Product placement on the rise on Chinese TV

Stricter advertising rules force sponsors to be creative

BEIJING -- A raft of new Chinese television advertising restrictions have made sponsorship and product placement a strong alternative route to reaching a ballooning consumer market, according to an independent analysts' report released this week.

The series of new TV ad rules put in place in the first quarter of 2010 by the State Administration of Radio Film and Television "play directly into the hands of sponsors and product placers," the report from Beijing-based media consultants China Media Monitor-Intelligence said.

"There has never been a better time to start closing the gap between reaching consumers and making quality programming," Kristian Kender, CMM-I's research director, told The Hollywood Reporter.

Since China's first TV commercial in 1979 through the end of 2009, the audience has grown to 395 million television households, many of which now are inhabited by increasingly sophisticated viewers willing to criticize outlandish product plugs.

Working with data from leading media research firm CTR, the CMM-I report estimates that program sponsorship now accounts for 5-10% of TV adspend and will rise to reach 2 billion yuan ($293 million) in 2010.

By comparison, CTR recently said that TV adspend in China, up 15% to $57.9 billion in 2009, will likely slow to a rate of 10% growth this year, due in part to new regulations.

"Most of the regulations focus on advertising not on sponsorship," Kender said. "If brands want to get into China, they would do well to do due diligence on TV production companies and get involved in creating branded content from the start."

The new rules limit TV ad time, thus protecting sponsorships that can offer producers cash up front. Unilever's sponsorship of several seasons of the high-rated localized version of Televisa's "Ugly Betty," is cited as among the report's examples of highly successful branding on Chinese TV.

Allowing that measuring the value of a sponsorship in China is tough to do because time-tested gauges don't yet exist, CMM-I's Kender said that if sponsors get involved from the start, it's easier to see what they're getting for their money.

CMM-I's 37-page report, written by veteran China media analyst Rowan Simons, notes that corruption remains prevalent in the industry and adds that that several product categories, such as tobacco, sexual function improvement medicines and gambling services, are still able to advertise on state media.

The report says that as the government cracks down on corruption in advertising, ad agencies and media buyers alike are turning to sponsorship as major international brands increase their ad spend to reach China's consumer market, which is recovering faster than the rest of the world from the recession.

Talk shows, talent shows, variety shows and sporting events on China Central Television and Hunan Satellite TV are among the most often branded types of TV programming.

Apart from myriad Chinese sponsors, the CMM-I report cites several foreign brands as examples of the trend, including Sony cameras' and Samsung electronics'  sponsorship of Dragon TV's "Sufei's Diary"; Hewlett Packard's sponsorship of the annual China MTV Style Awards Gala; and Nike's sponsorship of the four-times weekly "NBA Live" show on the state-broadcaster's dedicated sports channel, CCTV-5.
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