Taipei Times: Economists have warned that the protracted presidential election dispute may cause a decrease in domestic consumption and investment. Has the election dispute made consumers hesitant to shop? Would it be accurate to describe it as the same sort of impact as SARS had?
Christopher Fay: I don't have exact weekly statistics from our sister company, Zenith Optimedia, about media spending in Taiwan after what had happened in the past five to six weeks. But the election did slow down retail sales during the weekend of the election. Probably retail sales in the past four weeks or so have been slowed a bit.
PHOTO: CHIANG YING-YING, TAIPEI TIMES
But would it be accurate to describe it as a big problem like SARS? My answer is no. To me, it would be inaccurate to suggest that the situation here in Taiwan has slowed consumers' spending so much that started to look like SARS. While the entire nation and people are preoccupied with something, what's important is that there's nothing yet to suggest that interruption brought out by the election disputes is so prolonged and so deep to reach the level of SARS during the first half of 2003.
My general observation therefore is that there's nothing to suggest a dramatic shift in consumer behavior because of recent events. Before these events took place, there was ample evidence of growth in media spending here in Taiwan. So smart marketers are still planning on growth, so long as they are smart.
TT: How strong was the growth in media spending last year?
Fay: Before addressing the spending issue, I want you to know that Saatchi & Saatchi is an ideas company and we consider ourselves to be an ideas consultancy. Therefore our business model does not pay close attention on spending. We are more interested in using ideas to help them build their businesses.
But it's true that advertising spending in Taiwan last year increased from a year earlier. According to statistics provided by Zenith Optimedia, total media spending in Taiwan grew 23.9 percent to NT$65.64 million last year. Advertising spending on terrestrial television grew 8.6 percent last year from the previous year, while that on cable television also increased nicely, up 32.6 percent year-on-year. It is very healthy to see growth in all of the major categories including newspaper, magazine and radio, not just one. It is a sign that what happened last year was more than just post-SARS.
In addition, when you look at actual industry sectors -- computers, apparels, real estate, cigarette, leisure and furniture, among others -- last year, most of them also reported increases in advertising spending. It's not just a major industry leading the way.
These figures tell me that Tai-wan's consumer market is signaling to all the marketers that there's an opportunity, so long as you have innovation to offer that something consumers want. They will reply and they will respond. In 2004, we see continued growth in the media market.
TT: Was that strength in spending solid evidence that the industry will bounce back to pre-2000 levels?
Fay: The increase in spending doesn't mean that we're back to the golden days and everything is OK. But it does suggest everybody has to be more efficient in their pricing and more competitive.
I wouldn't say the resurgence in advertising sales market has returned to the good days of the past, but it indicates a sign of constant improvement and innovation, as well as people's investing in growth.
People see growth here but that growth is going to be controlled and comes out from increases in efficiencies and innovation. In the 1990s, a big source of that growth was emotionally-charged growth without a firm foundation. In this century, it will be a realistic growth, a reality-based growth, not a speculative growth.
TT: Has the nation's accession to the WTO created a more competitive environment here?
Fay: Competition is good and you could hardly find a place more competitive than Taiwan. From a consumer marketing standpoint, it's hard for me to see any dramatic problem and challenge that will blow [it for] Taiwan following WTO accession. Although a great chunk of the advertising business done here is Taiwan-based companies, another big chunk is done by international businesses. If you look at the top-10 advertisers in Taiwan, probably eight of them are foreign brands.
There hasn't been a dramatic hollowing-out and nothing that would inhibit my industry or the clients we tend to work with. That the business is so competitive here is because of the industry per se, not because of the WTO. Again, I don't feel a strong change because of the WTO.
TT: The government set up a national design center in February, aiming to help small and medium-sized companies enhance product design and marketing. Is the creation of such a design center the answer to developing a creative industry?
Fay: By setting up a design center, the government is starting a dialogue. It's a helpful and leadership stance to prompt a dialogue. I don't think we can manufacture innovation. It just doesn't happen that way. Everybody realizes that Taiwan needs to expand its field in the competition side. But it will be a huge mistake for any business leader in Taiwan to expect that something like the design center is going to be the answer.
To me, Taiwan will graduate to a more sophisticated level of manufacturing, brand marketing and consumer marketing anyway. Now that everybody thinks it is particularly important, that is going to accelerate things. Therefore, having the government involve itself by starting a dialogue in this way, it can only help.
TT: It appears that most Tai-wanese companies are aware of the importance of branding. What is your opinion on that?
Fay: Most companies have sensed the need for growth and realized that they must become brand-centric. But it is not to say that each of these companies is ready for the change. There are plenty of cases you can find that companies who were so prosperous in the past are less in a rush than anybody else now.
However, Taiwan has its advantage in the fact that so many of the white-collar workforce have international experience and international education, much, much more than other economies, particularly much, much more than other Asian economies.
TT: Does Taiwan need to import foreign talent in order to improve or realize its creative potential?
Fay: Absolutely not. Personally, I have a great respect for the creative capabilities of people here. Really, really -- they are quite strong.
Mixing things up is always good for the creative process. Having lots of points of view is exactly what any creativity needs -- whether you are making a poll or making an advertisement. So the path to a creative breakthrough is widening your skill as much as possible to get stimulated.
Asking me -- does Taiwan need people coming here from America, Europe, Hong Kong or other places in order to achieve its abilities? I will say no. Can Taiwan improve by having people coming from Bangkok and other places? Absolutely.
But is it a necessity -- and a necessary ingredient to get to the next stage? I don't think so, for the reasons I said before -- that you have so many people who studied overseas and lived overseas.
TT: But the fact is that local creativity is not recognized worldwide ...
Fay: It is a point of contention with me that creative capability in Taiwan is not widely known and respected. I have a great respect for all the work that's going out the door from all the advertising agencies in Taiwan. But the fact is that they are not getting noticed enough. I think it is because a lack of internationalism on the part of people outside Taiwan.
Actually, I lived in Japan for many years and I know that a lot of Japanese advertising doesn't get noticed, either. So there's a big blind spot when it comes to Asian creativity right now. Bangkok is a different story. It is now the creativity capital of Asia, and the biggest news in the world of advertising is Bangkok and Brazil.
To me, the advertisements done in Bangkok and Brazil are the same as they have always been. What's different is that people are noticing more of the work done there than before.
TT: Back to your profession. What's the reason for advertising? Is it different from what it used to be?
Fay: People used to think that the one and only purpose for advertising was to sell. But that doesn't make any sense. If you already bought a car, what's the point of advertising a Lexus automobile to you?
Just because you do a commercial does not mean everybody is going to say: That's it. I'm buying a new car right now. It doesn't work that way. There's a difference between advertising that says "please buy me" and advertising that says "Thank you for making you part of my life."
The advertising that is getting the most attention in the world these days tends to be advertising that says "thank you," that tends to be savvy and touch people -- whether they buy the product or not.
Advertising, after all, is a statement from the owner of the brand to its constituents, be they the brand's direct consumers or potential consumers. But to have advertising that is entertaining and also achieves its business goals, it is great and tells you something about the company.
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