China adspend on target for a bonanza year

Huge pharmaceutical and healthcare campaigns, media inflation and

pent-up demand have caused China's advertising expenditure to skyrocket

42 per cent to RMB59 billion (about USdollars 7 billion) in the nine

months to September.

The figure exceeds the USdollars 6.1 billion for the whole of 1999, with

the gains being primarily made by local companies - the top 10 spenders

were local brands.

Local healthcare brand Gai Zhong Gai emerged as the biggest advertiser;

a position achieved through the controversial strategy of buying up all

leftover advertising airtime from major television stations.

China's imminent entry to the WTO, recovering local consumption and new

medical and insurance reform are among the major factors driving up

local adspend.

It is estimated that state-owned enterprises have invested eight times

more than foreign/joint venture companies on advertising this year.

Top 20 local brands in 1999 have increased their adspend by 90 per cent

in 2000 while international and JV interests lowered their budget by 19

per cent, according to Carat managing director Winnie Lee.

She added media inflation "is still staggering" at 12 per cent.

"If we look at the top 10 advertisers, local brands dominated and those

international brands which used to be in the top 10 are no longer

there," explained Ms Lee.

She noted the majority of international and JV brands actually lowered

their adspend this year.

"Some advertisers switched their money to below-the-line, promotion, and

sponsorship activities; and some just lowered their spend," said Ms

Lee.

In contrast, local advertisers usually ran promotions and thematic

campaigns at the same time, said Lu Suigang, general manager of L&L

Advertising, a local 4As agency in Guangzhou.

"Many local advertisers lifted their budget following recovery from

the country's downturn (of the 1998-99)," said Mr Lu, adding that hyper

domestic sales have prompted local manufacturers to roll out massive

promotional campaigns.

Media owners, particularly television owners, benefited most from the

hyper growth as a majority of the investment was put into the media

rather than the campaign itself.

In some cases, the split of advertising budgets between media and

campaign strategy and creativity ranged from 80 per cent (media) to 20

per cent (campaigns).

According to ACNielsen's Adex report, pharmaceutical and healthcare was

the major catalyst for the growth, investing spectacular media budget on

televisions which snatched 72.4 per cent of total media adspend.

Pharmaceutical and healthcare companies are mired in a multi-billion

yuan, nationwide battle to build up brand awareness ahead of the

introduction of medical reforms next year.

"The new OTC (medical) rule in China will restrict some medicines

(prescription drugs) to advertise next year and that's why many

pharmaceutical marketers are crazily advertising their brands right

now," said Zenith Beijing general manager Derek Kwok.

Mr Kwok also said that dotcoms were heavy spenders but that that

activity has slowed down.

He expected the pharmaceutical, healthcare, telecom and insurance

markets to be the most active advertising categories next year.

In addition, with the government allowing more foreign films to be

imported into China, Mr Kwok believed that cinema advertisements and

movie sponsorships would increase as well.

- See also page 15 for ACNielsen data.

This article was first published on Media Asia