The annual CCTV advertising airtime auction is always a closely-watched affair, but more so than ever this year, with the 2008 Beijing Olympics now less than a year away. Competition for slots not reserved for official Games sponsors is intense.
More than 75 per cent of available Olympics airtime had already been sold at the pre-auction in mid-September. On November 18, all remaining commercial airtime goes under the hammer, primarily on CCTV channels 1, 2, 5 and 7, with bidding set to reach fever pitch for the packages scheduled between early July and the end of the Games on 23 August.
1 Despite the demand, media agencies do not expect CCTV to achieve more than the average year-on-year increase in auction revenue. “The target for CCTV airtime revenue in 2008 is Rmb 10 billion (US$1.3 billion), representing an increase of between 20 to 25 per cent. CCTV earned Rmb 6.8 billion for 2006 airtime sales, and revenue for 2007 was 16 per cent more than this,” says Lisa Wei, managing director of GroupM in Beijing and a veteran at CCTV auctions. “So, a 20 per cent rise for 2008 sales is a reasonable forecast.”
2 This is despite rates being inflated between 20 to 50 per cent, depending on the channel - in comparison, local TV networks have raised their rates by just 10 to 15 per cent. In one case - sole sponsorship of the 2008 My Favourite Spring Festival Evening Gala - rates soared by more than 70 per cent.
“Achieving the target of eight billion renminbi in 2008 should be no problem, as the minimum bidding base rate has increased 20 per cent,” notes Derek Kwok, MD, Zenithmedia Beijing. “The range of the base rate is huge, however.” Overall viewership for CCTV, particularly Channel 5 - the sports channel - will increase, thus compensating for the 20 per cent rise in the base-bidding price.
3 Not everyone is convinced that what’s still on offer is a good buy, however. “CCTV is an effective way to cover the whole of mainland China, but it’s not the only way to do that,” observes Kindy Lei, associate planning director, MindShare China. National satellite networks such as Hunai Satellite TV and Oriental TV in Shanghai offer consistently high audience ratings and coverage.
“The CCTV auction is like a big show, its airtime is extremely valuable, but it is like being presented with five-carat and a 10-carat diamonds. You have to ask yourself, ‘do I really need it? Is there other alternative?’ It needs careful evaluation,” Lei explains.
4 Clutter is another major concern. “The Olympic period is between July and August next year, with the peak period taking place between 8 to 24 August” says Lei. “It’s a cluttered and short period, as Olympic sponsors with big advertising budgets, like Coca-Cola, will make sure they don’t miss a single opportunity to make noise.”
Official Olympics sponsor Yili - which has spent US$2.4 million on 150-second slots during the opening and closing ceremonies - will be doing all it can to prevent rival Mengniu (which i s not an official Games sponsor) from getting in on the action.
5 So how is CCTV making this November auction attractive? It is expected that domestic advertisers - that is to say, non-sponsors of the Games - will make up the bulk of bidders on 18 November. Packages, guaranteed ratings and other unique selling points will be touted to woo clients into spending.
“Some Chinese brands have a gambler’s psyche, placing all their chips on the Olympic Games as a platform for brand development,” says Zenithmedia’s Kwok, noting that the national broadcaster is also in negotiations with China Mobile, for example, to offer major Olympics sponsors extensions of their communications via licensing content and so on.
6 To ensure its post-Olympic bubble doesn’t burst, CCTV will probably become far more flexible in its offers and tailor-made packages. “The market will no doubt subside and this would affect its revenue in the last quarter of 2008,” observes Kwok. “But it could offer discounts to seasonal clients, such as flu medications, or new brands which still have the budget to compete for eyeballs. A CCTV spokesperson, meanwhile, notes that “apart from the Olympics, we have a new integrated media offer of newspapers, internet, HDTV and CCTV newspapers.”
What it means for…
ADVERTISERS
-The minimum bidding rate has increased by 20 per cent, while base rate increases range from zero up to a whopping 71 per cent.
-PCCTV is also offering a range of integrated advertising packages that include online, HDTV and its newspaper portfolio.
-While the broadcaster boasts the biggest national coverage, advertisers focusing on first and second tier markets may do better looking at more cost-effective packages from regional satellite TV channels.
-Other channels are hardly immune to the wave of inflation. General channels are expected to hike charges by up to 20 per cent, with local TV also planning double-digit increases.
AGENCIES
-The most sought-after time slots occur around programming such as news, weather, dramas and talkshows. The most expensive spot falls after the national CCTV news, which costs Rmb 3 billion for a two-month stretch.
-CCTV has pledged it will neither increase volume nor advertising airtime, to protect client spend.
-Post-Olympics, better opportunities may be better priced as CCTV pulls out stops to meet its fourth-quarter numbers.
