Six months later, it appears that even the world's fastest-growing and most buoyant marketing sector is not immune any more. What's more, in a recent study we've just completed with 50 top marketers in China and the rest of Asia, the immediate impact is likely to be quite significant.
Our research was conducted via face-to-face, telephone and online interviews with more than 50 marketers, covering 100 of Asia's top 500 brands and more than $3 billion in marketing spend. The group included multinational and local companies in China, Korea, Taiwan, Hong Kong, Singapore, Thailand, India and Malaysia.
Despite the diverse country mix, results were quite consistent between developed and developing markets. China performed marginally better, but not enough to make it a safe haven for investment in 2009.
The fieldwork was initially completed in September 2008 and showed an optimistic view for the coming year, with 62% of marketers initially forecasting higher budgets. Among China-based companies, more than 70% saw increases. But all that has changed now.
The same base of companies was re-contacted just this week to measure changes. This time, 21% of respondents forecast a reduction of more than 20% from their initial budgets, and 73% saw reductions of more than 10%.
This is a gloomy outlook for the region for the coming year. Just 6% of respondents forecast an increase in spend for the next twelve months. And 55% are now actively reducing their overall spend, with the rest currently maintaining 2008 levels.
In China, the numbers are only slightly better--18% of marketers are forecasting an increase, with 42% forecasting a drop in budgets. This group includes some of our own clients, such as Yili, a dairy that has been hammered by the milk crisis and PC maker Lenovo, following on from an Olympic year where business and consumer confidence has shrunk dramatically in the last thirty days.
Predicting the future has never been more challenging. Among these same marketers, 54% also told us their 2008 budgets declined off their original forecasts, making the annual planning process fraught with danger.
In China, despite a massive pre-Olympic rush from sponsors and other companies such as Nike, Li Ning and Pepsi, we've come to grips with the post-Game lull, coupled with a stock market that has fallen more than 60% year-on-year--one of the world's worst declines.
The future is direct
This study also identified a shift in the region from traditional advertising to digital, direct marketing and activation. More than 40% of respondents now spend more money in these areas than in paid advertising, quite a significant increase from our past research in this area. The successful marketer will be one focused more on engagement, and less on just awareness and trial.
One of Coca-Cola's great successes from the Olympics was not only the event itself, but the way it leveraged and activated the torch sponsorship within China – something of a masterclass for the ages. Online submissions were in the millions to earn the right to carry the torch, linked with even more votes and visits from friends and families to support these contenders.
During the days of the relay itself, Coke worked closely with its bottling network to individually sample more than 100 million Chinese consumers with a bottle at just the right temperature in their home town, as the torch ran on ahead of this activity.
Finally, Coke built strong association through local concerts in over 100 cities when the relay ended each night—and with less than 20% of the funds to drive this initiative were spent on traditional or major media. In our Olympic tracking research, Coke emerged as a clear leader, with over half of all respondents mentioning the company by name.
The message from these marketers is clear--doing more with less, traditionally a new model for China's marketers and agencies--is going to be the mantra for the next twelve months at least. Only the practical will survive.
Greg Paull is a Beijing-based principal and founder of R3 (www.rthree.com) an Asian-based consultancy helping marketers improve their efficiency and effectiveness.
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