`Value' is the message
Taipei Times: Given the economic slowdown, how can advertising spending help corporations boost revenue?
Ann Yang (
TT: Does entry to WTO and increasing global competition mean Taiwan-based companies need to spend more on branding?
Yang: We can expect that more products from different parts of the world will be available in the marketplace after entry to WTO. This means competition will be intensified whereas products become more homogeneous. What should marketers do? Building a strong brand to differentiate oneself from the competition.
TT: When did your client's advertising spending begin to slow last year and what quarter was the toughest financially?
Yang: Several clients cut advertising budgets in order to achieve their annual profit/loss goals in the second half of last year. The fourth quarter was the toughest financially for our agency.
TT: In terms of advertising spending, what clients or commercial sectors have been hit hardest by the recession in Taiwan?
Yang: Amongst our clients, travel and Internet-related businesses were the most severely hit by the recession.
TT: What did the Sept. 11 terrorist attacks do to ad spending in the third quarter last year?
Yang: The 9-11 event was just like sprinkling salt on the wounds of the sluggish economy. Most advertisers became even more conservative after 9-11. Airlines and tourist industry were the most directly hurt by the event.
TT: Since the beginning of the year, has your company begun to see any signs that advertising spending is on the rise?
Yang: We have not seen numbers picking up. However some of our clients have changed their attitude towards advertising from "spending" to "investment." If clients hold this attitude, I am sure they will not trade off their advertising budget for other expenses.
TT: What is the outlook for Taiwan's advertising sector in 2002?
Yang: While the sector as a whole will begin to recover this year, it may not bounce back to pre-2000 levels.
Visualize the `beauty'
Taipei Times: Given the economic slowdown, how can advertising spending help corporations boost revenue?
Steve Kuo (
TT: Does entry to WTO and increasing global competition mean Taiwan-based companies need to spend more on branding?
Kuo: The brand is the soul of any product, especially when competition is tough and homogeneity is high.
After entry to WTO, Taiwan-based companies will be competing in a bigger, tougher arena, so therefore, a well-communicated brand is always the preferred brand.
However, great branding is always established by consistent and creative communications that are product-oriented, just like "Absolute Vodka" or the "VW Beetle" -- you don't have to talk about some vague company philosophy that is obscure to the consumer, instead, you hammer your brand into the consumer's mind with nicely executed product communications in a consistent tone and manner.
TT: When did your client's advertising spending begin to slow last year and what quarter was the toughest financially?
Kuo: Those clients who anticipated an economic slowdown in 2001 started to streamline their spending from the very beginning of that year. But some clients strengthened their ad investments in the third and fourth quarters to maintain sales. In general, the third quarter was the toughest financially.
TT: In terms of advertising spending, what clients or commercial sectors have been hit hardest by the recession in Taiwan?
Kuo: In our case it was confectioners that were hit the hardest by the recession in Taiwan.
TT: What did the Sept. 11 terrorist attacks do to ad spending in the third quarter last year?
Kuo: We saw no significant decrease after 9-11, and on the contrary, ad spending in the banking sector showed moderate growth. Another interesting observation was that some premium and designer brands saw significant sales growth as they offered discounts up to 50 percent for the first time ever. By so doing they not only effectively encouraged loyal customers to consume more, they also attracted peripheral users to purchase.
TT: Since the beginning of the year has your company begun to see any signs that advertising spending is on the rise?
Kuo: Existing clients have tended to be conservative in 2002, thus there are no significant indicators that the well-established brands are investing more this year. However, we found lots of products and brands that are new to Taiwan are entering this market aggressively. And most of these new product launches are scheduled for the third and fourth quarters, where significant growth in ad spending can be expected.
TT: What is your outlook for Taiwan's advertising sector in 2002?
Kuo: A mini recovery in total ad spending might be foreseeable. With DYR Taiwan being approached since the beginning of 2002 by lots of products and brands that have never done ads before, I am quite positive on the recovery of the economy as well as the ad sector.
Don't ignore brand equity
Taipei Times: Given the economic slowdown, how can advertising spending help corporations boost revenue?
Steve Lin (
TT: Does entry to WTO and increasing domestic and global competition mean Taiwan-based companies need to spend more on branding?
Lin: In general, yes. As competition and product/technology parity increase, the real differentiator between brands relies heavily on "branding" not on the product.
TT: When did corporate advertisement spending begin to slow last year and what quarter was the toughest financially?
Lin: Signs of a slowdown in ad spending began in the first quarter of last year, and the third and fourth quarters were the worst.
TT: In terms of advertising spending, what clients or commercial sectors have been hit hardest by the recession in Taiwan?
Lin: Durable goods, luxury goods and automobiles -- those have seen the greatest slowdown in spending.
TT: What did the Sept. 11 terrorist attacks do to ad spending in the third quarter of last year?
Lin: Clients in the durable goods and luxury product sectors were affected by the 9-11 attacks the most, and therefore we saw a drop in ad spending.
TT: Since the beginning of the year has your company begun to see any signs that corporate advertising is on the rise?
Lin: Yes, spending is slowly picking up a bit in the first quarter.
TT: What is your outlook for Taiwan's advertising sector in 2002?
Lin: The industry will enjoy 5 percent to 8 percent growth over last year.
Get an accurate insight
Taipei Times: Given the economic slowdown, how can advertising spending help corporation boost revenue?
Yeh Min-guay (
TT: Does entry to WTO and increasing domestic and global competition mean Taiwan-based companies need to spend more on branding?
Yeh: Local brands have their own personality and won't need to spend a lot on advertising/mass communications. But some "me-too" local brands -- trying to compete with imported products -- will reduce prices instead of increasing adverting/communication spending.
TT: When did your client's advertising spending begin to slow last year and what quarter was the toughest financially?
Yeh: The third quarter is usually a tough season since clients are not completely sure whether it's too early to save on advertising costs. On the other hand, they also consider this stage as perhaps a very important time after the prior two quarters efforts have accumulated. The clear financial figures of the fourth quarter are the main factor in determining whether the annual goal has been achieved or not, so any cost-cutting action should be taken to move some advertising costs over to targets that need them.
TT: In terms of advertising spending, what clients or commercial sectors have been hit hardest by the recession in Taiwan?
Yeh: Products selling social image or status were the most affected by the recession, followed by products selling self-image and self-rewards. Products featuring basic necessities were not affected by the recession.
TT: What did the Sept. 11 terrorist attacks do to ad spending in the third quarter last year?
Yeh: For the past three years, September and October numbers have been usually low. We also learned that the numbers for these two months were below average for the year.
The impact of the 9-11 terrorist attacks in Taiwan has been limited specifically to tourism, airlines and IT industries, as well as other companies highly dependent on American markets. Compared to consumer product suppliers and channel distributors -- that depend more on local consumers -- these companies are less influential in the Taiwanese advertising industry. In addition to the 9-11 terrorist attacks, about the same time there were other events last year that may have contributed to the slow advertising market. They was the domestic recession, the typhoon-triggered floods in Taipei and the December elections.
TT: Since the beginning of the year has your company begun to see any signs that corporate advertising is on the rise?
Yeh: In order to lower risk and increase security, clients always hold their budgets until mid-year, depending on the overall financial situation, including the achievements of sales, internal cost structures, and then decide whether to spend more on advertising/communications. More and more clients treat advertising/communications as "spending" rather than "investment" behavior. Therefore, it is possible to foresee that financial forecasts may be inaccurate or different than had been predicted.
TT: What is your outlook for the Taiwan advertising sector in 2002?
Yeh: Some clients see this year as being more miserable than last year, while others are quite optimistic. Therefore things look a lot like last year.
Slowdown an opportunity
Taipei Times: Given the economic slowdown, how can advertising spending help corporations boost revenue?
Eliot Lin (
Interestingly, in times of economic slowdown, the gut reaction in the industry is to reduce ad spending, while in actuality the environment is more favorable due to reduced competition, less ad clutter and better media buying conditions. With an adequate ad budget, advertisers could actually reinforce their SOV -- share of voice, or the percentage your advertising message that is heard verses the competition -- and gain brand awareness points over them.
TT: Does entry to WTO, and increasing domestic and global competition mean Taiwan-based companies need to spend more on branding?
Lin: WTO entry is bound to quickly bring in lots of new competition. To retain their market share, Taiwan-based companies will undoubtedly need to focus and, ideally, increase marketing budgets to maintain healthy brand awareness and preference.
TT: When did your client's advertising spending begin to slow last year and what quarter was the toughest financially?
Lin: Starting in early 2001, most clients took a more conservative approach in their ad spending, clearly feeling the pinch from the recession hitting the island. The tragic terrorist attacks on Sept. 11 further injected a sense of uncertainty amongst all clients. Consumers spending was also reduced, adding to the difficulties.
TT: In terms of advertising spending, what clients or commercial sectors have been hit hardest by the recession in Taiwan?
Lin: All sectors have clearly suffered, but real-estate and fast-moving consumer goods have been the most visible casualties on the island.
TT: What did the Sept. 11 terrorist attacks do to ad spending in the third quarter last year?
Lin: The attacks and the ensuing war on terrorism further heightened the sense of doubt and uncertainty amongst clients. But obviously, the travel-related industry suffered the most with airlines and hotels immediately experiencing a dramatic drop in business volume that put a hold on all communication projects for some time.
TT: Since the beginning of the year has your company begun to see any signs that advertising spending is on the rise?
Lin: Advertisers remain very cautious and will maintain their current wait-and-see attitude. There are however signs that confidence levels are starting to build, and advertisers are currently weighting the pros and cons of returning to a more aggressive strategy in 2002.
TT: What is your outlook for the Taiwan advertising sector in 2002?
Lin: The sector will hopefully bounce back in the third quarter of 2002 as the US economy picks up. However, it won't be a full recovery. Ad agencies and advertisers will still be licking their wounds for some time to come.
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