The Chinese new yearthat begins Jan. 22 is 4071, the Year of the Monkey. It will also be the year that Chinese motor oil companies take to the nations television airwaves.
One year after the first motor oil ads ran on nationally broadcast China Central Television, lube companies have become some of the biggest purchasers of prime time slots for the coming year. Industry observers say the surprise trend reflects a belief that television offers access to a rapidly swelling pool of potential customers. They also speculate that the trend will lure foreign lubricant companies onto the airwaves before long.
China has more than 2,000 television channels, but state-managed CCTV is recognized as the most prominent, largely because it claims more than 1 billion viewers. The broadcaster conducted its annual auction of prime time slots last November and observers were caught off guard to see three motor oil companies – Kunlun, Monarch and Great Wall – among the biggest winners. Kunlun, the main motor oil brand for national oil giant PetroChina, spent more than Yuan 100 million (U.S. $12 million). Privately owned Monarch spent just under Yuan 100 million and Great Wall, the flagship brand of Chinas other national petroleum giant, Sinopec, spent nearly that amount.
Observers said afterward that the level of activity from these companies was undoubtedly due to the success of Monarch, which became the first company to run motor oil ads on CCTV last year. According to news reports, the upstart credited that campaign for an 80 percent jump in revenue.
Lubricant companies usually place their advertisements in trade magazines, said Ying Xie, media manager for market and media research company CTR, a joint venture between China International Television Corp. and London-based TNS. Monarch broke the rule by advertising on CCTV and it ended up working out, so the other companies are following their steps.
The motor oil marketers say it makes sense to advertise on television these days because the medium offers access to the rapidly increasing number of Chinese drivers. Sedan sales jumped 70 percent last year, according to the China Association of Automobile Manufacturers.
This trend is expected to parallel growth in demand for high-quality lubricants, which make up just 30 percent of Chinas lubricant market while accounting for 80 percent of its profits. The segment has been dominated by foreign multinationals, and Chinese companies are eager to grab their share.
Domestic lubricant companies are shifting their promotion strategies in an attempt to quickly build up brand recognition and to turn that recognition into profits during Chinas auto-buying craze, said Qian Zhiyong, chief editor of Great Wall Lube News. From our point of view, it reflects that Great Wall is becoming more of a service company than a traditional manufacturer.
CTRs Xie said she does not think foreign motor oil marketers have advertised on television in China, but she suspects they soon will.
If they want to access this market and achieve success, they should take into account their competitors advertising strategy and ensure that they have enough exposure, she said.