theskeptic's Journal: Where communists trumpet capitalism

Chinese Game Show
Offers a Big Prize:
A 15-Second Ad Slot

Companies Bid for Best Spots,
Chance to Become 'King';
A Karaoke Fan's Dream
By GEOFFREY A. FOWLER
Staff Reporter of THE WALL STREET JOURNAL
November 30, 2004

BEIJING -- With a flick of his flag, numbered with a red 111, Li Jia of Monarch Lubricant Oil made the top bid of $4.3 million. He won a coveted 15-second advertising slot on Chinese TV. For two months, his company's ads would run just after the weather forecast, one of the world's most popular television shows.

Cameramen swarmed around Mr. Li as a television anchor yanked the 38-year-old executive onto a podium reserved for the "Number One" bidder. Chinese Olympian Luo Xuejuan, winner of the women's 100-meter breaststroke at the Athens games, gave Mr. Li a medallion, and Tian Liang, winner of the synchronized 10-meter diving contest, crowned him with a wreath.

"All I could think was how sweaty I was under all those lights," a giddy Mr. Li, the company's general manager, said in an interview after his victory.

China finds itself in the peculiar situation of being both a centrally planned economy and a sometimes-crass capitalist juggernaut. Both faces show up at the lurid "Economic Olympics," an annual televised event designed to sell advertising on China's state-run TV network. During the event, the nation's businessmen bid to buy ad slots for 2005 in front of a studio audience and in the process sometimes become instant celebrities.

China Central Television's advertising director, Guo Zhenxi, announces the beginning of this year's "Economic Olympics" by firing a starter's pistol.

To organize the festivities, which can last three days, China Central Television employs its top game-show producers to transform the hard sell into a no-expense-spared variety program. CCTV advertising director Guo Zhenxi, who serves as the event's ringmaster, kicked off this year's bidding earlier this month by firing a starter's pistol. A professional auctioneer presided over the 13-hour bidding, taking only short breaks as TV celebrities performed comedy sketches and doled out mystery prizes, including a basketball autographed by Chinese basketball star Yao Ming.

CCTV planted staffers in the audience who cheered after each bid. Producers added drum rolls and other cartoonish noises at moments of high drama, such as when the bidding reached a peak. "Raise your hands faster and raise your price higher!" CCTV sportscaster Zhang Bin exhorted bidders.

Explains Mr. Guo: "Just like an Olympic athlete needs cheering to perform his best, these businesses need our clapping to prove they are the best."

This year's event was China's 11th annual advertising auction. It was dreamed up in the early 1990s as a way to insert a dose of market capitalism into CCTV's ad sales team. At that time, CCTV offered only one prime-time spot and all ads were sold at fixed prices. Mr. Guo, a 39-year-old former CCTV news reporter, has been responsible for refining this promotional circus for the past four years.

This year the auction generated $632 million, about half of CCTV's total annual advertising revenue. Mr. Guo, who sleeps only four hours a night during the three-day event, embodies the ambition that lies just beneath the surface of Chinese business.

"Nobody knows more CEOs in China than me," he told reporters at an impromptu news conference held in CCTV's media center, before bragging about the congratulatory text messages he'd received on his two ever-present cellphones.

Last year, marketers spent $14.5 billion advertising in China, according to Nielsen Media Research. That's a fraction of the $149 billion spent in the U.S., but enough for some in the ad industry to predict that China will become the world's second-largest ad market by the 2008 Beijing Olympics, passing Japan.

Monarch's Mr. Li spent a quarter of his ad budget on CCTV's most expensive slot: 15 seconds following the 7:30 p.m. weather report. It's a no-frills, but exquisitely timed five-day forecast that appears directly after CCTV's nightly news. That program, the official outlet for government news, must be carried by every state-supported Chinese broadcaster. With 194 million viewers, according to CCTV, the weather report stands as one of the world's most widely watched TV shows.

Mr. Li says he gained more than just a lucrative time slot. Winning bidders pose for photos and take questions from journalists. In addition to CCTV's on-air and online reporters, 60 mainstream Chinese news outlets covered the event. "The value of this is beyond just commercial. It has news effect and influences everybody," Mr. Li told reporters at one of two separate news conferences he held.

With advertisers spending 27% more at this year's auction compared with 2003, Mr. Guo says "people are crazy about China's economy." Others in China's state-run media think the bidders are just crazy. Last year, the state-run China Daily newspaper, which is operated separately from CCTV, warned in an editorial that the "rocketing costs of commercials cannot but cast doubts on whether these enterprises are acting rationally." The editorial went on to suggest that companies "should pay more attention to the quality of their products."

Some participants this year consciously avoided irrational exuberance. "I don't manufacture money, so I have to make rational decisions," said Su Muqing, chairman of Guangzhou I-Stone Jewelry Co., at a news conference early in the bidding process. "I consulted an auction expert, and he asked me not to make compulsive decisions, and not to be enticed by the applause," he said.

Past winners, such as Qinchi Liquor, have fallen on hard times. According to an article in Economic Information Daily, a newspaper published by the official Xinhua News Agency, Qinchi responded to the resulting flood of orders by buying alcohol from other brewers, adding water, and slapping its own label on the bottle. In a written response to questions, Qinchi says the published report "doesn't reflect the facts at all" but didn't elaborate. The company, which was crowned the 1997 "Bid King" -- a title given to the biggest overall spender -- no longer buys advertising, said a staff member who declined to identify himself.

Big multinational advertisers have long avoided the event, which they found hard to understand. Few international companies had a Chinese distribution network sophisticated enough to make such advertising worthwhile.

But this year, Procter & Gamble Co. emerged as "Bid King" after spending $46.5 million to advertise a variety of products, including Olay, a face cream, and a shampoo called Rejoice. "It is still a communist tool, but at the same time it has embraced the commercial aspects of broadcasting," said P&G's associate director of media in China, Alfonso de Dios.

CCTV invited P&G's senior media manager, Lai Liangrui, a karaoke fan, to sing "Turning Back Once Again" with Taiwanese pop star Jiang Yuheng. Their performance, held at the Happy Moment CCTV Advertising Auction Fellowship Evening Party, was broadcast across China. It bumped the planned programming, a historical drama called "Story of the Riverside," to after midnight.

"Hundreds of millions of people were watching the show," said P&G's Mr. Lai in a later interview. "You can see that I'm a little bit excited."

---- Nancy Zhang contributed to this article.

Write to Geoffrey A. Fowler at [e-mail]