The CCTV building in Beijing. (Photo/Xinhua)
Baidu, a leading Chinese web services company, may replace state-run national broadcaster CCTV this year as China's 'king of advertisements' as the analytic capabilities of its ad algorithm, based on large volume of information, has won the trust of advertisers, China Entrepreneur Magazine reports.
CCTV has dominated the advertisement field for at least 22 years, but the growth of Baidu's ads has outpaced that of CCTV. Last year, Baidu's ads income reached 22.2 billion yuan (US$3.6 billion), up 53.5% from a year earlier, while CCTV had an ad income of 26.9 billion yuan (US$4.3 billion), up less than 15% from a year ago. If Baidu keeps on target with these growth figures, it is set to pass the broadcaster this year, the report said.
When this happens, TV will longer than be the top medium for ads. The transition has already happened in the US. In 2011, internet ad income reached US$31.7 billion, surpassing cable TV for the first time. The gap after including leading radio and TV stations, was narrowed to just US$7 billion, the report said, citing statistics from market research agency IAB.
What worries the CCTV most is that the internet is wooing the outlet's big ad clients away.
Baidu's major ad clients will continue their high growth this year, and become locomotives for growth, said Baidu vice president Wang Zhan. The group now accounts for some 30% of Baidu's total ad income, enjoying a growth rate over the past few years higher than the overall growth.
On Jan. 17, Baidu signed a joint business plan with Ping An Insurance (Group), agreeing to set a thorough marketing resolution program for the latter, including surely a high growth in ads. Ping An's ad spending on Baidu has seen high growth over the past few years, with one year reaching as high as 200%, the report said.
Procter & Gamble, the world's largest advertiser, has also become cautious towards TV ads. During 2005-2007, Procter & Gamble was the largest advertiser on CCTV for three consecutive years, but last year, it reduced its ads on TV and diversified into other channels, the report said.
In 2009, Procter & Gamble put only 40 million yuan (US$6.3 million) of ads on China's internet, but the figure rose to 286 million yuan (US$46 million) in 2011. In May 2012, Procter & Gamble became Baidu's first JBP partner.
People's attention has been shifted to internet from TV, the report said. According to media research agency eMarketer, Chinese consumers spend less time on TV than on the internet, with young citizens aged 19-30 spending twice the time on the internet than TVs.
Baidu can offer its clients special "brand zone" services integrating words, pictures, videos and apps that can function as a mini company websites for the clients. Baidu can also design interactions for the advertisers and their clients — much more personal than the one-way discourse of TV ads.
The internet media also attract advertisers by pulling analysis from their large volume of data. For example, Baidu analyzed data and suggested that Procter & Gamble adjust its marketing strategy for a particular product last year, which got good market feedback, the report said.
TV ads, however, are still needed and will not disappear in the future, but they probably will no longer play the leading position, the report said.