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1 Advertising in China: A Snapshot September 2008 Prepared for: China Forum Munich Prepared by:
2 About CMM Intelligence CMM Intelligence is the leading independent consultancy and business-to-business information resource for the Chinese Media Industry. CMM Intelligence has been providing key clients with strategic market entry intelligence and project implementation services for broadcast services since CMM-I is also exclusive Reed Midem agent China for the MIPCOM and MIPTV Television markets as well as German Film China Representative and WirtschaftsWoche China Advertising Agent. Publications on the Chinese media market include: - the weekly China Media Monitor -the annual China Media Yearbook & Directory
3 CMM Intelligence Contacts Anke Redl Managing Director, Kristian Kender Research Director, CMM Intelligence Ltd Tel: B621 Gehua Tower, No 1 Qinglong Hutong, Dongcheng District, Beijing, China
4 China Media Landscape: TV Snapshot General TV Facts TV Households: 396 million National TV Penetration: 98.81% Cable TV Subscribers: 136 million TV Channels: 1,288 Average Satellite Channels Received (Nationwide): 20 Average Channels Received (Urban): 60 Average Channels Received (Rural): 36 National TV Station: CCTV
5 China Media Landscape: Print Snapshot General Print Facts Number of Magazines: 9468 Number of Newspapers: 1938 Number of Publishing Houses: 578 Source: GAPP
6 China Media Landscape: New Media Snapshot General New Media Facts Internet Subscribers: 256 million Broadband Penetration: 85% Main Chinese Portals: Main Chinese UGC Sites: Source: CNNIC Sina.com Sohu.com Netease.com Tudou.com Youku.com 56.com
7 Advertising Snapshot Total ad market grew 17% to EUR20.4 billion in H Television accounted for more than 80% of total adspend. Online is the fastest growing advertising platform. Outdoor and radio adspend dropped 23% and 1% YoY. Mobile advertising is still in early stages but growing fast. Adspend across different media platforms in H1: Television: EUR13.52 billion Newspaper: EUR2.4 billion Magazine: EUR0.34 billion Online EUR0.457 billion Source: AC Nielsen and CSM Media Research
8 Advertising Costs Advertising costs in China are on the rise, particularly for national platforms and platforms in first tier cities. CCTV made RMB8 billion when it auctioned off the 2008 prime time ad slots on November 18, The total value of the bids grew 18% YoY. Big difference in costs on CCTV vs major provincial stations versus minor provincial stations. Advertising Costs on CCTV vs Provincial Stations in 2007 Station Time Slot 5 Second Ad 10 Second Ad 15 Second Ad CCTV-1 8-9pm EUR6,400 EUR9,600 EUR12,000 Hunan Satellite TV 8-9pm EUR1,590 EUR2,650 EUR3,780 Ningxia Satellite TV 8-9pm EUR350 EUR560 EUR750
9 General Challenges for Advertisers Advertisers face a number of general challenges in China, such as: Media fragmentation: Huge number of media to navigate Not one consumer market of 1.4 billion people: Rural Urban divide; Young old / female - male South North / East West TV Mass Media No 1 and increasingly expensive with little program diversification and high CPM as well as YOY 20% price increase Lack of professionalism with regards to media buying and employment of media agencies Lack of good analytics & information Restrictive media environment with regards to content and censorship 9
10 Specific Challenges for Advertisers Advertisers face a number of specific challenges in China, such as: Distribution channels for consumer products often fall behind advertising reach Consumer and media nationalism and political fallouts Political fallouts can seriously harm public sentiment for foreign products Foreign brands often get caught flat-footed when local distributors/partners of their products respond badly to consumer complaints Lack of brand loyalty due to relative immaturity of the market Hongbao culture and check-book journalism Pay-for-coverage of press events and launches is fairly endemic; 10
11 2008 Beijing Olympic Sponsors and Partners Beijing 2008 Olympic Games Worldwide Partners Beijing 2008 Olympic Games Partners Beijing 2008 Olympic Games Sponsors BOCOG received around EUR503.4 million in sponsorship revenue (IEG).
12 Who watched the Olympic Games? IOC called Beijijng 2008 the biggest broadcast event in Olympic history. More than 5,000 hours of Olympic coverage made available to rights holding broadcasters in more than 200 countries and territories (IOC). Around 4.4 billion people watched first 10 days worldwide (Nielsen. More than 86% of Chinese households watched the Games on TV every day (AGB Nielsen). Most Chinese used TV as their primary platform for viewing the Games, supplementing their viewing with coverage on the Internet, mass mobile TV and mobile phone TV. More than 1 million Chinese watched more than 300,000 hours of Olympic programs on mobile TV by August 20 (CSM Media Research). More than 80 million people watched Olympic webcasts every day (CSM). Source: AC Nielsen and CSM Media Research
13 Olympic Sponsors and Advertising Olympic partners and sponsors increased their adspend by 12% YoY to EUR1.18 billion by the end of H Olympic partners and sponsors accounted for 5% of the total adspend in China by the end of H The amount the Olympic sponsors and partners spent on advertising was proportional to their level of sponsorship: Worldwide Olympic Partners 44% of total The Beijing 2008 Partners 30% of total Total adspend from Olympic partners and sponsors is expected to increase to EUR1.8 billion by the end of The advertising industry also received a major boost from companies that launched ambush campaigns.
14 Olympic Advertising Spenders Big Spenders in H1, 2008 China Mobile: EUR206 million Local Dairy Brand Yili: EUR126 million (KFC) EUR134 million) McDonald s: EUR84.4 million Coca-Cola: EUR81.2 million (Pepsi) EUR80.0 million) Johnson & Johnson: EUR78.7 million (Nike) EUR67.7 million) Haier EUR60.5 million Adidas EUR58.9 million The companies in (parenthesis) are not Olympic sponsors or partners. Source: AC Nielsen
15 Olympic Winners and Losers Ads With the Highest TV Ratings During Olympics Lenovo China Mobile Haier Tsingdao Coca-Cola Source: AC Nielsen Olympic sponsors with the Highest Consumer Recognition Coca-cola Yili Dairy Lenovo China Mobile Adidas Source: CSM Media Research
16 Olympic Winners and Losers: Trends and Revenues The most successful Olympic sponsors: Started early. Ie, Coca Cola launched a campaign on more than 90% of the billboards in Beijing in August Used above the line and below the line marketing campaigns. Ie, Coca-cola, Lenovo and Samsung sponsored the torch relay. Placed increasing ads on websites with digital broadcasting rights to the Olympics. Lenovo sponsored computers plus for computer centers Most Olympic sponsors with high consumer recognition experienced revenue gains in H1. Yili s business grew 21% QoQ in Q
17 Case Study - Adidas vs Li Ning Li Ning spent much less on advertising than Adidas or Nike in June 2008: Li Ning Adidas Nike EUR2.3 million EUR15.9 million EUR22.3 million Li Ning scored ambush marketing coup at opening ceremony: CCTV reporters wore Li Ning-branded shirts CCTV broadcast contained no ad breaks and sponsor logos Li Ning sponsored the uniforms of the Spanish Olympic Team Li Ning founder and former gymnast Li Ning lit the Olympic flame The results? Investors poured EUR13.07 million in Li Ning on HK Stock Exchange. More 40% Chinese think Li Ning is the Olympic sponsor.
18 Life After the Olympics Most major media advertising agencies forecast China s ad market will sustain double-digit growth in 2008 and ie, GroupM estimates: Why the optimism? Consumption is not showing any signs of slowing in first and second tier cities. Regulatory restrictions imposed in lead-up to Olympics are expected to ease off. Major multinationals such as Proctor and Gamble will continue to launch major campaigns in China. Non-Olympic sponsors expected to launch major campaigns. Olympic sponsors expected to keep spending at high levels to maintain momentum from Beijing 2008 exposure. Local companies becoming international competitors companies such as Lenovo expected to promote their brand overseas after competing successfully with major multinationals during Olympics.
19 The End For more information on CMM-I services please visit our website at Or contact us at
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