The digital marketing sector, it would appear, has never looked as promising. That is, judging by the investments network agencies claim to be making into interactive services this year.
Buoyed by the optimism sweeping interactive agencies in Europe and the US, where online spend has doubled year-on-year and is growing twice as fast as cable TV and three times faster than any other medium, agency networks are slowly re-evaluating digital strategies ahead of a projected boom in interactive marketing in 2005.
Indeed, the region's agencies - often accused of paying lip service to digital marketing and simply tagging on interactive names to please clients, while in reality outsourcing work to smaller shops - are starting to invest in senior talent and new technology in the race to have a well-rounded offer in place.
Leo Burnett, which decided earlier this year to bring its below-the-line services under the Arc umbrella, says it is plowing dollars into online services and is working towards strengthening collaboration between offices.
Mark Renshaw, managing director of Galaleo Singapore (a division of Arc), says the agency is taking on senior talent and is developing more applications, from content management systems to viral marketing capabilities.
Rival interactive agency XM, whose clients include Nokia and Hewlett-Packard, is strengthening its analytic and customer insights practice to provide clients with a more holistic array of services under one roof, according to Ken Mandel, CEO at the agency. He adds that XM has been eyeing the development of interactive TV and will "undoubtedly be providing capabilities when the critical mass is there to justify further investment". It is also pushing ahead with CPA online media services, which can include search engine marketing, search engine optimisation and targeted banner buys.
Media agency Carat, meanwhile, is on a spending spree and plans to buy into five digital agencies by year-end ahead of a projected revival in the interactive scene, while Proximity expanded into the Malaysian and Japanese markets following a tie-up with sister Omnicom agency I&S BBDO to launch NYX Proximity.
So are clients finally rediscovering digital marketing and raising online budgets?
"We certainly had more retainers in 1999 and 2000 and we are seeing slow improvement but there is still a lot of short-termism in the region," explains Mandel. "This is counter-intuitive given the shortage of good interactive/internet skill-sets (in the industry); one would think clients would want to make a stronger commitment to securing them (agencies) on a longer-term basis."
Wunderman - which recently appointed Thomas Meyer as regional head of mobile marketing following demand from clients for sophisticated interactive mobile campaigns in Japan and Southeast Asia - has handled the online business of Motorola for over a year, according to Mike Langton, president Asia-Pacific at Wunderman. He says the agency's other clients, such as Microsoft, naturally see interactive as a key platform to connect with consumers.
But look beyond the tech-based brands and rampant short-termism persists, creating a buyers market for interactive resources. More worrying are client budgets, which appear to have been frozen, despite an economic revival, with only the more experimental allocating about 10 per cent of their marketing budget online.
The good news is that while clients remain reluctant to raise digital advertising budgets, agencies agree that most marketers have become more sophisticated in their approach to online and mobile marketing. Take Volkswagen, which has committed to a long-term CRM programme that allows it to address customers and the trade across various cities in China, says Theresa Franklin, executive director Asia-Pacific, relationship marketing, Grey Global Group.
Meanwhile, Mandel notes: "Previously, we were required to integrate with ATL (above-the-line) when providing concepts. The idea of integration has become much more conceptual in nature and not a direct 'look and feel' translation of ATL."
While in some cases this is giving way to the online medium taking the lead in ideas or a more strategic role in campaigns, for the most part, agencies continue to create "basic" online campaigns for both local and international clients. Kent Wertime, president at OgilvyOne Asia-Pacific, explains: "Those campaigns mainly include banner advertising, e-DM and mini-sites or landing pages. The demand for viral campaigns is still high to support campaigns on a low budget. SMS is used as an additional channel at a few promotional campaigns."
Interestingly, Wertime says that while media spend was the key concern for clients in recent years, the last 12 months have seen brands like Levi's increase awareness to "do something cool" with the online medium.
"This means that production budgets for photo or video shoots increased and clients now demand a more sophisticated user experience," he adds.
And, whether clients opt for regional or local campaigns is largely influenced by the marketer's ability to influence or control regional budgets, not necessarily an indication of their confidence in the medium. Most multinational brands appear to prefer a regional campaign, which is appropriately localised and prevents marketers from having to "reinvent the wheel" in every country.
"Also, the results of employing small web shops in each market results in a total meltdown of your brand guidelines and key campaign learnings," says Mandel.
Rob Hughes, regional director at Group M's mOne, says the key to the digital industry's future survival will be anticipating clients' evolving needs and marrying those to developments in the channels. He also anticipates a face-off between agencies and portals as the latter gain loyalty from audiences.
But as the region's network agencies reevaluate their interactive offerings history, at least in Asia, threatens to repeat itself. "As parent companies and agency heads slowly wake up to the fact that they are about to miss the internet boat, yet again we can look forward to a reactive flurry of activity in the industry in 2005," warns Mandel. "It will be the usual round of hurried announcements: boasting key staff appointments, mergers, acquisitions or a newfound commitment to the digital services part of their business. Some of the announcements will be strategic moves but most will once again be painfully reactive to a medium that is still not understood. It will be deja-vu for some as the fear comes back."
ONE-TO-ONE CAMPAIGNS THAT HIT THE MARK: the region's marketers are getting more sophisticated with interactive campaigns to reach consumers
THE ECONOMIST
The Economist, with the help of OgilvyOne and Red Card, 'Bluejacked' people at major events across the region, in keeping with its trademark irreverent advertising style.
A media first globally, The Economist used Bluetooth technology to send witty one-line messages to unsuspecting people with Bluetooth-enabled mobile phones.
The mobile phone 'high jacking' was used to carry the message 'Caffeine-free stimulant' immediately followed by The Economist's logo, and was sent to people as they were getting their morning coffee before an event.
According to OgilvyOne's Kent Wertime, phones must be fitted with Bluetooth and within a range of 10 metres to accept messages sent to them.
YTL HOTELS & PROPERTIES
YTL wanted to build on its viral marketing and database acquisition campaign 'Paradise in Malaysia', developed by Web Guru Asia, to generate bookings at its luxury resorts, all this at a time when Sars hit the travel industry hard. The company used the 'Kiasu Holiday' concept to kick off a four-month email campaign. At the end of the campaign, it received bookings for several hundred rooms for its luxury resorts, and 97 per cent of Malaysian participants asked to be informed by email of future promotions.
INDIAN DEPARTMENT OF TOURISM
The Indian Department of Tourism took its 'Incredible India' brand campaign to the internet in a bid to reach travellers across multiple markets.
Group M's mOne was tasked with ensuring that web users interacted with the Incredible India brand via the incredibleindia.org website.
While it would have been impossible for the client to measure the campaign impact in terms of driving travellers to India, the agency measured impact by tracking number of pages viewed and web surfer's behaviour. It also identified prospective travellers through database development.
HAAGEN-DAZS
During the week before Valentine's Day, 21 Communications distributed a discount coupon to 200,000 opt-in email users in five cities in China.
Users who participated in the discount campaign were also invited to subscribe to an e-newsletter by leaving contact information on the campaign's mini-site.
The permission-based email campaign registered a high 25 per cent open rate, largely because the offer was sent only to email users who specifically requested to receive value-added offers from major brands. The campaign saw added success because many customers forwarded the email to their friends, generating additional foot traffic.
HEWLETT-PACKARD
Hewlett-Packard was launching a number of digital cameras and, to create buzz around the digital photography category, worked with XM and 141 to devise an integrated strategy to launch the 'new' category.
A through-the-line campaign, from field marketing to POS and four supporting campaign websites, ran under the tagline 'One shot. One print. You make it real'.
Websites focusing on a different areas, family, travel, young people and everyday life, were launched. The sites offered step-by-step guides to taking photos and helped consumers get creative and presented digital photography from the point of view of 'evangelists', giving tips for taking and printing photos from a personal point of view.
PEPSI
In Australia, where consumer promotions via SMS and the web have increased significantly, Pepsi launched an iPod competition with Communicator Interactive Marketing.
The promotion, which gave away an iPod each hour, was one of the most successful consumer promotions to run in Australia in terms of redemption rates.
Consumers purchased a Pepsi and sent an SMS with a unique code found on the inside of the label. All valid entries went into the hourly draw to win an iPod. The automated draw took place for one week and received more than 550,000 entries and achieved a 15 per cent redemption rate compared to the standard two to three per cent.
CLEARASIL
In a bid to reach the Japanese youth, Boots Health Care Japan's Clearasil brand and Grey Global Group created a 'homepage' for mobile phone users.
The homepage featured product information, a love clinic, fortune-telling and other services, as well as a contest targeted at the 13 to 17-year-old segment.
The online media presented Clearasil as a brand that understands teens, supports their lilfestyle and provides valuable advice. The campaign also acquired a database, promoted trial of the product and generated word of mouth.
LAND ROVER
Land Rover is gearing up to launch its new Discovery 3 in early 2005, but it first needed to clear outstanding stock of the current Discovery model in China. But prospects were hesitant to buy because of a pending revision for import car purchases. While rivals slashed prices, as a premium brand, Land Rover could not risk hurting its image with a desperate, price-cutting strategy.
The brand charged Young & Rubicam with defining and tapping into a sub-culture in China, in the same way Harley-Davidson had done in the US.
The agency created a visual experience as seen by a typical driver through a Land Rover windscreen. Within the first two weeks of using the web, email and print ads, the campaign netted traffic of 220 visitors. This translated to a marked increase in walk-in traffic to the showrooms and drove sales.
MAKING A PLAY FOR ONLINE GAMING
Advertisers in the US are starting to take a serious interest in video and computer games.
Although brand owners have been exploiting the opportunities of in-game advertising and product placement for several years, the emergence in recent years of dedicated gaming divisions within advertising and media agencies, in tandem with a developing system from ACNielsen to measure ad exposure in games, shows that this medium is fast growing up as a channel for advertising.
One network, Starcom, is testing out the potential of the Asian market, opening an outpost of its specialist gaming unit, Play, in Hong Kong earlier this year. "There's no question that Asia - Hong Kong, South Korea, Taiwan and Japan especially - is one of the hotbeds of gaming," argues Play's VP, P J MacGregor. "It's been a thriving part of the popular culture for decades and with recent pushes by the console manufacturers and software publishers we expect the market to flourish."
Videogames, which now turn over more money than Hollywood, offer marketers access to the key male youth demographic in an environment where the gamers are far more engaged than the mainstream media which the same young men have been deserting in droves. However, as the industry gathers pace it is attracting both sexes and different age groups.
Despite the long history of gaming in Asia advertiser interest remains way below that in the US, with Media enquiries unable to locate other specialist marketing operations catering for this segment in the key gaming centres of Korea and Japan.
- Mike Savage.