China: Two media chiefs argue why digital buys remains a challenge

From a media buying perspective, what are the unique challenges of the Chinese media market?

Michelle Ko (pictured left), president of MEC China
I would say managing media inflation is always the challenge. There are so many changes in China such as regulation, changes in consumer media habits and demands of media space across all platforms are still high. Media inflation is inevitable, yet clients are expecting high year-on-year savings.

Li Yifei (pictured right), country chair, Vivaki Greater China
The biggest challenge would be that you’re negotiating with a lot of local companies. For example, out-of-home as a medium is very fragmented and there are many different tiers and locations.

Which media platforms are the most difficult to operate in?

MK: TV and digital. TV is a very complex medium and I don’t think this will go away, as China is still pretty much a TV market in view of its geographic coverage. While everyone talks about digital, my bigger question is whether everyone is ready for it, or knows how to do it. This area is very new.

LY: The most difficult to operate in are digital and out-of-home. Digital is all about understanding ad-tracking, monitoring and analysing consumer behaviour.

What’s the difference between depending on an agency and relying on in-house marketers for media buys?

MK: Using an agency can help to leverage the scale and volume, while in-house will be very focused.

LY: I actually see a trend of local companies using more international companies. Our professionalism and expertise, plus our deliverables and the way we can present ROI, are proving to work very well for clients. As long as we’re able to localise the way we operate, we should become more successful.

What has been your most successful media buy?

MK: In China, the negotiation part is done via trading, therefore I have not personally been involved in negotiation with a vendor. No big story to share.

LY: We’ve taken up a lot of buying in 2009 but L’Oreal was a great win for us. Plus, we’ve delivered because of the way they wanted to position themselves in the digital space, and they’re an innovative company.

Can an MNC ever truly understand the Chinese media market?

MK: Why not? It just takes time. The line between MNC and local will get blurred in the long run as it is all about people. Local clients hire people from MNCs and MNCs hire people from local companies. Mergers and acquisitions will happen in the marketplace. So knowledge, working approaches and so on will get transferred.

LY: Of course, it’s all about people - it’s a people’s business. If we can localise and engage more local talent, I don’t see why we can’t compete and understand the local markets.

What’s likely to change in the Chinese media buying market this year?

MK: The tightening of Sarft policy that is pushing premium inventory up a lot will move to the cycle of limited inventory and push prices up. However, the fundamental rule is not going to be changed, merely challenged. After all, it’s all government owned. Being politically correct is a priority over everything else.

LY: More advertisers will be going digital. I see national buying becoming more localised. Local TV stations will become more sophisticated and we’ll be working out more ways to collaborate with them.

This article was originally published in the 25 February 2010 issue of Media.

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