With the new government of Nambariin Enkhbayar promising to connect
his country to the Internet, Mongolia's introduction of democracy and
economic reform towards market economy in the early 1990s have helped
build a working media infrastructure that aims at linking its 2.5
million citizens.
For marketers, however, the fact 50 per cent of Mongolians live on the
vast grass steppes and the Gobi desert continues to limit potential
returns.
Along with the advent of democracy in Mongolia has come the concept of
freedom of the press.
A number of newspapers, radio stations and television stations have been
founded, while several cable networks in Ulan Bator supply 25,000 cable
homes with satellite channels in a range of languages, including
Russian, Japanese, Chinese and English.
Today, even nomads in remote parts of the nation watch satellite TV
channels via portable satellite dishes, receivers and electricity
generators available at the Chinese border.
However, the growth in access to media has not been mirrored by similar
increases in the size of the consumer market.
To date, there are only 5,300 mobile phone and 4,500 Internet users in
Ulan Bator.
Shops are filled with a variety of products from Russia, Korea, English
speaking countries and Germany.
There are notably few Chinese goods, a result of the bad reputation
China has earned for supplying counterfeit products.
Strong ties to Germany dating back to the days Mongolia and former East
Germany were communist brothers help fill the shelves with German
products bought by Mongolians living in Germany and who, once in a
while, fill a container and send it back home.
Other products are brought in over the border from Russia by the
suitcase.
On the steppes, young men were all clad in bright coloured tank tops, as
a suitcase vendor had recently made his rounds.
The limited range of products and potential consumers naturally limits
the volume of advertising on the new media outlets that are serving the
people.
As there is no fierce competition for products, distributors have not
yet seen the necessity of big advertising budgets.
Advertisers, meanwhile, can still take their pick of choice media venues
at low rates.
A 30-second TVC at prime time costs about US$50, while newspaper
ads sell for between US$15 to US$60.
At just US$15 per spot, radio is still the cheapest medium
available.
According to a survey conducted by the Press Institute of Mongolia in
1998, advertising does affect buying habits.
The survey found that more than half of all respondents believed that
advertisements have a "significant" impact on people's daily lives,
while 53 per cent also said it affected their own purchasing
decisions.
Commercials were also seen as a time saver and method of helping
businesses save money.
At that time, the most popular commercials were for alcoholic beverages,
well ahead of health care and consumer products.
These findings are confirmed by David Reiner, manager of Mongolia Star
Melchers, which represents Johnson & Johnson and Mercedes Benz in
Mongolia.
"When we tell people how to use a product in the commercial this has a
big effect on sales. This works well for baby oil, but is more difficult
for women's hygiene products though," he said.
As the launch of new newspapers and TV stations increases media
competition in the short term, ad rates are not increasing.
"This is still very much an advertisers market," Mr. Reiner said.
"TV stations and newspapers come to us to offer discounts to get us to
advertise with them."
As may be expected in such a young market, when professional advertising
campaigns are conducted, the influence on sales is marked.
"When we advertised Johnson & Johnson Baby Oil, sales revenues increased
50 per cent the next month," he said.
An example of how smaller advertising budgets can take you a long way in
Mongolia is Konica Film, which has carved out a 70 per cent market share
in the photo film, camera and photo album market after five years of
marketing activities.
Konica is one of the pioneers of the Mongolian advertising market,
posting a series of "firsts", including the first outdoor 3D billboard
in Ulan Bator, the capital city.
"We wanted this market and we have successfully pushed out Kodak and
Fuji with our marketing campaign over the last five years," said
Singaporean Francis Lee, manager of Konica Film in Mongolia.
General distributor for Konica MIC Mongolia P/L has spearheaded
advertising development in Mongolia, and Konica signage is visible all
over Ulan Bator.
Konica concentrates on traditional advertising, including billboards,
trolley buses, newspapers and TV. It also sponsors special contests,
including a children's photo contest and the Ms Konica Beauty
pageant.
"You have to be first in business, like we are in many areas," said
chairman and CEO of MIC Mongolia P/L Battulga Khaltmaa, not only
Konica's local partner but also main shareholder of the Bayangol Hotel
and the country's main meat factory.
"We introduced the first billboard, the first disco, the first fitness
studio and the first discount card," he said.
"It's all about having new ideas; otherwise it's too late because others
follow suit."
While Konica is lining Ulan Bator's streets with large outdoor
advertisements, the billboards themselves are still produced outside the
country.
"We produce our billboards in China or Singapore," said Mr Lee, "as the
facilities are not good enough in Mongolia yet."
However, in a sign that poverty is still widespread in the country,
Konica has recently taken down a large billboard on the airport road
because "street" children were stealing the metal to sell, according to
Mr Lee.
With the gap between rich and poor widening, the newly-elected prime
minister has promised to address the serious issues resulting from
radical privatisation of state enterprises and an economic path mainly
dictated by the IMF, which has led to the closure of eight out of 10
newly-privatised companies.
But with growing interactivity with the outside world, Mongolia is
continuing to integrate into the international community.
For now, a small advertising budget will still go a long way to
achieving brand recognition with a growing consumer base and help build
the media to deliver it.
* Source: CMM Intelligence*.
