China firms exploring various ad channels


  • Business
  • Friday, 07 Nov 2003

BEIJING: Everywhere in China, tens of thousands of small advertising agencies are desperately trying to beat the competition and survive either through innovation or by exploiting virgin advertising territory. 

“In 1995, when billboards began to invade the streets of Beijing, I decided to place them in lifts, a niche still unused at that time,” said Chen Jingsheng, a former Communist Party cadre, who became a businessman about 12 years ago. 

“In elevators people have nothing to do. And as they are embarrassed to be in a tight space with people they don't know, they look at the advertising panels.”  

But his business, Conghui Shichuang Advertising Co, faces tough competition, with competitors plastering the foyers of buildings and the communal areas of housing estates in the Chinese capital with publicity messages. 

And just as advertisers have profited by lowering tariffs for their ads, building managers have upped the price for ad space, reducing the agencies' profits. 

“Today we have advertisements in more than 3,800 elevators in Beijing, which allow us to reach 1.5 million people. But the situation is becoming too difficult and we are having to diversify our activities,” said Chen. 

Chen, who employs 46 staff members, said without creativity an advertising business was not going to be successful even if it managed to secure ideal ad placement. 

“Television advertising is exorbitant and people zap onto another channel if they are hit with a wave of advertising,” he said. 

One of his more innovative ideas has been to organise car rallies sponsored by manufacturers. One of these was done in association with a Buddhist organisation and saw the cars pass by a number of temples and sacred sites across China. 

Yet, television is by far the biggest advertising medium. 

China's 2,901 channels last year raked in more than 23 billion yuan (US$2.8mil) in takings, of which 6.3 billion were from the national CCTV (which accounts for 13 channels), according to the Modern Advertising magazine from the Chinese advertising association. 

The 100 biggest ad agencies had a turnover in 2002 of 22.8 billion yuan (up 57.6% from previous year) but majority of the more than 89,000 businesses share the crumbs from the sector. 

“This year, we hope to post a turnover of five million yuan and double that in 2004,” said Wang Yong, a 30-year-old graduate, who previously worked at China's biggest Internet portal Sina.com. 

He quit in January to found his own advertising agency specialising in the Internet, IM and C. 

This business, with three associates (shareholders) and some 15 employees, has bought advertising sites on Sina.com as well as on other portals. It also advises advertisers on how best to position their commercials on the web. 

Wang also buys some keywords to place ads on search engines. 

“Today, advertisers are fighting to have a presence on the major web portals. The principal sectors are education, cars, housing and information technology,” he said. 

The advertising industry is also being assisted by the boom in online sales. 

“In China, we don't have the problems of using a credit card as in developed countries. Home deliveries are good value and the clients only pay once they receive the products,” said the young entrepreneur. – AFP 

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