The Advertising Industry in Vietnam

 

By: Huyen Trang Nguyen – FTA Senior Research Manager

Before 2000, marketing was the concept still far from Vietnamese enterprises in their doing business. Most of strategic marketing activities are of international or joint-venture companies whose marketing has been so much professional. However, from 2000 – 2007, more and more Vietnamese enterprises focused on planning for marketing strategy for their products or services to build their brands strongly & effectively in consumers’ mind. That can be seen from the fact that Vinamilk – dairy brand has succeeded with their Megabrand strategy, ICP – Personal care manufacturer with X-Men & Tan Hiep Phat – Beverage company with Number 1.

A very visible indicator of marketing activities is concentrated on Above-the-line (ATL) activities. The expenditure for advertisements in television, radio, newspaper & billboard accounts for 80% – 90% of the total marketing budget. In the contrary, Below-the-line (BTL) activities such as exhibition, fair, promotion, public relation or sponsor are paid less attention or done less effectively. From a positive perspective, the term 2000 – 2007 marked a milestone on the road of development of advertising industry in Vietnam with the average growth of 50%/year & the growing of Vietnamese marketers in terms of both quality & quantity.

Post-recession – Planning on recovery:

When sales are down & budget is cut, it would seem that the most important thing for a business to do is to focus on survival, not plan for growth. But recovery will come, and marketers who are not ready to seize that opportunity will lose out to those who are. However, in 2008 & the first 6 months of 2009, cutting the budget for marketing was the must-to-do of almost Vietnamese enterprises in tightening their belt to weather the storm of downturn, except giant like Unilever, Mobifone, Vinaphone & “rising star” Tan Hiep Phat which is very outstanding with Dr. Thanh (herbal drink), Green tea O0. While only television advertising retained its growth & online advertising gradually emerged, others activities showed its significant slowdown, especially PR, billboard, commercial event, trade exhibition, sponsor, … In the inaugural address, U.S President Barack Obama said, “The state of the economy calls for action, bold & swift, & we will act to lay a new foundation for growth”. And Vietnamese marketers seem to follow this lead. A recession is not a time to slowdown. It is time to speed up. And while it is difficult to ignore the current bad tidings, now is the time to make plan for the anticipated upturn. Therefore, it is expected to have a “brand war 2.0” in the time coming while the companies pouring dollars into marketing to recapture its share & position.

What is the scenario for the allocation of marketing budget in post-recession?

The very obvious fact taken from the recession is the focus on “effectiveness” of marketing strategy of companies. It is no longer a period of deploying mass marketing campaign but less cost effectiveness. The marketers now prefer direct approach to end-users by communication at POP or by BTL activities like promotion, brand activation, PR, … In addition, the significant booming of internet in Vietnam creates the new channel for marketing with the high cost effectiveness. Each enterprise should have its own plan for marketing budget but they seem to be still conscious & cautious to keep tightening the belt.

Here are some similar indicators of marketing budget allocation as below:

–       The FMCG with mobile phone, laptop categories are the leading investors in marketing. In general, they are still loyal with tradition marketing channels like television, print, … However, FMCG enterprises will focus more on direct promotion to end-users & online marketing has a chance to show its impacts on marketing budget allocation. This fact can be seen obviously from the strong investment of giants like Pepsi, Nokia into online marketing.

–       The telecommunication will see the revolution in marketing because the rapid growth of subscribers will cause the saturation in the market. The key selling messages of telecommunication providers focus on improve quality of services by promotion, discount, improve customer relationship to offer more added value package to subscribers. Activities in ATL & BTL will be balanced because the loyalty of subscribers is the prerequisite for the survival & development despite of appearance of 3G technology.

–       The sector of Banking – Finance & Real Estate will say goodbye to sponsor activities for television game shows to more focus on building the corporate images in consumer’s mind.

–       The automotive with its own nature has gradually shown some changes in marketing strategies. Instead of pouring money into advertising, they prefer activities reflecting their corporate social responsibilities (CSR) to the community like Honda with the program “I love Vietnam” or Toyota with “Go-Green”, …

Online marketing trends:

2009 is likely to be a challenging year for many businesses as the global economic slowdown takes hold. Online marketing, however, looks set to continue its rapid growth, as its many solutions & advantages become more apparent when marketing budgets are subjected to even greater constraints. In Vietnam, this trend has more transparent signals especially in post-recession even though the increase of internet subscribers is not directly proportional to the marketers’ preferences to online marketing. If the ratio of internet users from 1998 – 2000 is less 1% over the total population of Vietnam, this number of 2008 is up to 25% over the total population. With the average growth of approximately 60%/year, the growth of online marketing activities is inversely rather low. The revenue of online advertising in 2008 reached US$10 million, equally to about less 2% of the total revenue of advertising sector in 2008. Online marketing is limited in simple activities like presenting the banner, logo, corporate introduction, …

It is too soon to confirm the usurpation of internet to television the next 5 years, but with its such rapid growth, Internet could mark the changes in marketing in the years coming. The budget for online marketing will be increased more than ever. The strong evidence could be seen that Pepsi is the leading in changing its communication strategy. Less TVCs, less big events with famous stars but Pepsi is the outstanding beverage brand with the marketing campaign in internet with rich banner on online newspaper, music sites, … Not only Pepsi but also other giants like Nokia, Samsung, Kotex, Honda, … now switch to social media like a modern channel for communication.

PR usurps Advertising?

Advertising continuously keeps it leading position as the 1st choice of enterprises in communication. However, PR has been more focused on building & advertising products & brands. That doesn’t mean PR will usurp Advertising because both PR & Advertising are important to communication plan of enterprises. While PR is very effective in economic stable status, advertising could hit the revenues. However, the decision of going with PR or Advertising or allocating the budget is up to the nature of each enterprises. The PR activities is no longer limited in government relationship, communication but widening into internet, we call it PR online. That is the reason why Social media is booming in Vietnam with blog, social sites, … Every messages of enterprise can be spread to consumers within a second or by a click.

The tough time of recession is passing & the recovery will come. The marketing budget allocation should be optimized to help enterprises to recapture its share & position in an effective & due manner.