China State Broadcaster Mum About Ad Haul as Web Giants Eat Into Revenue

CCTV headquarters in Beijing

CCTV says it hit a record in upfront ad sales for 2014, but analysts say it didn't disclose a figure because it has surrendered its dominant position to search firm Baidu.

The annual sale of primetime advertising slots on state broadcaster China Central Television (CCTV) is normally a fanfare show, but this year's event was a 10-hour silent auction as the giant said total revenue for 2014's slots exceeded 2012's record amount, but did not release any figures.

For the past two decades, the CCTV primetime ad auction has been a media institution in China, a barometer of the state of the economy. CCTV has 19 channels and a reach of 1.2 billion people, so it is difficult to ignore.

Media analysts said the reason CCTV kept quiet about its primetime figures this year was because it has surrendered its dominant position as ad king to China's biggest search engine, Baidu.

"Baidu's advertising revenue is expected to surpass that of CCTV this year," Li Guangdou, head of Beijing-based brand consultancy Wondersee, told the Global Times newspaper.

In last year's auction for 2013 primetime ad slots, CCTV earned record revenue of $2.6 billion (15.88 billion yuan), up 11.39 percent year over year.

But this year, CCTV, which has about one third of the domestic market, said it was not going public with the figures because they no longer represented the market's real condition.

He Haiming, director of CCTV's advertising center, said the auction on Nov. 18 did not give a real indication of the broadcaster's ad revenues, as 70 percent of CCTV's 2014 ad slots were sold between Sept. 17 and Oct. 31.

Earlier this year, Baidu released its total ad figures for 2012, which showed revenues up a muscular 53.5 percent at $3.65 billion (22.246 billion yuan).

In the same period, CCTV's total advertising revenues were $4.43 billion (26.976 billion yuan), still higher than Baidu's, but they increased by a lower rate of less than 15 percent.

China is the world's largest Internet market with 591 million users, and in the last year the number of people who surf the web from smartphones and tablets rose by 20 percent. This year, China’s mobile Internet market will reach 648 million users, and a growing number of them use the web, not their TVs, to fulfill their entertainment needs.

Online video group Youku Tudou and other smaller sites launched a $49 million lawsuit this month against Baidu and a smaller search engine as part of an anti-piracy push.

The food and beverage, home appliance and automobile sectors were the top three ad spenders on CCTV. The tourism and healthcare sectors also recorded significant growth in ad spending, according to CCTV.

A government clampdown on extravagance by officials has hit ad revenues in the luxury sector.

"High-end liquor brands such as JNC, last year's top bidder, and Kweichow Moutai, kept a low profile during Monday's auction, partly due to the country's crackdown on official spending and extravagance," Yu Fei, a brand expert with marketing consultancy Lange Zhiyang, told the Global Times.

CCTV is hoping for a boost this year from events like the World Cup in Brazil -- one of the highlights of the primetime auction was the $7.55 million (46 million yuan) Nike paid for the exclusive titling rights for CCTV's World Cup program Brazil Action.

And some of CCTV's big hitters, including the Spring Festival Gala, an epic variety show to mark the Chinese Lunar New Year, have become a bit jaded.

This year, to jazz up the Spring Festival Gala, CCTV has selected the country's most popular film director, Feng Xiaogang, to direct proceedings to welcome the Year of the Horse. Feng is best known for his comedies, but he has also explored more serious themes, such as the Tangshan earthquake in the movie Aftershock. He recently left his handprint outside the TCL Chinese Theater in Hollywood, and his movie Back to 1942 is China's foreign-language Oscar entry.

Ad revenues reflect a changing society too.

"Top bidders are mainly consumer-related companies, signaling China's transition from relying on investment to relying on consumption," said Li.

Webcos were big bidders in Monday's auction as well, including e-commerce platform, home appliance retailer Gome and domestic online education platform

CCTV continues to dominate the domestic TV ad market, but provincial satellite TV broadcasters this year started ad pre-sales ahead of CCTV, aiming to earn a bigger share of the advertising market.

East China's Zhejiang TV earned $210 million (1.3 billion yuan) from an ad auction for its popular talent show The Voice of China on Nov. 2, up more than 30 percent from the previous auction.

Three days later, Central China's Hunan TV raised $290 million (1.758 billion yuan) from the sale of its ad slots, with ad slots for the popular music show I'm A Singer accounting for nearly half.