Rational Bidders and Cost-effective Price

Bidders of this year are very rational, and the bid-winning prices are very cost-effective. Although the total amount of CCTV Bidding this year grows 18.47% over the previous year, as projects for bidding and subscription of this year are not exactly the same as the previous year, growth rate of the total amount does not reflect the increase in unit bid-winning prices. From the perspective of bid-winning prices of these traditional items such as Special A, positions after the summary of Topics in Focus, time-telling on Spring Festival Gala, Cooperation Enterprises with CCTV-1 Night TV Theater and the like, the average increase reaches around 10%, which is very reasonable and cost-effective. There are four reasons as follows:

Firstly, all parties concerned now believe that China's economy is in the recovery state, China's economy will maintain sound and rapid development momentum in 2010. The increase rate of 10% for bid-winning price accords with China's economic growth, which is scientific and reasonable.

Secondly, since mid-2009, reform of CCTV channels and programs has gradually achieved effectiveness, which is expected to achieve good audience rating in 2010. Audience shares of CCTV are expected to be further expanded, and bid-winning enterprises will harvest better advertising results.

Thirdly, after SARFT issues “NO.61 Order”, advertising prices of different local satellite TV stations will remarkably soar due to the reduction of advertising time in 2010. According to our estimate, advertising prices of local satellite TV stations must rise more than 24% in 2010 so as to keep up with to advertising revenue in 2009. 10% increase of the advertising price of CCTV is obviously far below the advertising price increase of local satellite TV stations.

Fourthly, advertising effectiveness of new media is being subjected to the test. China Business Journal has reported that advertising revenue of several major internet portals in the third quarter was in negative growth. A latest investigation about memory extent on advertising shows that in the test for the most impressive consumer brands and advertising, more than 70% came from television ads in 2009, some came from the newspaper ads, but internet ads and other new media ads featured very low degree of memory extent, which shows that the influence of traditional ads still dominates. Many brand enterprises advertising on new media for years now invests advertising costs in traditional media.