China
Red-hot demand for airtime at the national broadcaster's annual auction has provided a foretaste of the media inflation situation in store for advertisers in China next year.
China Central Television's ninth auction pulled in Rmb 4.4 billion (US$532 million), an increase of about 32 per cent over last year. "I am astonished by the rates the advertisers are allegedly paying," notes a media agency buyer. "It's a true auction in that it's totally demand-driven. With a couple of advertisers pitted against each other, rates will go up substantially."
Media agencies say the auction shows a narrowing in the gap between CCTV's peak and off-season advertising rates.
"There's an economic reason more than anything else for the TV inflation," says Simon Woodward, MindShare China's national buying and implementation director. Two factors are fuelling television inflation in China. Advertising spend continues to surge. While it is not as large as the 30 plus per cent range monitored data suggests, it is still in a healthy 15 to 20 per cent range. At the same time, authorities have reduced primetime advertising slots to improve the television viewing experience, a move that could prompt broadcasters to hike rates to cover the shortfall of saleable slots.
For instance, Hunan TV has introduced a loading charge on longer TV spots, which translates into a 20 per cent rate hike for 2004. While advertisers are nervous, agencies say China's television rates - for the size of its market - compares favourably with developed markets even after taking into account 2004's rate hikes.
However, the double-digit rate increases on television should benefit the print and outdoor sector, according to agencies. Media agencies are tipping a 10 to 15 per cent increase for dailies and local publications, although international women's titles are expected to go for a higher rate hike. "The rate card for Cosmopolitan, Bazaar and Elle should increase about 20 per cent," says ZenithMedia Shanghai print media associate buying director David Xu. "There is no denying that international magazines are doing better than local titles because they offer quality editorial content, attractive designs, and news and the purchasing power of Chinese women is also rising."
Singapore
Media inflation in Singapore is estimated to be five per cent next year, according to MindShare Singapore managing director Manpreet Singh, who says inflation for print media is expected to be about four per cent, while television will see an inflation rate of six per cent. The overall media basket should see a five per cent increase, he added, noting that inflation in this case is defined not just as a rate hike. If exposure falls while rates remained the same, that would be considered inflation as well.
According to Singh, the estimated inflation rate was based on three factors: the increase in operating costs for the media owners, the increasing fragmentation of the media scene resulting in falling exposure for each medium, and the increase in demand for inventory if Singapore's economy picks up next year as expected.
The Singapore Government is targeting three to five per cent growth in 2004.
Broadcaster MediaCorp says: "Our rate cards will generally remain unchanged for 2004. However, we do not rule out the possibility of some increase in 2004, given our strong performance vis-a-vis the competition and a possible upturn in the economy."
Singapore Press Holdings declined to comment on whether it planned to increase its rates for print and broadcast.
Thailand
Channel 3 is leading the rate rise among television stations in Thailand, with figures up between eight to 20 per cent, depending on the time slot.
The station will also no longer offer the free daytime slot per primetime buy that it used to, "making it even more expensive", according to Jaruwan Niratisai, communication channel strategy associate director at Initiative Media: "This is the first big increase since 1997, and it is a very dramatic increase," she said.
Paichit Thienthong, chief operating officer at Carat Media Services, estimates the real increase at 18 per cent, ahead of the other dominant player, Channel 7, which is up an average nine per cent.
With demand routinely outstripping supply on prime time programmes, however, the two channels - which control more than 55 per cent of the 40 billion baht (about US$1 billion) TV ad market - still have agencies scrambling for slots.
Among print media, top three titles Thai Rath, Daily News and Kom Chad Luek, have adopted a strategy of maintaining their rates, but reducing agency discounts. Overall, this has translated into a 10 per cent rate increase, said Paichit, with Thai Rath slightly higher at 13 per cent.
Korea
In Korea, where airwave advertising is strictly regulated by the Korea Broadcasting Advertising Corporation (Kobaco), a state-run agency with a monopoly on terrestrial TV and radio time, all eyes are on the economy - and as global markets see signs of a recovery, Korea's top TV stations MBC, SBS and KBS will likely see the end of a two-year flat rate in advertising.
Hyonju Cho, managing director, Starcom Worldwide Korea, says: "Next year, we do expect a better economy and so media vendors hope that after two years of no increases, there will probably be some hikes. However, we don't expect these to be big or significant. Media spend is up two per cent and as media inflation depends on the economy, it will certainly stay below five per cent."
Kobaco 'adjusts' TV and radio ad rates every May and November, with airtime sold monthly. A price rise of three to five per cent is normal every six months, though this varies for individual programmes and stations, depending on what was aired over the previous six months. Due to media fragmentation, cost efficiency rises when viewership ratings fall.
Korea's top TV station in terms of both high ad rates and number of viewers is MBC, followed by SBS and KBS, three domestic terrestrial stations, according to Kobaco. This season, for example, MBC's Specially Planned Drama, airing serial episodes every Monday and Tuesday, reaped the highest national ratings, at 45.7 per cent. Second place was KBS1's daily drama, at 28 per cent.
In print media, there have been no government-set official price rises this year, and there is no monopoly regulating ad prices. Korea's largest circulation daily is the Chosun Ilbo with 2,377,707 copies sold per day, followed by the Donga Ilbo (2,051,594 copies) and the Joongang Ilbo (2,051,588 copies), according to the Korea Newspapers Association. (For comparison, Britain's The Sun sells about 3.5 million copies per day.)
Hong Kong
Hong Kong's leading terrestrial broadcaster, TVB, recently stunned the market by raising its ratecard by up to 10 per cent.
Other major media owners, such as the Ming Pao Group and the South China Morning Post Group, have said that they would hold their rates at existing levels for at least another year. However, it is believed that some others might be tempted to hike charges by about five per cent, because it appears that the economic gloom hanging over Hong Kong is gradually lifting.
MindShare Hong Kong managing director K.K. Tsang describes TVB's move as "too aggressive and optimistic".
"The economy has bottomed out, if we are to believe the current indicators, but it won't grow as rapidly as TVB thinks," Tsang says.
TVB is encountering its strongest opposition from the new chairman of the 2As, Michael Kwok, who described the hike as unacceptable and without justification.
He also discouraged other media owners from hiking rates for at least another year, after which there would be clearer signs as to where the local economy is headed. While some advertisers are looking at other alternatives, many others say they have no choice, because TVB has the highest audience rating of any channel.
Said Cathay Pacific marketing communications manager Olivia Wong: "We are not thrilled, because we need a mass medium and TVB is pretty much a monopoly. Costs will be higher, no matter how hard we negotiate. But we also have to shoulder part of the responsibility, because we allow them to force us into iron-clad contracts and commitments."
Reports compiled by Christy Liu, Alfred Hille, Atifa Hargrave-Silk, Gregory Eaves, Jimmy Yap and Sangeeta Mulchand
CHINA - TV 2003
Viewership Published rates (RMB, 30')
News Drama/Variety
Stations Unit: '000 Rating (%) Unit: '000 Rating (%) News Drama/
Variety
CCTV-1 42,622 3@7 60,651 5@2 67,833 77,404
CCTV-2 1,146 0@1 5,889 0@5 33,700 29,591
CCTV-3 - - 6,436 0@6 - 36,456
CCTV-4 1,447 0@1 8,330 0@7 27,700 29,500
CCTV-5 1,940 0@2 - - 37,700 59,330
Source: ZenithOptimedia, China
TOP 5 NEWSPAPERS - CHINA 2003
National Adults Circu- Ratecard rates Approximate
Newspaper readership lation (full page, agency
('000) ('000) full colour, industry
RMB) discount
Xin Min Evening News 6,185 1,300 210,000 15%
Can Kao Xiao Xi 1,637 3,300 200,000 20%
Bao Kan Wen Zhai 1,307 1,800 - 25%
Popular Computer Week 1,214 704 100,000 25%
Yang Cheng Wan Bao 1,115 1,620 265,300 20%
Source: ZenithOptimedia, China
TOP 5 MAGAZINES - CHINA 2003
National Adults Circu- Ratecard rates Approximate
Magazine readership lation (full page, agency
('000) ('000) full colour, industry
RMB) discount
Du Zhe 8,583 3,000 165,000 20%
Bosom Friend 5,095 2,450 135,000 20%
Family Magazine 3,972 2,100 115,000 20%
Gushihui 3,775 3,520 100,000 0%
Qing Nian Wen Zhai 3,072 1,380 70,000 15%
Source: ZenithOptimedia, China
HONG KONG TV - RATE CARD INCREMENT HISTORY
Jade Pearl Home
Year Average for J1 - J7 Average for P1 - P5 Average
2002 0% 0% 0%
2003 0% 0% 0%
2004 8% 8% 1@8%
Source: TVB
ATV Source: OMD H.K.
