Understanding challenges for advertisers

Daniel Lindgren, Associate Director, TNS, Daniel.Lindgren@tns-global.com

Advertisers will face new challenges as we progress into the digital era. Traditional marketing strategies are unlikely to be as effective and selecting suitable media in which to advertise will no longer be as straightforward as it used to be. Advertising and promotion, however, will still remain a major item on the expense budget for most large businesses most, of which will be spent on media placement.

Going back a few years, advertising was relatively simple and advertisers could achieve good results by placing advertisements in mainstream media such as television, radio and press. There was less clutter and limited media options meant that potential customers could be reached fairly effectively at a reasonable cost. Advertising was the "main game" with sponsorships, direct marketing, events marketing and public relations being viewed as independent tactics.

The situation today is very different and whilst many advertisers have reviewed their advertising and media strategies many business operators still rely on traditional methods. Indeed, advertising agencies too need to realize the changes that are taking place and take the necessary steps to keep up-to-date. We are already beginning to see some significant changes here in Indonesia and this is the time when advertisers need to stop and think about the consequences of future developments.

Today's advertisers are challenged with a much broader spectrum of media to choose from when promoting their products and services. New innovative media such as cable television, the Internet, and a great variety of other communication channels represent new compliments to conventional media options such as television, radio, press and magazines. The table below shows broad categories of different media channels that are available today. For each channel there are numerous vehicles available to choose from so there is definitely no shortage of choice.

Common media channels: Television, Cable television, Press, Radio, Cinema advertising, Magazines, Stationary outdoor, Mobile outdoor, Sponsorships, Internet, Direct marketing, Events marketing, Publicity, Point of purchase promotions, Telemarketing, Direct sales, SMS.

Each media channel has its own strengths and weaknesses and these should be considered when planning an advertising campaign. Integration between the different media channels means advertisers can be more precise in their targeting. In Indonesia, reach for different media channels vary greatly between different regions and consumer groups and add yet another challenging dimension to the media planning process.

The desire to find and target niche markets may explain why direct marketing has become increasingly popular. In recent years, direct marketing has outgrown traditional advertising in many western countries. But there are also traditional channels that remain under utilized.

The power of outdoor advertising is often underestimated and many advertisers only use it as a tactical medium. However companies like Nestle and Philip Morris will tell you that outdoor advertising is a great tool for brand building. To a large extent, advertisers have moved away from mass marketing to customized marketing.

Trying to be all things to all people has become a thing of the past although for some advertisers in Indonesia it is still reality. But the customization trend will no doubt continue. With the help sophisticated technology together with insight from research, we are moving towards mass customization. Individually formulated messages that are mass marketed in real time.

Trends are starting to emerge including digitalization of various media. As we enter further into the digital era, advertisers will need to address the various impacts this will have on their communication strategies. The rapid growth of technological advancements will also, almost certainly, include unexpected developments.

We are told that it is difficult to predict when Indonesian households will be digital-enabled for television as it will depend on when Japan switch from analog. At present digital television can only be used for watching DVD and Indovision. The new technology is expensive and a luxury few can afford, and it will happen here as well. Internet penetration also remains stubbornly low here, meaning that most major advertisers will not be forced to address their online strategies in the short to medium term.

Still, the average time-poor consumer will become increasingly bombarded with messages. The average consumer is exposed to more than 3,000 marketing messages daily.

Consumers are becoming more and more fragmented into smaller segments of media consumers, and advertisers must develop and place advertising that breaks through the clutter before reaching their intended target audiences.

It is of course very difficult to assess the value these new media channels will contribute to the overall marketing function. However, as consumer groups continue to fragment, their overall media consumption patterns will become more difficult to track. They will become increasingly more difficult to find and more expensive to reach.

While many free-to-air networks deliver lower audience reach today than a few years ago, there has been no reduction in ad rates -- on the contrary in most cases rates have increased. There is constant pressure from advertisers to see how they can obtain more value for their advertising budget.

All in all, the process of selecting media vehicles and developing effective campaign schedules will no longer be as straightforward as it used to be. Most advertisers, however, want simple media strategies that produce results.

To some extent it's a catch-22. An important first step will be for advertisers to educate themselves about new media developments and determine whether these are likely to have an impact on their marketing strategies.

More importantly perhaps, advertisers should take time to evaluate alternative media channels to see if they can be taken advantage of in some way. Investigation in the form of research into media consumption habits among the intended target group is an investment well worth considering.

Not only will the campaign be more targeted but there will also be less wastage of precious marketing funds. To put things in perspective, a 3 percent to 5 percent saving in the media could easily fund the annual marketing research budget.

During the initial evaluation it is important to also involve the advertising agency. If marketing research shows that media changes are required then the agency should be the first to know. The advertising agency will also be able to share information about what media planning capabilities are available.

For example, if regional advertising is required then there will be limitations for television but not for radio and press. At the end of the day, the media environment is changing and will continue to do so, so expect your agency to recommend research from time to time. After all, a good advertising agency always keeps an open mind.

The writer has over 17 years experience in marketing. TNS is one of the world's leading market information groups.