The state broadcaster China Central Television (CCTV) began holding annual auctions for its prime-time spots at the end of 1994, writes Andrew Green of Zenith Media. Its motives were to maximise revenue and sell much more of its time upfront for an entire year, as is done by major networks in the US.
For the first three years advertisers bid in secret for one or more of 13 five-second `billboard' slots shown after the CCTV news at 7.30pm, two after the weather at 7.35pm and a time announcement at 7.00pm. A break of 14 15-second spots at 7.35pm, prior to the daily Focus current affairs programme, is sold alongside. The highest bidder overall was awarded the accolade `king of the auction' and its spots would run every day for the following year.
When the auction began there were few reliable statistics on audience levels, but it was commonly believed that the CCTV news which by law has to be broadcast simultaneously by every leading channel in the country ?was the highest viewed programme in the country.
Advertising in the news pro-gramme itself is not permitted, so the slots just before and after are highly prized. Three years after the launch of urban audience measurement across the country, CCTV news appears to have confirmed its high popularity.
The highest individual bid in 1994 was Yn30. l m (US$3.6m). By the time of the 1996 auction the `king' title was costing Qinchi Liquor Yn321 m?equivalent to US$21,000 per second ?more expensive than much network prime-time in the US. The king is in fact awarded substantial bonus airtime in addition to the slot for which it has bid. Moreover, there are indications in the market that it rarely pays the full price of the bid in the first place.
The auction process led to criticism from within and outside the media industry. The secrecy of the process was thought to encourage companies to over-stretch them-selves in search of the auction king title and to artificially distort the market. It was also being dominated increasingly by liquor companies, which were thought to project an unsuitable image of a country suffering shortages of grain and food.
As a result, CCTV announced that bid-ding would be open from 1997. In addition, a number of procedural changes were intro-duced to improve the efficiency of the process ?advertisers could only bid for a single slot, each was allowed only one representative agency and all had to pay a hefty deposit to weed out less serious contenders.
Liquor companies were banned from the auction king bids. To compensate, they were allowed to participate in 12 mainly non-prime-time slots which were auctioned separately. Qinqi Liquor succeeded in obtaining a slot with its top bid of Yn67m.
The main impact of CCTV's ruling was to lower the overall level of bids ?the top price fell from Yn321 m to Yn2l Om. The king title moved to Guangdong-based video compact disc (VCD) manufacturer Idall. However, CCTV didn't suffer unduly ?total auction revenues were up by 17 percent to Yn2.8bn. Estimated total revenues for the six monitored CCTV channels in 1998 for their prime-time spots alone exceed Yn6.6bn.
In 1998 liquor companies were again prohibited from taking part in the ballot for prime-time slots to be aired the following year. Further changes were made in the procedure to counter continuing criticism. These included selling the prime-time slots by quarter instead of for the whole year. VCD advertisers dominated for the second year running with the winning company, Bubugao, bidding Yn l 59m, 24 percent lower than the highest bid in 1997.
In return the company secured a 15-second spot for the whole year before the Focus programme as well as one of the five-second billboards after the 7.30pm news for just Yn37m for the first quarter of 1999. Projected for the full year, this would represent a 30 percent saving for the company.
Andrew Green is the Southeast Asia director of Zenith Media.