P&G becomes CCTV bidding king
By Zhang Lu (China Daily)
Updated: 2004-11-20 08:53

After spending more than 385 million yuan (US$46.5 million), Procter & Gamble Co (P&G) was the biggest winner at China Central Television's (CCTV) annual auction for its prime time advertising slots on Thursday.

It is the first time a foreign company becomes the "bidding king," as it is often called by the Chinese media, since CCTV began to auction its ad slots in 1995.

Stimulated by a huge Chinese market potential and driven by hot competition, multinationals, which seldom took part in the annual tendering game over the past 10 years, became more active this year.

More than a dozen foreign giants participated in the bidding and most of them such as P&G, Unilever, Colgate and NEC won some major ad slots for 2005.

"Foreign companies' participation indicates they are paying greater attention to the huge domestic market and also proves their confidence about the market," said Guo Zhenxi, director of CCTV's advertising department.

According to Guo, foreign companies spent a total of 753.3 million yuan (US$91 million) at this year's bidding, compared with less than 180 million yuan (US$21.7 million) invested by P&G in last year's bidding.

Yuan Fang, media director of CTR Market Research, said that part of the reasonfor the growing foreign spending on ads is the rapid growth of domestic companies, which puts pressure on their foreign counterparts.

"Branding building is key to long-term competition, and CCTV is the most valuable channel to promote our reputation," said Zhou Bo, media director of Unilever, though the company did not reveal its total spending at the auction.

The annual ad auction has become a big event among enterprises, as the prime-time advertisements have helped some brands become household names such as Wahaha beverages, Naobaijin health food and Haier home appliances.

With its great influence on the market, the national broadcaster earned a record sum of nearly 5.25 billion yuan (US$634 million) on Thursday, more than 18 per cent up compared with last year's 4.41 billion yuan (US$532 million).

Wahaha, a Hangzhou-based private beverage firm, was the second-biggest bidder, spending more than 300 million yuan (US$36 million).

Kunlun lubricating oil, which spent a total of 277 million yuan (US$33.5 million), was the next highest bidder.

Recognized as a barometer of the domestic market, the auction reflected the hot competition in some industries, said Guo Zhenxi from CCTV.

A large amount of food processing companies attend the bidding this year, spending a total of 1.4 billion yuan (US$169 million), 20 per cent higher than the sector's spending last year.

While daily consumer goods providers including foreign companies P&G, Unilever, and domestic brands Longliqi, Shanghai Jahwa, spent 700 million yuan (US$85 million).

"The prime-time ads on CCTV help our product promotion get quick and nationwide consumer coverage," said Wang Zhuo, deputy director of the sales department of Shanghai Jahwa.

The company, attending the auction for the first time, is expected to promote its Liushen and Maxam brands through advertising, to gain a bigger market share.

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