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
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
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
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