BEIJING Nov 8 (Reuters) - Excited bidders pushed advertising rates on China's state television to new highs on Tuesday as domestic firms crowded out foreign brands in the battle to reach ever more Chinese consumers.
China Central Television's annual advertising auction is broadly seen as a barometer for the Chinese economy, with ad spending rising by about one and a half times GDP growth in each of the past several years.
This year, as much of the rest of the world copes with slowing growth, the CCTV auction hall was abuzz with advertisers trying to reach deeper into China's hinterland to grow sales. Entry tickets to the rose-festooned hall were in short supply.
"From an advertiser's perspective we are seeing a lot of confidence compared to 2008," said Wei Zhou, chief financial officer for Charm Communications , the agency representing about a third of the 100 companies bidding at Tuesday's auction.
Foreign brands like Proctor & Gamble , which held pride of place as CCTV's biggest buyer from 2003-2008 , have given way to Chinese firms carving out a domestic brand.
Bidders were mindful of the lessons of the November 2008 auction. Then, international firms that cut spending due to the global financial crisis ended up losing market share once the Chinese economy recovered, Zhou said.
In an increasingly competitive market, big Chinese banks are moving from corporate lending to selling wealth management products to picky customers, while regional firms yearn for the sheen of a national brand.
This year, Bank of China battled it out with a Chinese meat producer for the coveted 10-second spot just after the evening news. It bid 76 million yuan ($11.97 million) for the right to air in that spot in January and February, the months that cover Chinese Lunar New Year celebrations.
REACHING THE MASSES
Ad spending in China has increasingly flowed to more daring provincial satellite channels, whose dating shows and talent contests are wildly popular. Over the longer term, online advertising is also eating away at TV budgets.
But CCTV could get a boost as foreign and domestic brands, which originally only focused on the wealthiest cities, reach out to those consumers in the hinterland who still tune into CCTV's period dramas.
"One of the things driving CCTV is that as clients move to 50 cities rather than 15, no regional channel can reach them the way CCTV can," said Seth Grossman, China managing director for ad agency Carat.
State-owned CCTV also enjoys a little help from on high.
China's broadcast regulator last month limited satellite channels from airing more than two hours of entertainment programs during prime time. The directive against "excessive entertainment" also forces them to air at least two hours of news during evening hours.
That should help staunch the flow of ad money away from CCTV, which is kept on a tighter leash and must air "harmonious" programming.