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Fig. 1: Outdoor advertisement in China. A rare view on the sky of Qingdao, partly due to heavy regulations related to advertising in general and outdoor ads in particular.
In this chapter we will cover the basics of Advertising in China.
Definition
Advertising can be defined as
“any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor.”
(source: Armstrong/Kotler, Marketing: an introduction)
Fundamentals
One sector that is clearly benefitting from China's economic boom is the advertising sector. Meanwhile China has grown to become the second largest advertising market of the world. Every year millions of new consumers are pouring into markets that have not been accessible to them in the past, making them a prime target for the ads.
Tab. 1: Overall advertising expenditures for different media types in China in recent years. Please note that only the figures for "magazine", "radio", "online advertisement", "others", "newspapers" and "TV" add up to the "total" - the blue bar depicting the overall annual revenues of Chinese "advertisement agencies" must not be added. The bar only depicts the part of total advertising which is not dealt with in-house or through the media directly.
Fig. 2:Breakdown of advertising expenditures in China in the year 2007.
The advertising sector (both sector revenues and advertising costs in CPM (costs per million) has been growing by 15-20% annually in recent years (see Tab. 1 and Fig. 2). At first sight TV, newspaper and outdoor ads might appear quite similar to a Western visitor in China, however the underlying dynamics are quite different.
As anything in China that deals with opinion making and the provisioning of information is highly regulated and subject to strict control and limitations.
The regulatory framework of advertising in mainland China is provided by the "Advertising Law of the People's Republic of China" (中华人民共和国广告法), or in short the Chinese advertising law, which has been effective in its current form since 1995. The Chinese advertising law is directed to advertisers, advertising operators and publishers of any nationality engaged in advertising activities within the territory of mainland China.
The philosophy behind the law is among others to
- • "be good for the physical and mental health of the people", and
- • conform to social, public and professional ethics and safeguard the dignity and interest of the state"
From a marketer's point of view it is interesting to note that among others
- • comparative advertising,
- • exaggerations and the use of superlatives
are not allowed.
To make a long story short, many of the regulations that can be found in the Chinese advertising law are similar to those that can be found in the advertising laws of European nations (e.g. Germany does not allow comparative advertising, while it is permitted in the USA).
In the end it is the TV stations, newspaper editors etc. who will decide over acceptance or rejection of the ad (one should however avoid frequent rejections, as they could result in other disadvantageous measures).
In particular foreign organizations doing business in China are adviced to give advertising activities in the hands of experienced local agencies.
An English translation of the Chinese Advertisment law can be found here: http://law.gaotai.gov.cn/englishlaw/article/2005-11-10/755-1.htm
A good summary of the law's main points can be found here: http://www.ibls.com/internet_law_news_portal_view.aspx?s=latestnews&id=2206:
- Cost of advertising in China
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