P&G came out tops when bidding for prime-time advertising slots on China Central Television (CCTV) ended on November 18, forking out a massive 394 million yuan (about US$49 million) for 2006 ad space, reflecting an increased importance in branding and advertising in the developing Chinese economy.

The multinational will have the right to broadcast two 15-second advertisements on CCTV1 between the weather report and the current affairs program, Focus Interview, every evening in 2006.

History of TV advertising in China

On November 8, 1996, Qin Chi Wine Company spent a whopping 320 million yuan on TV advertising. Just a year earlier, the company consisted of a small factory in Weifang City, Shandong Province, with a yearly output of only about 10 thousand tons. And their wine had never been sold outside the city. The company spent 66 million yuan that year, equivalent to two years' revenue, on advertising. As a result, the company prospered. But they couldn't maintain their good run. Product quality dropped remarkably, and the company was crushed when it was revealed that they had mixed generic retail wine with their stock.

Other companies learned from the Qin Chi example, including Bubugao, Wahaha, Tong Yi Petroleum Chemical, and China Mobile.

"Our basic principle is that no money should be wasted," Li Jia, president of Tong Yi Petroleum Chemical, said.

Echoing this view, P&G said that advertising is just one aspect of the P&G marketing model. P&G uses a very strict and scientific system to build its brand. A large amount of personnel, money and materials will be spent on the analysis of the consumption and the implementation of the plan before and after an advertisement is aired or published.

Guo Zhenxi, the former director of advertising at CCTV, thinks that the history of advertising bid winners can be divided into three distinct periods: Qin Chi represents the first period, where media advertising was in its infancy; Bubugao the second, and P&G the third. The three periods reflect the changes and developments that have taken place within Chinese industry.

Branding and Rising Living Standards

Wine drinking has caught on over the last 10 years by virtue of the fact that general living standards have risen steadily. Fierce advertising by wine makers such as Kongfu Yan and Qin Chi promoted wine drinking as a symbol of a good life.

Then came the VCD and then the DVD. VCD manufacturers like IDALL reaped the benefits of the consumption drive in the late 1990s.

And so it continued with health care products, cars and real estate; all reflecting an ever-increasing affluence.

Branding Not Only for Private Enterprise

Xia Hongbo, director of advertising at CCTV, said that more state-owned enterprises and wholly foreign-owned enterprises took part in the bid competition this year, and he expects this to be the shape of things to come.

Xia believes that the participation of state-owned enterprises such as China Mobile, China Life Insurance and Sinopec shows a growing awareness of the importance of branding and advertising in the developing Chinese economy.

(China.org.cn by Li Xiaohua November 24, 2005)