Times are tough, but no one would have guessed that Taiwan’s two largest FMCGs - Procter & Gamble and Unilever - would lead the pack in slashing budgets.
Unilever halved its adspend in 2004 to NT$867 million (US$26.7 million) from $1.6 billion the year before, cutting it again in 2005 ($680 million) and in 2006 ($577 million), according to data from Rainmaker-XKM International. P&G followed suit a year later, reducing its adspend from a peak of $2.1 billion in 2004 to $884 million in 2006. Unilever and P&G, now number two and number five respectively, kept budgets at those lows last year.
Unilever halved its adspend in 2004 to NT$867 million (US$26.7 million) from $1.6 billion the year before, cutting it again in 2005 ($680 million) and in 2006 ($577 million), according to data from Rainmaker-XKM International. P&G followed suit a year later, reducing its adspend from a peak of $2.1 billion in 2004 to $884 million in 2006. Unilever and P&G, now number two and number five respectively, kept budgets at those lows last year.
Barbara Liang, senior manager of external relations P&G Greater China, explains: “The Taiwan market is mature and highly competitive, particularly in the consumer product sector. Advertising investment is still important to us.
“However, we also put our resources in merchandising, promotion, and the internet to seek the best synergy.
“At the same time, we are operating on a Greater China basis, which covers China, Hong Kong and Taiwan. Good advertising work is shareable between these three markets. We have our design work done in China and reapply it in Hong Kong and Taiwan.”
To many, this seems to validate the notion often heard in Taiwan ad agencies that the multinational clients are rolling up their tents like nomads and heading for greener pastures in China.
No doubt P&G’s and Unilever’s actions are dramatic. Yet they are exceptional, too, compared to the rest of the island’s top 10 ranked multinationals. Taking a long view and using 2001 as a benchmark, Toyota, Ford, Johnson & Johnson and 7-Eleven increased adspend by double digits, enough to stay ahead of inflation.
J&J has increased its adspend in five of the past six years, though part of last year’s gain came from a boost in promotion for new acquisition, Pfizer, according to J&J Taiwan managing director, Angela Chang.
Taiwan’s economic indicators, such as percentages of private spending and public expenditure in total GDP, offer little hope for a major upturn. The market will remain a zero-sum game for most product categories.
“You won’t see much growth,” predicts Chang, “but you will see shifting between channels.”
Unlike P&G, J&J continues to make original ads in Taiwan. “Three or more years ago, we moved out of the Greater China structure,” says Chang. “The reason is we have a different focus in each of these markets.”
Companies like McDonald’s and J&J are committed to Taiwan. But is there lower interest among multinationals in general? You will hear both ‘yes’ and ‘no’ in Taipei. But what cannot be disputed is that the market is in an overall decline.
Month-on-month spending for above-the-line has declined in 43 of the 46 months available since ACNielsen began measuring it in January 2004. “More and more clients focus on ROI,” says Roger Chiang, strategic resources AVP, Carat Taiwan. “Everyone is more conservative when it comes to spending money.”
This may have shifted the promotional burden toward retailers who are using advertising to bring customers into their stores. Carrefour, the island’s largest hypermart chain has become one of the top 10 foreign advertisers. “I’d say that for retailers, putting ads on TV is new,” says Alice Lee, marketing director, Carrefour Taiwan.
