Advertising promotion is developing rapidly on the mainland, with advertising expenses of enterprises showing an annual growth of nearly 40% between 2000 and 2004. The following are some statistics on advertising expenses:
The following statistics show which products and sectors rely more heavily on advertising promotion. A comparison between 2003 and 2004 shows that professional services, health food, and shampoos and conditioners are the top three users of advertising promotion. Professional services spent 83% more on advertising in 2004 than in 2003.
2-2-1 Characteristics and Functions of Advertising
Advertising is one of the most important means of promotion for brands. It can increase brand awareness and build up brand image and reputation within a short time. It can also reinforce consumers' memory of the brand and guide or stimulate their demand and consumption. For these reasons, leading brands are willing to spend large sums of money on advertising. The content and timing of advertisements are easy to change and control and the methods of promotion are quite flexible.
Characteristics of Different Advertising Media
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Advertising Media
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Characteristics
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National
Total
(2005)
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Market Penetration (2004)
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Newspapers
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Wide coverage, high circulation, can carry complicated advertising content, but it is quite difficult for newspaper advertisements to project a sharp image
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2,000+ titles
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90%
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Magazines
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Have specific target readers and great influence and can be kept for a long time, but are slow in dissemination
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9,000+ titles
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21%
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Broadcasting
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Quick dissemination, simple and quick production, low cost, and can reach audiences at different levels
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800+ stations
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25%
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Internet
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Simple production, extremely low cost, and no time or space restrictions
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-
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33%
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Direct mailing
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Very target specific as they can directly reach designated consumers
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-
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-
|
|
Outdoor ads
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Great variety of forms and choices, targeted at specific regions, and can easily attract pedestrian attention
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-
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92%
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Means of transport
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Vast scope of dissemination and simple to produce, but advertising content must be clear and wording must be simple and precise
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-
|
-
|
| Note: |
"Market penetration" refers to the number of people over 15 years of age who have come into contact with the designated media in the past week. |
| Source: |
Synovate Ltd, Asia-Pacific Region Market Handbook (2005) |
There are many different types of advertising media, each with its own effects. Enterprises should choose their advertising media according to their own needs, and it is particularly important for SMEs with limited resources to choose media that are cost effective. Different media have different characteristics. For instance, TV advertising, combining sound with image, is the most influential of all media. However, since TV commercials cannot be preserved and are complicated and costly to produce, they are more suitable for large enterprises. By comparison, advertising on means of transport is more suitable for SMEs as it has a wide coverage and is simple and inexpensive to produce. As for direct mailing, care must be taken not to make excessive use of this media as it can easily arouse customers' resentment and affect the brand image.
With the development of communications technology, fewer people now rely on the radio to obtain information. To the contrary, the utilisation rate of the Internet on the mainland is steadily increasing and online advertising is showing strong growth, with sales revenue soaring from less than Rmb100 million in 1999 to nearly Rmb400 million in 2000. According to the figures published by the renowned US financial magazine Barron's in 2004, 70% of the Internet users in China were people under 30 years of age in 2003. Enterprises opting to use the Internet as their promotion tool should target young people in keeping with the Internet user age distribution.
The geographical coverage of different advertising media varies. There are national and local media. National advertising media include national newspapers, magazines and TV stations. However, national advertisements are costly and are more suitable for large companies. SMEs cannot afford to bear the risks involved. Local advertising media include provincial newspapers, magazines and TV stations and they target consumers in particular areas. Regional advertisements are more target-specific and sometimes can be more influential than national advertisements. Thus, enterprises should choose their advertising media according to their product characteristics and target market.
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Local Advertising Media
Conwell Property Investment Consultancy Co Ltd (with parent company in Hong Kong) was incorporated in Beijing in 1996. Its business mainly covers market research, planning and consultancy. As the mainland property market was not quite mature at that time, Conwell decided to target expatriate tenants right from the start. With limited resources, the company decided to make use of regional advertising by running advertisements in free magazines for foreigners and distributing leaflets containing company profile and property rentals and sales information at various embassies in a bid to achieve the best advertising and publicity effects. With a well-defined target market and appropriate methods of promotion, Conwell has established its brandname and is doing great business.
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| Source: Synovate Ltd - company interview |
2-2-2 Choosing the Right Advertising Media Combination
Advertising media combinations involve the use of more than one advertising medium to promote the same category of product within the same period of time. A common strategy is to make use of one main medium and several other supporting media. Different advertising media have different targets and advantages. The right choice of combination will enable an enterprise to achieve the best advertising effect with the lowest cost. In order to choose the optimum combination, it is necessary to understand the performance and effects of different media.
The following is a comparison of the effects of major media made by the American author Margaret Riel in Memorandum on Media Choice:
The following are some of the more common advertising media combinations and their characteristics:
(1) Combination of newspapers and TV with on-site media
This combination first uses newspapers ads for promotion to create an impression of the brand in the consumers' mind and then makes use of TV and on-site media to prompt consumers to make purchases. This combination is suitable for products that do not require much consideration in the buying process, such as snacks and articles of daily use. On-site advertising can stimulate people's purchasing desire. Since sales venues on the mainland are much larger than in Hong Kong and enterprises can conduct massive on-site publicity at sales venues, this combination is easier to implement on the mainland.
(2) Combination of direct mailing with on-site advertising or posters
This combination can be used for advertising promotion in particular areas and is useful for market consolidation and development. Take Pizza Hut for example. Apart from opening restaurants serving pizzas, it also introduced takeaway and delivery services many years ago. Pizza Express is an independent brand of Pizza Hut China and provides delivery service only. In addition to putting up posters outside Pizza Hut restaurants and other outdoor media, it regularly mails the latest promotional leaflets to residential and business clients.
(3) Multimedia combination
This combination combines the advantages of different media and can help enterprises reduce risk by diversifying their advertising expenses. The use of multimedia increases the coverage of advertisements and helps reach more consumers of different groups.
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How Enterprises Allocate Resources in Multimedia Advertising Combination
Betu is a Hong Kong fashion brand. It opened its first store in Shanghai in February 1989 and had over 80 outlets in the mainland by 2005. The company has been spending 5-8% of its annual sales on promotion in recent years. It runs advertisements in magazines (20%), on underground trains (15%) and buses (10%), on light boxes at shopping centres (10%), and in other media (45%) such as the Internet, sponsoring the clothing of actresses on TV dramas and programmes, and sponsoring beauty pageants.
Betu targets women in their 20s. As mainland women have the habit of finding out about products of different brands from what they read, online advertising (such as 21cn.com and 163.com) and soft advertising are ideal for disseminating brand information and telling brand stories. This advertising combination, offering easily accessible media and combining reading, mobility with information technology, can effectively increase brand awareness and penetration, leave a deep impression on consumers and stimulate their purchasing desire.
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| Source: Synovate Ltd - company Interview |
2-2-3 Evaluation of Advertising Effects
Evaluation of advertising effects can contribute to improving advertising campaigns by finding out the inadequacies of the advertisements and the gap between actual implementation and the target. However, as hiring professional research companies to conduct evaluations involves huge expenses, SMEs may not be able to afford it. Desirable advertising effects should embody three aspects: cognitive effect (how many people have heard or seen the advertisement?), persuasive effect (how many people understand the message of the advertisement and to what extent do they understand it?), and purchase effect (to what extent has the advertisement helped promote product sale?).
While SMEs may have limited funds, they should not overlook the evaluation of advertising effects. In fact, they can create their own indirect means of evaluation. The following is the method devised by Betu to evaluate the effects of its advertising media:
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How Enterprises Devise their own Methods for
Evaluating Advertising Effects
Betu invests considerable amounts every year on brand promotion in the advertising media. Its method for evaluating the effects of advertising is to have shop attendants conduct a simple questionnaire survey with consumers to find out how they come to know Betu products. In this way, they can get a clear picture of the effects of different advertising media. For example, Betu spent several hundred thousand yuan advertising its products at a certain bus stop. After finding out from the survey that very few customers actually paid any attention to that advertisement, it decided to stop advertising at that bus stop. Sometimes customers would come to its shops with magazines showing Betu products and ask for those products. After a period of observation and referring to the results of the questionnaire surveys, it is not difficult to find out which magazine has better advertising effects.
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| Source: Synovate Ltd - company interview |
