Cautious optimism is the byword among marketers in 2003 after the much-touted economic recovery failed to materialise last year.
Despite the threat of war hanging overhead, the majority of respondents said they believed their business would improve this year - but only from the second quarter on.
"We see a tough first quarter, maybe first half, because everyone is anticipating a war (in Iraq) soon," says Mahesh Madhavan, managing director of Caldbeck MacGregor in Thailand. "But if there's no war, and the GDP continues to pick up, it will certainly be better than last year." Marketers in Thailand are entering 2003 balancing an impressive five per cent GDP growth for 2002 despite last year's dismal global economy.
The poll, conducted by Synovate, and commissioned by Media achieved close to a 10 per cent response rate, with 121 marketers responding to the email survey.
The level of optimism varied from market to market. Fewer respondents were confident of an uptick in Singapore. Heavily dependent on exports to Europe and the US, the city state narrowly missed a double-dip recession last year. But the general consensus is that things cannot get any worse than 2002. "Our expectations are for a modest recovery in Singapore, but we are not taking anything for granted," says Marianne Thomson, corporate director of brand management at Pan Pacific Hotels & Resorts. "We saw some improvement in the fourth quarter of 2002 as conference organisers moved away from countries seen to be more risky (to terrorist attacks) and moved their conferences and events here, which benefited Singapore because it is perceived to be a safe place."
Thomson adds that the Singapore Government has also implemented measures to hasten the recovery. The Government recently announced a raft of measures including steady cuts in the corporate and top income tax rates to 24.6 and 26 per cent, respectively, by 2005.
On the spending front, there's better news for agencies - 30 per cent of respondents said they plan to increase their marketing budget for 2003, while 42 per cent say they would stick to last year's levels.
Caldbeck plans to increase overall marketing spend by 10 per cent to 20 per cent "to build up the long-term health of our brands", says Madhavan.
Its portfolio includes Bacardi, Bombay Sapphire and Whytehall.
Coca-Cola Hong Kong also plans to increase its overall marketing budget to "back up the aggressive marketing campaign for various brands", says Elsie Tsui, external affairs manager, Coca-Cola China. "We expect 2003 to be a vibrant year, especially in the Hong Kong market. We have planned several aggressive launches and marketing activities including a new graphic campaign for Coca-Cola, line-extension of key brands and a new brand launch."
S.K. Wong, senior vice-president of group marketing at KFC Holdings, the parent company for KFC and Pizza Hut in Singapore and Malaysia, says the company plans to up marketing spend in anticipation that overall market sentiment will rise this year. "We have a legal obligation to our franchisees to spend a certain percentage of turnover on marketing. By virtue of the fact that we always add new stores each year means that total turnover increases so there are more marketing dollars."
With KFC, the company plans to continue to devote the bulk of its Singapore marketing budget to television and print advertising and is unlikely to make any significant investments into new media. "We know the web is an area where people are watching and we are open to the idea, but have no plans to do it at this stage," says Wong.
Internet marketing, however, appears to be a major sector that some marketers are looking to improve. According to the poll, 35 per cent of respondents rate the internet as "very important" in their marketing campaigns.
At Coca-Cola, the company has found the internet to be a vital part of its marketing strategy. In 2002, it was extensively used as a medium to reach target consumers like the 'R U Up for a Date' campaign for Coke Light, the Qoo website, which has registered over 1.2 million visitors and over 120,000 club members, the Bonaqua website and the Coca-Cola 'Yesssss Summer' campaign. "Moving to 2003, the internet will continue to play a strong role as an interactive and innovative medium to communicate with consumers," says Tsui. "It will be used whenever it fits into our overall brand strategy."
Other forms of direct spending are also in the pipeline for several marketers.
Thailand's travel industry reservation system, Amadeus, will be moving beyond traditional media to include more direct and BTL activities, according to Chang Mei Hwa, regional marketing and communications manager. "This will get us directly in touch with our customers." While marketing budgets have not yet been finalised, they are unlikely to be below last year's figures, she adds. The company's solid performance in 2002 is likely to be echoed this year as regional governments look to revive their tourism industries.
In the telecoms sector, Thailand TA Orange plans to maintain budgets at last year's 1.5 billion baht (US$34.8 million), but will revamp the way it spends the money. Corporate affairs manager Duke Theerathada says that advertising in 2003 will be more targeted, with direct marketing playing a "very important part".
Singapore's Pan Pacific also plans to invest more below-the-line. "There will be a lot of behind the scenes and systems development work done in the first quarter," says Thomson. "We plan to make a lot of investments in CRM and go back to basics like running programmes to help us better understand our customers' needs and to generate more business from existing customers."
Another marketer focused firmly on below-the-line marketing activities is Charlotte Goh, marketing manager at Singapore's ACP Asia, a magazine publisher. She is wary about investing too heavily in the internet but is a strong advocate of SMS marketing.
In terms of agency satisfaction, the poll found only about one-third of respondents were satisfied with their creative agency's performance.
Creative skills and strategic strength are listed as the two most important qualities marketers are looking for. Caldbeck's Madhavan says that he expects its current ad agency, Ogilvy & Mather, to have to work harder for its advertising dollar. "Because of increased competition, a brand needs to be clearly differentiated, and this has a lot do with advertising," says Madhavan. "And irrespective of the fact that we have done well this year, there will be pressure for them to perform, and perform better than in the past."
Says Tsui of Coca-Cola: "We treat our creative and media agencies as very important business partners. It is crucial that the agencies are able to translate their strategic thinking into groundbreaking creative ideas with excellent market execution. For 2003, we would like to see the further deployment of creative ideas in both content and media use to help reach our consumers."
According to the poll, 31 per cent of marketers say they are considering an ad agency review in the near future, and of that group, 63 per cent say they will review both their creative and media agencies.
- Additional reporting by Leithen Francis and Sangeeta Mulchand.