ANALYSIS: Advertising - Can agencies pull off ads targeting older consumers? Potentially lucrative drug category highlights skills gap

The prospect of a new advertising money-spinner emerging in Hong Kong - if a decades-old ban on pharmaceutical advertising is lifted - has been overshadowed by questions about local agencies' ability to handle the category's unique requirements. Indeed, if the Undesirable Medicinal Act ad ban is removed, agencies will need to quickly develop specialist category experience for the raft of product offerings - from medication for fungal diseases to STDs, baldness and dermatology - which will be allowed to advertise. And much of it is likely to be educational in nature. While there is some dispute over the category's potential spending power, estimates that first year spend could top HK$400 million (US$51 million) demonstrates the sheer scale of the challenge awaiting agencies. Grey Healthcare managing director Candy Wan expects the average client budget of $5 million will rise considerably. But higher investments will mean greater pressure to excel. DraftWorldwide regional director Greg Paull said client Merck Sharp and Dohme spent US$94 million on advertising for Propecia, a product to treat male pattern hair loss, and achieved sales of $98 million last year. "This is an investment into creating a lifetime of valuable customers. In the pharmaceutical category, some products require significantly more investment, given their lifetime of usage." But having spent the last few years honing their skills to the younger, trendier telecommunications and technology markets, are Hong Kong agencies equipped with the know-how and understanding to service this specialised sector and its generally older target audience? Market Catalyst's Conrad Chiu says that Hong Kong is still a market with a traditional FMCG culture. "The lack of expertise is not just limited to healthcare. Hong Kong has been moving towards the service economy, which requires new knowledge." However, Ian Thubron, chief executive of M&C Saatchi Hong Kong and China, argues that with the "proper tools, even men can write tampon ads". The real challenge for agencies, he says, will involve understanding the problems and needs of the target audience. Using research properly, understanding consumers, developing key insights will all be highly relevant. Hong Kong is increasingly a churn-it-out-without-too-much-thought marketplace, and that's not going to help develop insightful and compelling campaigns for this new category." At Grey, staff receive training on-the-job, but Wan cautions that agencies will need to sharpen their skills to deal with this specific category. "Agencies tend to treat OTC products like FMCG. They focus on the brand image and build trust," says Wan. "With pharmaceutical clients, you need special training and a medical perspective. The department of health has no understanding of advertising, and right now agencies are good at producing ads for consumers, but they lack a medical perspective. You need someone who really understands both sides of the issue." But the biggest concern facing the industry is one of ethics. In a city where there is effectively no regulation against misleading or false claims in advertising, the Consumer Council found 84 per cent of advertising for medication, health food and therapies last year came with questionable claims. "Ethics is something the agencies will have to learn quickly. With FMCG, you're selling a dream, not the product. With pharmaceutical products you cannot make claims that are not proven through clinical studies," says Wan. Motiv8 managing director, Chris Fjelddahl, says the issue is endemic in Hong Kong. "Most agencies will communicate questionable benefits and not rely on real facts. A lot of advertising here is using unfounded and uncheckable claims," he says. "I have yet to see a single property ad which accurately states how many usable square feet of real estate you're actually buying. So, with medical products, I don't think many agencies are equipped with the right business ethics to stick to the real benefits of a product." Ultimately, the lifting of the ban will provide an opportunity for agencies to expand their knowledge base as Hong Kong becomes more of a service economy. Says Chiu: "The challenge for management now will be to take this opportunity and use it to improve staff knowledge, which in turn will become an asset for the company."

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