China adspend on target for a bonanza year

<p>Huge pharmaceutical and healthcare campaigns, media inflation and </p><p>pent-up demand have caused China's advertising expenditure to skyrocket </p><p>42 per cent to RMB59 billion (about USdollars 7 billion) in the nine </p><p>months to September. </p><p><BR><BR> </p><p>The figure exceeds the USdollars 6.1 billion for the whole of 1999, with </p><p>the gains being primarily made by local companies - the top 10 spenders </p><p>were local brands. </p><p><BR><BR> </p><p>Local healthcare brand Gai Zhong Gai emerged as the biggest advertiser; </p><p>a position achieved through the controversial strategy of buying up all </p><p>leftover advertising airtime from major television stations. </p><p><BR><BR> </p><p>China's imminent entry to the WTO, recovering local consumption and new </p><p>medical and insurance reform are among the major factors driving up </p><p>local adspend. </p><p><BR><BR> </p><p>It is estimated that state-owned enterprises have invested eight times </p><p>more than foreign/joint venture companies on advertising this year. </p><p><BR><BR> </p><p>Top 20 local brands in 1999 have increased their adspend by 90 per cent </p><p>in 2000 while international and JV interests lowered their budget by 19 </p><p>per cent, according to Carat managing director Winnie Lee. </p><p><BR><BR> </p><p>She added media inflation "is still staggering" at 12 per cent. </p><p><BR><BR> </p><p>"If we look at the top 10 advertisers, local brands dominated and those </p><p>international brands which used to be in the top 10 are no longer </p><p>there," explained Ms Lee. </p><p><BR><BR> </p><p>She noted the majority of international and JV brands actually lowered </p><p>their adspend this year. </p><p><BR><BR> </p><p>"Some advertisers switched their money to below-the-line, promotion, and </p><p>sponsorship activities; and some just lowered their spend," said Ms </p><p>Lee. </p><p><BR><BR> </p><p>In contrast, local advertisers usually ran promotions and thematic </p><p>campaigns at the same time, said Lu Suigang, general manager of L&L </p><p>Advertising, a local 4As agency in Guangzhou. </p><p><BR><BR> </p><p>"Many local advertisers lifted their budget following recovery from </p><p>the country's downturn (of the 1998-99)," said Mr Lu, adding that hyper </p><p>domestic sales have prompted local manufacturers to roll out massive </p><p>promotional campaigns. </p><p><BR><BR> </p><p>Media owners, particularly television owners, benefited most from the </p><p>hyper growth as a majority of the investment was put into the media </p><p>rather than the campaign itself. </p><p><BR><BR> </p><p>In some cases, the split of advertising budgets between media and </p><p>campaign strategy and creativity ranged from 80 per cent (media) to 20 </p><p>per cent (campaigns). </p><p><BR><BR> </p><p>According to ACNielsen's Adex report, pharmaceutical and healthcare was </p><p>the major catalyst for the growth, investing spectacular media budget on </p><p>televisions which snatched 72.4 per cent of total media adspend. </p><p><BR><BR> </p><p>Pharmaceutical and healthcare companies are mired in a multi-billion </p><p>yuan, nationwide battle to build up brand awareness ahead of the </p><p>introduction of medical reforms next year. </p><p><BR><BR> </p><p>"The new OTC (medical) rule in China will restrict some medicines </p><p>(prescription drugs) to advertise next year and that's why many </p><p>pharmaceutical marketers are crazily advertising their brands right </p><p>now," said Zenith Beijing general manager Derek Kwok. </p><p><BR><BR> </p><p>Mr Kwok also said that dotcoms were heavy spenders but that that </p><p>activity has slowed down. </p><p><BR><BR> </p><p>He expected the pharmaceutical, healthcare, telecom and insurance </p><p>markets to be the most active advertising categories next year. </p><p><BR><BR> </p><p>In addition, with the government allowing more foreign films to be </p><p>imported into China, Mr Kwok believed that cinema advertisements and </p><p>movie sponsorships would increase as well. </p><p>- See also page 15 for ACNielsen data. </p><p><BR><BR> </p>