Multinational companies that are spending millions of dollars to advertise their products in China should abandon their one-size-fits-all strategy and pay more attention to the country’s geographical diversity, according to leading media buying agency MindShare.
As China’s consumer market becomes increasingly sophisticated and competitive, a city-specific approach would boost the effectiveness of companies’ promotional campaigns and by extension, their return on investment, says MindShare, a unit of WPP, the marketing services giant.
“In China, it’s always a one-measurement campaign. It’s always about creating a commercial that does equally well in Beijing as in the south,” says Arvind Sethumadhavan, MindShare’s Asia Pacific managing director. “But China is changing so fast. You need to look at the different cities and then identify strategies which can be tailored to each of them.”
Foreign companies have been gearing up their marketing campaigns in China to boost their brands and attract a growing base of affluent consumers. According to Nielsen Media Research, advertising spending in China grew 20 per cent year-on-year in the first half of 2005 to Rmb143.4bn ($17.7bn).
MindShare predicts this pace of expansion will accelerate to 25-30 per cent a year until 2007 on the back of the mainland’s strong economic growth and the Beijing Olympics, and to 50 per cent in 2008, when China’s marketing and advertising market is expected to become the world’s second largest, after the US.
Companies in the automobile, toiletries and food and beverage sectors, as well as and fast food, are expected to be the biggest international spenders on advertising as they face rising competition from domestic brands.
Foreign carmakers in particular are likely to beef up their promotional campaigns following China’s relaxation of import taxes on cars, according to Bessie Lee, chief executive of MindShare China. Other multinationals such as Procter & Gamble, Unilever, McDonald’s and KFC are also expected to boost their spending.
But if companies want to make their advertisement investment worthwhile, they should not ignore the geographical, cultural and economic differences between Chinese cities, Mr Sethumadhavan says.
He notes that different media have different degrees of effectiveness depending on the cities concerned. Television, for example, is much more effective in second- or third-tier cities than in centres such as Beijing and Shanghai, where the entertainment value of television is relatively weak.
To reach consumers in big cities, Mr Sethumadhavan says companies should use the printed media. “Beijing people have very strong ties with newspapers and magazines because of the political ties there. In Shanghai, compared with Beijing, magazines are more effective.
“We discovered that outdoor media was most effective in Beijing and least effective in Guangzhou. It’s because of the characteristics of the media, the bus shelters. They are badly maintained in Guangzhou and are not cleaned very frequently,” he says.
He also suggests companies look at the cultural differences within China – including the languages spoken and the sort of celebrities people like – when they market their products.
“A Hong Kong celebrity could be very effective in Hong Kong and south China and have very little relevance in the north of China. Or you could use a Japanese celebrity which may have some sensitivity in one region but no problem in others.”