Media Planning Comes To China

If American brands are to succeed in penetrating and competing in China's booming market, they need to form partnerships with local media consultants or foreign media consultancies with a significant local presence, according to Richard Wageman, one of ten foreign lawyers at Lehman, Lee & Xu, a Chinese law firm based in Beijing.

Of course, there's no lack of incentive; speaking during the final presentation of the Association of National Advertisers' (ANA) two-day symposium on advertising law and business affairs, Wageman touted the numbers of media devices already in circulation. "There are already 300 million cell phones in China, and I would guess perhaps half a billion television sets, which are quite cheap."

Wageman also gave a list of impressive figures for the ad industry itself: "The advertising business generated about $30 billion in revenue last year; it employs about 910,000 people--and there are literally tens of thousands of ad agencies, though some of them are obviously quite small."

China, once a closed society, has indeed become ad-friendly. But there are still hurdles for foreign brands, and media planners in particular. For one thing, Wageman warned, the Chinese legal system is still opaque, although it is improving: "Courts are very regionalized, and they will protect local interests. There is a lack of transparency in the court system, although they're making real efforts to upgrade it."

Pointing to the example of intellectual property (IP) law, he noted that "they're setting up a separate court to deal with it." The Chinese government is particularly concerned with protecting its IP rights in relation to the brands, logos, and products associated with the 2008 Olympics. "We always thought the IP system would improve as the Chinese felt their own IP rights were being threatened, and that's proven to be the case," Wageman confirmed. "On IP disputes, about 85 percent of them were Chinese, and 15 percent were foreign."

Meanwhile, consumer research--and laws governing personal privacy--are still in their infancy, though growing rapidly: "They only just now developed a credit-reporting system that banks can access. So while [research] is very limited, the field is really wide open. They've brought some new laws out governing access to personal data, but again, they're quite limited in scope."

As transparency improves, Wageman said he expects the foreign and domestic Chinese media planning industry to boom in the next few years: "I think there's going to be a huge increase. There are already a number of consulting companies that are foreign-dominated or totally foreign-controlled dealing with advertising and media strategy." These firms are invaluable for outside brands trying to get in: "They'll do market research, vet the ads, tell you if they think it offends any cultural or legal provision."

These services can also provide some of the benefits of guanxi, or connections, to foreign brands: "Influence is still important... and it tends to be regional. So when you're dealing with an advertising campaign in the Shanghai area, which has 40 million people at minimum, you'll go to a consulting company that's been there a while, and it will have people that are in tune with the state-owned television stations and print media companies."

In fact, Wageman pointed to one example where local savvy enabled a clothing brand to run a controversial campaign featuring a scantily clad model that might otherwise have been nixed: "If the government had focused on it, it probably wouldn't have been allowed, but they got away with it because of local influence."

Asked what differences media planners can expect in the Chinese market, Wageman recalled the proliferation of outdoor advertising in particular: "You can just bombard people, because you can put ads on public facilities, which is certainly not like here in the U.S. So you'll see ads on light poles--just covering them--and the next 400 telephone poles or light poles will all be plastered. And billboards are endemic, on top of literally every building. It's part of the charm of Asia, I suppose."

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