An Unexpected Bright Spot for TV Advertisers in China

by: Julia Boorstin November 21, 2008 | about stocks: FXI / KO / PG / PGJ    

Julia Boorstin

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The global advertising market faces major challenges, most notably, the decline in consumer spending. And even though the financial crisis seems to be hitting every corner of the globe— even China—China's $35 billion ad market is a hot spot.

China Central Television's auction of its primetime ad time Tuesday yielded nearly $1.4 billion in revenue, 15 percent more than last year. This Chinese version of the American upfront ad sales period attracted global companies like Coca-Cola (KO) who have become more committed to the growing economy since the Olympics.

Speaking of the Beijing Olympics, the huge event transformed China's media environment. It's hard to compare this year's numbers to last year's, as the Olympics are no longer pending. But one thing's clear; ad rates are 10 percent higher this year than last. (American networks would be thrilled to report 10 percent higher prices). Overall Chinese ad spending is expected to grow almost 11 percent next year, compared to nearly 22 percent this year. Growth rates have slashed in half, but it's still growing much faster than the U.S. ad market, which is expected to drop by several percent last year.

The increase in Chinese TV ads indicates confidence in the Chinese consumer. International companies are certainly hoping they can look to China for growth as other markets suffer. This jump in TV ads also points to the fact that CCTV is higher profile and more prominent after the Olympics, which the network streamed.

So the question becomes: which multi-nationals will pull back, counting every penny, and which will invest in China to gain marketshare? Procter & Gamble (PG) and Coca-Cola were reportedly big players in this auction.

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This article has 1 comment:

  •  
    Nov 21 01:56 PM
    XFML is a stock that fits squarely into the category of advertising in China. The company is not very shareholder friendly however and has fallen from over $10 to under 50 cents today. It will probably bounce at that price, but isn't a long term buy until mgmt. focuses on growing shareholder value as the measure of performance instead of focusing only on growing revenue.
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