With the Beijing Olympics just around the corner — approximately 12 months away — the Beijing Organising Committee for the Olympic Games, with the support of the Central Government and the International Olympic Committee, is preparing to push through changes by the end of the year in a bid to ensure approved sponsors are looked after, to the detriment of existing advertisers.
While yet to be confirmed, the regulatory revamp is rumoured to include a one-kilometre exclusion zone around Olympic venues to ensure approved sponsors do not suffer from competitive clutter; restrictions on transit advertising in favour of said sponsors and bans on OOH sites leading from Beijing’s new airport facilities, slated for opening in January 2008.
Add to that a proposed introduction of a national auction system for OOH sites in Beijing and other tier-one and two markets — which many fear will drive smaller vendors to the wall — and a decision to crackdown on luxury advertising in a bid to maintain social harmony, and it appears the OOH industry is indeed on the cusp of a fundamental change, particularly in the mainland’s capital. “I think it will affect up to 50 per cent of current outdoor advertising contracts. It will affect the market significantly, but there is nothing we can do about it,” says Marcus Ma, MD, Posterscope China and Hong Kong.
But Ma notes the auction system, which would favour the more established outdoor operators,which already boast impressive scale, reach and resources, is essential to clean up the industry. Thanks in large to profiteering practices by many smaller independents, media inflation has rocketed up by an average of 15 per cent annually in recent years. “I think it’s good to regulate the market price, and make it more or less more transparent to the agency, the vendor and the advertiser,” notes Ma.
Broadly aimed at sprucing up Beijing before the Olympics, the new regulations will hit clients which have already committed to long-term placements, with Nestlé, Hitachi, JVC and Apple just some of the key brands to be affected. But some believe the auction system, rather than keeping price rises in check, may create potential monopolies. “Regulating the industry effectively would be incredibly difficult, and with fewer players on the market, you would expect prices to rise somewhat,” points out one source, who declined to be named.
Agencies though, are not sitting back. Ma notes that Posterscope — and the network is not alone, he says — has created a special Olympic unit, which is already signing up clients for new one-year contracts due to begin in September this year, running across the key three-month Olympic period from July to September in 2008.
“There’s a lot of risk, because even though you can still commit to the one-year contract, there’s still a strong possibility that the Government will claim the site back. We just do what we can, and we’ll have to keep a close eye on changes in Government policy from now until the Olympics next year.”
