Gome pays 400 million yuan for CCTV ads

The annual ad auction for China Central Television slots, a barometer for the country's economy, drew record bids over the past weekend. The ad auction on China's only national television network drew bids totaling 15.8 billion yuan for 2013, up 11.4 percent from the previous year. Home appliances retailer Gome paid about 400 million yuan for advertising slots on CCTV for 2013, in the hope of strengthening its brand image.

During the pre-sale auction for CCTV's 2013 prime-time ad slots, home appliance retailer Gome paid 215 million for a 10-second countdown slot on Xinwen Lianbo, the nation's most influential news program.

He Yangqing is vice-president of Gome Electrical Appliances Holding. He says this is the first time the company attended CCTV's pre-sale auction.

"Gome purchased more than 400 million yuan of ad slots on CCTV for 2013. And this is our first time at the auction, even though we began placing ads on CCTV in 2003. You might think 400 million is too much, but this decision was made based on our overall ad budget adjustments."

He Yangqing says they previously put more of their budget into print media and off-line promotions, but after 26 years of growth, Gome is turning to the idea of better service and a stronger brand.

He also added that the company will spend less on other media to guarantee a high-performance ration on CCTV.

He says he believes China's home appliance and retailing industry is at a turning point right now, making multi-channel marketing very important.

"A key point of Gome's five-year-plan is multi-channel marketing, and e-commerce will be one of our major channels in the future."

Starting next year, He revealed that the online shopping mall of Gome will change its name to Gome Online in order to attract more e-commerce consumers.

"With Chinese people's higher living standards and the change in consumer habits, more people are choosing to buy online; this is definitely the trend. Only when consumer's demands are met will they be satisfied."

When asked about their largest competitor, He Yangqing claims it's not just Suning; it's themselves.

"China's retail industry has very fierce competition. Gome and Suning have been fighting for more than 20 years in the market. But this competition spurs growth."

Media reports that, in the first half of 2012, revenue in the domestic advertising market only grew 4.2 percent, and television advertising was up 4.7 percent. Both rates were slower than economic expansion, which fell to a three-year low of 7.8 percent during the same period.

He Haiming, vice-director of CCTV's advertising operations and management center, says most companies cut their advertising expenditures 2012,as their budgets were squeezed by the gloomy economic outlook. The 11.4 increase for 2013 means companies are more optimistic for next year.