CCTV holds annual ad sale behind closed doors

China Central Television holds its annual bidding for prime advertising in Beijing on Tuesday. Ningxia Efone Investment Holding Group won exclusive naming rights for the third season of the popular TV program A Bite of China, with a bid of 118 million yuan ($19.3 million). Mao Shuo / for China Daily

New media's rise puts pressure on earnings of national broadcaster

China Central Television, the country's sole national TV broadcaster, held its 21st annual advertising auction for the coming year on Tuesday in Beijing.

More than 100 companies attended the Prime Resource Advertising Bidding. Many bidders were encouraged to sign deals ahead of the auction, rather than taking part in the event.

Since last year, auction organizers have declined to disclose the total amount of money bid or the advertising revenue. For the first time, the auction doors were closed to the media this year, transforming the event from a media sensation into a guessing game for outsiders. CCTV would rarely disclose information on the monetary total of bids in the auction, which has been a longtime barometer of macroeconomic consumption in China.

CCTV did announce on its website that Ningxia Efone Investment Holding Group won the exclusive naming rights for the third season of the TV program A Bite of China with a bid of 118 million yuan ($19.3 million).

The economic slowdown in China in the past two years has been reflected in the broadcaster's ad revenue. That revenue mainly comes from the live auction and the subscriptions signed two months earlier.

Analysts estimated that total bidding for 2014 in the live auction came in at about 17.5 billion yuan, a 10.8 percent year-on-year increase.

"The slowdown of the national economy has taken a toll on the whole advertising industry, except for several successful Internet firms," said Li Guangdou, head of Beijing-based brand consultancy Wondersee.

"Even the advertising price per prime-time second may see a moderate adjustment, curbing the fast increases of before," Li added. "As China's economy leans increasingly toward the Internet, new media ad revenue will rise sharply in the near future, as it attracts more target consumers. A steady decline of traditional media's ad revenue is almost certain."

He Haiming, director of the CCTV advertising center, said food, liquor, household appliance and automobile companies are the broadcaster's largest advertising customers.

High-end liquor brands were top bidders for many years. Last year, due to the national crackdown on official spending and extravagance, the industry kept a low profile. According to He, none of the high-end liquor brand companies attended Tuesday's auction.

"Since last year, all high-end liquor brands joined the subscriptions that would be signed before the auction," He said. "The total spending of high-end liquor brands remains at the same level as last year, a small drop from two years ago."

She Xianjun, deputy director of the CCTV advertising department and the head of the company's new media advertising, said, "More Chinese toiletry brands appeared on the bidder list this year, quickly catching up with the foreign brands."

He said two-thirds of the ads for next year were sold through subscriptions signed over the past two months. The proportion was 50 percent this year, and one-third last year.

Subscriptions signed in advance are "open to different sizes and types of companies, with different budgets". Compared with the live auction, customers have more time to decide, He said.

Traditional media's lackluster performance in the ad market poses a sharp contrast with the fast rise of new media's advertising revenue. Online search engine giant Baidu's ad revenue, which increases by 18 to 20 percent annually, was 23 billion yuan two years ago, compared with CCTV's 27 billion the same year.

Baidu's estimated overall ad revenue outpaced the TV giant last year by a slight margin. If the other large IT firms, such as e-commerce dealer Alibaba and social media leader Tencent are taken into consideration, the gap between the traditional media and new media is quickly widening.

In a noteworthy response, the TV station will invite bids for app ads on mobile gadgets for the first time.

"Fast-food providers like KFC Inc and MacDonald's have shown stronger interest in new media," said She of CCTV's advertising department.

duxiaoying1@chinadaily.com.cn