Dentsu Thailand stresses fundamentals as ad spending slides
As the media landscape and regulations change, advertising agencies need to focus more on fundamental approaches to help brands effectively communicate their messages to consumers, says Dentsu Thailand, an affiliate of the Japan-based ad firm.
Chief executive Narong Tresuchon said flooding online media with ad spending does not target every niche of consumers and brands should not rely too much on digital media.
“We know Facebook is considered the most powerful tool for business, but getting millions of views on that platform is not the key to success for everyone,” Mr Narong said.
“Fundamental approaches need to be reconsidered to meet consumer needs.”
He said advertising agencies should be more open-minded and flexible when dealing with clients and media platforms to get through the advertising slowdown witnessed in the past 2-3 years.
Media Intelligence media director Pawat Ruangdejworachai forecasts that total advertising spending in Thailand will drop by 13% this year, the worst performance in 10 years, as the economic slowdown is still taking a heavy toll on the domestic media industry.
Total media spending is estimated at around 87 billion — the worst since 2010.
Mr Pawat said the media industry will slow down again during the royal cremation in October, as advertisements will be curtailed during that time.
But he noted the situation is likely to change after October, as many events are being planned for the holiday season.
Mr Pawat forecasts media spending after October to fetch 9 billion baht against an estimated 7.5 billion baht in the third quarter.
According to Nielsen Thailand, ad spending across all media outlets fell by 8.4% in the first eight months to 70.4 billion baht, as companies shifted their ad budgets to cheaper and more specific online media.
The biggest drop in ad spending was experienced by the magazine sector, falling 36.4% to 1.25 billion baht for the period, followed by newspapers, which saw a 21.1% slide to 5.2 billion baht.
Radio, meanwhile, registered a drop of 18.3% to 2.98 billion baht.
By contrast, growing media spending was registered via in-store channels, where ad spending shot up by 37.6% to 651 million baht, followed by public transport spending, which climbed 18.3% to 4.03 billion baht.
Media spending in cinemas, meanwhile, increased 24.1% to 4.63 billion baht.
Mr Narong said the advertising agency industry is much like the music industry, as big players have transformed themselves and switched to new product offerings to keep up with changing trends among young people.
He cited RS Plc and GMM Grammy, which have turned their music content into drama series, as an example of the trend.
Mr Narong said the advertising industry is being continually disrupted by Facebook and Google, as those two global platforms can approach consumers directly.
He said technology is the main factor disrupting the advertising industry and will ultimately put weaker companies out of business.
Mr Narong said people’s behaviour has drastically changed, while many agencies believe that marketing via Facebook is enough to stay afloat, a perception he rejects because of the high fragmentation of users on that platform.
“The main role of advertising agencies is to help brands sell products, so looking back and building a strong foundation before executing [a campaign] via media platforms is very important,” Mr Narong said.
In a related development, Dentsu is introducing the Communication Design Centre (CDC), a marketing strategy team intended to streamline the advertising process for its clients, to the Thai market.
Mr Narong said CDC is nothing new, as Dentsu Inc Japan has been using the marketing strategy for more than 10 years and has achieved success with it.
He said introducing CDC in the kingdom will help elevate Dentsu Media Thailand’s potential, as well as that of the Dentsu Agis Network.
“I believe that CDC will be a successful business model and an effective revenue driver for Dentsu Media Thailand,” Mr Narong said.