Olympics a financial watershed for China, exec believes
EmptyFor executives like Martin Sorrell, China's future is now.
"What we saw Friday night confirmed that perception has become reality," said Sorrell, CEO of WPP, parent of media buyer GroupM, of the Beijing Olympics' Opening Ceremony. "People all over the world watching television who've been in denial about China's rapid growth now finally see it's for real."
Sorrell, whose GroupM is the largest media buyer for Olympics host broadcaster China Central Television, said Monday that he believes the Games are a watershed event for world consumers' view of China and for revenue at CCTV.
CCTV ad revenue growth in 2008 is up 30% because of what GroupM CEO Asia Pacific Mark Patterson calls "the Olympic effect." "That's double China's marketwide growth," he said.
Through a tight relationship with CCTV, Patterson said GroupM is able to predict that the lone Olympics broadcaster in China — where it has a near-total reach to nearly 1.3 billion people — will earn Olympics-related advertising revenue of $50 million-$60 million, given that it paid a "modest market rate for a sole bidder."
CCTV has not disclosed what it paid the International Olympic Committee for the right to broadcast the Games.
By contrast, U.S. rights-holder NBC has said it paid $894 million for the right to broadcast the Games. Although NBC has sold more than $1 billion in advertising, the GE-owned network has been supporting a team that swelled to about 3,000 here last week since long before the 17-day event began.
WPP, which commands 15% of the Chinese market, also saw 30% growth during the past year. Clients include multinationals Ford, Unilever and Procter & Gamble and rising Chinese giants Lenovo, Haier and Mengniu, which make computers, refrigerators and yogurt, respectively.
The Chinese advertising opportunities are only going to grow, Sorrell said. For instance, WPP values state-run China Mobile as the fifth-most-valuable brand in the world thanks to its 600 million subscribers, a group about twice the size of the U.S. population.
"Just think of the mobile ads market," he said.
In contrast with that optimism, Chinese stocks on Monday fell 5% to their lowest level since December 2006 on what analysts said were market concerns of a post-Olympic economic slowdown.
CCTV-2 economics anchor and host Rui Chenggang also expressed a dissenting view of Sorrell's optimism on the sidelines of a closed-door panel discussion organized by the Yale School of Management. Rui called China Mobile and the Bank of China just two giant state-owned enterprises "world-sized but not world-class businesses."
"It's only a matter of time," said Sorrell, who founded London- and New York-based WPP in 1986. (partialdiff)