Why Are Chinese Companies Racing, Even in Groups, to Advertise in Times Square?

For them, the symbolism of Times Square matters far more than any real return on investment.

This Spring Festival, the Year of the Monkey, Tsingtao Beer was back on the billboards of New York's Times Square, for the third year running. A week before the holiday, giant WeChat red envelopes filled the square's big screens; anyone with Bluetooth switched on could "shake" their phone to grab one. Wanglaoji got there even earlier, launching its Spring Festival campaign in Times Square at the end of last December.

A Chinese company called Huashang Taolue went further. It rounded up 100 Chinese brands this Spring Festival, and 66 for National Day last October, to advertise together on the Times Square screens. The list included industry giants such as Greenland Group, Hainan Airlines, TCL, Gree and Geely. Roughly half the names, though, you have probably never heard of.

Add Meitu, Didi, Coolpad, Huamei Food, Peak, Hisense range hoods, Henan's Synear Food and others, and somewhere between 100 and 200 Chinese companies appeared on Times Square billboards over the past year.

The first Chinese advertising in the "Crossroads of the World" came from the state. In January 2011, China's national image film played here. A wave of local governments followed: Shanghai, Suzhou, Jiangxi, Wuhan, Quanzhou. By one incomplete count, more than 30 cities have run promotional films in the square. Their aim was plain: to attract tourists or foreign investment.

Chinese companies seemed to have suddenly found a shortcut of their own to "going global." In August 2011, a Wuliangye promotional film appeared in Times Square, directly above ads for Samsung and Coca-Cola. Gree soon followed.

The Chinese company that has advertised there most often, and most frequently, is Shi Yuzhu's Giant Group, the company that drilled Naobaijin commercials into Chinese viewers for 17 straight years. Starting in April 2012, it ran a string of game ads on the Times Square screens, for ZT Online 2S, Allods Online, Xianxia World and others.

After that, more and more Chinese companies rushed to "check in" at Times Square. For them, the symbolism of Times Square matters far more than any real return on investment. Most are not trying to win overseas customers. They want to bring the prestige and the buzz back home.

Think of it as "export for domestic consumption." An ad playing in Times Square is not necessarily meant for the people in Times Square. The point is to take a photo, bring it home and tell people: "Look, we made it onto glamorous Times Square!"

It is the same logic as the Chinese starlets who turn up on the red carpets of international film festivals. Nobody abroad may notice them, but back home the headlines read: "Actress XX dazzles on the world stage, outshining everyone."

Some of these companies do have a market in the US, but it is mostly Chinese Americans. Tsingtao Beer, for example, is sold mainly in Chinatown supermarkets and restaurants. In the past, some young companies might also have hoped to list on the New York Stock Exchange one day and court foreign investors. The recent wave of Chinese companies delisting from US exchanges has probably killed that motive too.

Because Times Square ad slots can be bought flexibly, by the day or even by the minute, many companies can afford a turn on the screens. And a group of middlemen who bring Chinese companies to Times Square have helped drive the trend.

Look closely and you will notice that Chinese companies "favor" only a handful of slots: the Nasdaq screen on Four Times Square; the screen directly above McDonald's; an LED screen at the base of One Times Square (the building where the ball drops on New Year's Eve); a spot to the upper right of the AT&T sign on Three Times Square; and the much-photographed Two Times Square, which, like One Times Square, is a wedge-shaped building.

Each of these slots is sold through a different Chinese agency. The screen on One Times Square has been run since March 1, 2012, by Guoyu Wujiang, a Dalian outdoor media group, which named it the "China Red Screen." The billboard on Two Times Square was leased in August 2011 by Xinhua Gallery, a wholly owned subsidiary of Xinhua News Agency. The screen above McDonald's was leased from a foreign agency by Lanse Tianmu, a subsidiary of BlueFocus. QDaily covered all this earlier in "Who Sold Flashy Chinese Ads to New York's Glamorous Times Square?". So for Chinese companies, part of the pull may simply be habit: they go through the agencies they already know.

Prices for Times Square billboards vary widely with location, size, duration, screen quality and other factors. The Nasdaq screen, for instance, costs about twice as much as the "China Red Screen."

Huashang Taolue, which brought the 100 Chinese companies to Times Square, is a new kind of middleman. It began as a company that wrote biographies of Chinese entrepreneurs. From 2005 to 2014 it published an annual anthology, Global Chinese Business Hall of Fame, and built up a large network of business contacts along the way. In 2014 it moved into advertising and online publishing.

"There are two kinds of Times Square advertising," said Bi Yajun, Huashang Taolue's founder. "At first it was mainly big companies, buying up space in bulk to show how dominant their brands were. The other kind is just about getting more people to know you. Whether it looks impressive doesn't matter. You might spend a tenth of what people used to and still get noticed."

Bi told QDaily that the "100 brands" campaign was the company's first try at a new model. They call it "crowdfunded advertising." In practice, it is group buying.

An ad agency picks a theme and recruits a batch of interested companies to buy ad time together. The advantage is that the ad becomes an "event": it gets more attention and costs less, like moving from retail to wholesale.

The savings are obvious. According to Lanse Tianmu's 2014 rate card, a two-week ad campaign in Times Square cost 1.18 million yuan. Even at half the list price, it would still cost more than 500,000 yuan (though such a campaign also runs far more often).

For its 100-brand campaign, Huashang Taolue charged each company only a few tens of thousands of yuan. Every brand got the same deal: a Chinese ad and an English ad, each shown twice, 15 seconds a time, for 60 seconds of total airtime. "It's a very practical deal," Bi said. "The cost is much lower, but the effect isn't much less."

That fee was a package price. Besides the Times Square airtime, it covered a full service: photos from the square, follow-up publicity through various channels in China, and so on. Of the several million yuan the 100 companies paid in total, only about 1 million yuan went to buying airtime in Times Square.

"If I could, I'd spend just 100,000 yuan on the ad and put the rest into promotion at home," Bi said. Huashang Taolue owns no screens; like everyone else, it pays the screen owners for airtime. The minimum purchase is 60 seconds, so it bought one hundred 60-second slots. Competition among the foreign agencies has already squeezed most of the padding out of their prices, Bi said, so buying 100 slots at once did not earn much of a "wholesale" discount.

Advertising in Times Square is by now a mature business. The square's official website publishes detailed visitor data, including foot traffic on every surrounding block and changes in traffic flow. In January 2016, for example, an average of 293,600 people passed through each day. The chart below shows the details.

The annual New Year's Eve celebration draws an audience of more than 100 million. Times Square long ago earned a reputation as a barometer of the American economy. According to Ad Age, a decade ago it was already the most expensive outdoor advertising location in the US, with slots on One and Two Times Square starting at US$350,000 a month. At the time, the square drew about 40 million visitors a year, roughly 14% of the US population, and Kodak estimated that more than 100 million photos were taken there each year. It is still a favorite backdrop on Instagram. That is why Coca-Cola has advertised there since 1935 and still does.

The Chinese companies that come to Times Square may not care much about any of this. What they care about is the resonant name "Times Square." To them it is a gold-plated badge. And although ad prices there have more than doubled in the past ten years, for Chinese companies the square is not as expensive as people might think.

"Showing an ad in Times Square isn't the important part," Bi said. "What matters is how and in whose name you show it, and whether it makes an impact back home, whether more people hear about it. We're frank with companies about this: what counts is the symbolism, not how many people walked past the billboard that day."

In Huashang Taolue's package, the ad is just one step in a wider publicity plan. The follow-up is the main event. "For example, we buy ads on WeChat Moments, which get 10 to 20 million impressions. That's far more impact," Bi said. "We also write sponsored articles and place stories through all kinds of channels, and the companies promote it through their own PR firms and social-media accounts."

We don't doubt that a headline like "100 Chinese Brands Take Over Times Square" can create buzz in Chinese media and on social networks. But what does it actually achieve? As with almost all brand advertising, that is hard to measure. Spread across 100 brands, the benefit to each one is not a simple matter of division. Big and small companies also get different things out of it. And having read this far, how many of those 100 companies can you still name?

By Huashang Taolue's count, about half of the 100 companies do no business at all in the US; some sell only in Beijing. Once you understand the logic of "export for domestic consumption," you see that doing business in the US doesn't matter.

Huashang Taolue planned from the start how many big companies and how many small ones to recruit, and how many from each industry. Along the way it found big companies easier to sign up, because they grasped the model quickly. Small companies took more persuading: it was harder to convince them that they could advertise in New York without doing business there.

"We have never told a company, 'If you want to do business in New York, you should advertise in Times Square through us,'" Bi said. "Even the big companies don't join our campaigns for practical business reasons. They do it for the brand." He gave an example. Greenland has a real-estate project in New York, Pacific Park, and its sales launch happened to coincide with the 66-brand National Day campaign. But if Greenland had been thinking commercially, Bi said, it would not have picked a symbolic place like Times Square. It would have studied where its real buyers and customers were and placed ads there.

For publicity, having some big companies on board was essential. But as a matter of business, Huashang Taolue wanted to sign more small companies as long-term clients. When a small agency like this deals with big companies, it usually has little bargaining power.

But knowing it's all hype doesn't stop it from being a business.

"We chose Times Square for two reasons," Bi said. "First, it grabs attention. Second, as long as 'advertising in Times Square' still signals glamour and prestige to most people, someone will keep exploiting that, and the model will keep its value for brands."

Still, the model can't last. As more and more companies go to Times Square, its glamour will fade.

In the 1980s and '90s, Japanese and Korean companies also crowded onto Times Square's big screens, as brands like Sony, Panasonic and Samsung pushed into the US market. Each era has brought different advertisers to Times Square, and the shift from Japan to China tracks changes in the global market. Such booms tend to mark a stage in a country's commercial development. They fade as the business environment matures, and symbolism gives way to hard calculations of cost.

For now, though, "Times Square" keeps its status, and the gimmick hasn't grown old. Yet it may not be that these companies themselves believe in Times Square. "Rather, these companies believe that in the eyes of Chinese people, Times Square is still a convincing place."

Is it really?

(Fengyi Hua also contributed to this article.)

Cover image from pixabay