dairy.
The household products category in general showed the biggest increases in spending, with a 233 percent boost in spending. Other vibrant sectors included the financial and insurance industries, with spending up 138 percent, and telecoms, with spending up 109 percent.