According to CTR Media Intelligence monitoring, in the first half of this year, China’s overall ad spending grew only 0.1%. On the rate card basis, ad spending on TV dropped 3.8% from a year ago. It cut 2.5 percentage points off the net total growth and offset 2.5 percentage point of growth contributed by Internet.
Ad spending on traditional media
On the rate card basis, ad spending on traditional media dropped by 6.2% from a year ago, the worst performance in history. Just five years ago, ad spending on traditional media jumped 14.3% in the first half of 2011 from a year ago. But things went from bad to worse ever since, except in the first half of 2013 when it grew by 8.3%. The market appeared to be shrinking for the first time in the first half of 2015 (-5.7%) and this year the trend deteriorated.
Radio is the only traditional media format which has reversed its fortune by returning to growth (from -2.9% to 2.9%). TV, though the decline was small, appeared to have entered a downward spiral because its decrease was 0.4 percentage point more than -3.4% in a year ago. Also, the massive scale of ad spending meant a tiny decrease in TV ad spending will deal a huge blow to the overall traditional media industry.
Newspapers’ nosedive accelerated. Ad spending in newspapers lost 41.4%, nearly 10 percentage points more than -32.1% a year ago. The top five buying industries of newspaper ads all significantly reduced their spending. The evaporating of magazine ad revenue has also quickened. In the first half of this year, it was 29.4% less than a year ago, when it dropped by 15.6%. Non-digital out-of-home has also turned from black to red: its growth was -3.6% in the first half of this year while it was growing 3.9% a year ago.
From an advertiser perspective, traditional media are increasingly relying on revenue from healthcare brands. In the first half of this year, there are eight companies in the top 20 biggest ad buyers whose ad spending growth was higher than 30%. Six out of the eight companies are healthcare companies, among which Hongmao Pharmaceutical Co. Ltd. spent 121.8% more than a year ago. In contrast, some well-known FMCG companies were significantly reducing their spending, including Unilever (No.4, -17.7%), Yum! China (No.10, -48.4%), Dali Foods Group (No.15, -28.8%) and Mars China (No.16, -34%). The only one buckling the trend is Pepsi (China) whose spending on traditional media jumped by 144.8% and ranked No.18 in total spending.
Healthcare brands’ bullish betting on TV ad was especially apparent. In the top five buying industries of TV ad, healthcare industry is the only one that has been expanding in recent two years (1H 2015 24.4% vs 1H 2016 25.3%). Other industries either has turned from growing to declining, such as beverage (3% vs -13.6%) and food (3.5% vs -7.9%), or has continued to reduce their spending, such as cosmetics/toiletries (-24.4% vs -9.9%) and commerce and service (-9.2% vs -18.7%).
Out of the top 10 biggest TV ad buying brands, six were healthcare brands. They not only dominated the top four spots, but also all grew by at least 30%, the highest being nearly 170%.
Ad spending on traditional media
In stark contrast to the situation of traditional media, new media has attracted more spending at a much faster pace. Internet, office building screen and cinema pre-roll all reported higher growth compared with a year ago. The only exception being transportation screen, which has extended its decline.
Internet contributed the biggest share of new media advertising spending. Four out of its top five ad buying industries increased their spending, among which “computer and office automation products” (including mobile apps and mobile gaming) (77.4%) and “finance” industries (94.1%) were aggressive.
In office building screen sector, the growth of ad spending happened across all top five buying industries. “Computer and office automation products”, the slowest of them, expanded by 16.2%. “Telecommunications” industry, which included website brands, not only has spent the most, but also injected much more new cash into this media with a year-on-year increase of 174%. The biggest three advertising brands were Nongfu Spring (农夫山泉) (98.3%), travel website Tuniu.com (途牛) (163.5%) and JD marketplace (a staggering 784.9%!). There were also three brands breaking into the top 10 for the first time: real estate website Fang.com (房天下), second-hand car transaction website Guazi.com (瓜子二手车直卖) and live video stream app Yizhibo (一直播).
The sizzling growth of China’s movie market has cooled off when the box revenue increase in the first half of this year dropped to 21% from a year ago, compared with 48% in first half of 2015. However, the soaring of ad spending in cinema pre-roll was not affected: its growth accelerated to 77.1% in the first half of this year, faster than 54.2% a year ago. The growth of top 5 buying industries were all higher than 35%. Among the top 10 buying brands, Xiaomi and car rental website Zuche.com (神州租车) boosted their spending by more than 10 times. Three brands broke into the top 10 ranking: Youku Tudou, online wealth management website Lu.com (陆金所) and live stream app ingkee (映客). Chinese cosmetics brand Marubi (丸美) is the only brand cutting its spending among the top 10 (No.10, -18.4%).