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Internet advertising has gathered some momentum in Thailand but has yet to challenge mainstream media

Bangkok Post, 9th May 2005
Story by BAMRUNG AMNATCHAROENRIT and CHAROEN KITTIKANYA

The proliferation of Internet cafés catering to ever-increasing numbers of Net users may paint a rosy picture for the online advertising business in Thailand, but so far its market value remains negligible, according to media analysts.

Domestic online advertising sales are fragmented. There are not even any official figures. Online advertising does not have its own category in the media spending breakdowns released monthly by Nielsen Media Research Thailand.

In Asia-Pacific, online advertising revenue is expected to grow to $1.62 billion by 2007, from $304.3 million in 2002. Growth is led predominantly by search-engine ads and classified advertising, according to the IT research firm IDC.

IDC has forecast revenues from online "push" advertising _ web site banners, buttons, sponsorships _ will reach $789.6 million, while pull advertising _ search ads, classifieds and permission/e-mail marketing _ will grow to $832.4 million by 2007. The latter category is expected to grow more rapidly to become 51.3% of overall online ad revenue by 2007.

Online advertising demand is also being spurred by its effectiveness at gathering consumer data and preferences.

Classified ads are also poised to grow rapidly through 2007 as consumers' habits of gathering information change, especially as it becomes increasingly common for Internet users to go online at least once a day. Internet users are gradually using online media more and more when they look for information or make purchases.

Thailand's online ad sales are in sharp contrast to the United States, where the Internet has become one of the key media used to expose brands effectively.

In the US, brands such as BMW, adidas, Levi's and Coca Cola are among the companies capitalising on the Internet's ubiquity and popularity to promote themselves and communicate with consumers.

Some companies are even said to bankroll negative content as it helps them understand what people don't like about their products. Marketing industry lore has it that www.ihatestarbucks.com is linked to the giant coffee shop chain, though Starbucks has never commented.BMW is a good example of the effective use of the Net. The automaker chose to launch its new model on the Internet, rather than in the mainstream media, reasoning that most of its prospective affluent customers were heavy Net users with fast connections at home or work. The five-minute commercial would have cost much more if it was shown on traditional media, especially television.

In recent years, Internet advertising in the US has enjoyed robust growth. In 2004, the market grew 33% to $9.6 billion, according to the Interactive Advertising Bureau and PricewaterhouseCoopers.

Preeyada Vuttipakdee, managing director of MediaVest Co, a part of the Starcom MediaVest Group headquartered in Chicago, said online advertising in Thailand showed potential, and had been showing double-digit annual growth lately.

Pantip.com, a popular Thai web site, has seen its online advertising sales grow steadily, at about 20% annually, though he would not provide figures.

Wanchat Padungrat, the Pantip.com owner, attributed the growth to rising awareness of the Internet and electronic commerce in general, and expanded adoption of online advertising to new sectors such as entertainment and real estate.

Earlier, online advertising was popular only among operators in information technology, such as computer dealers.

"Among the key reasons for the bright future of Internet advertising is that it targets specific groups and people. That is a business opportunity of brands and a media agency to place advertising," Ms Preeyada said.

She said the good side of the Internet was that it allowed freedom to anybody who wanted to publicise an opinion _ a channel to create communities and share experiences. Such communities can make their mark on businesses. In some countries, large companies hire staff whose main job is to monitor product response and news from web sites.

Factors driving advertising growth in Thailand include growing adoption of affordable high-speed Internet, better infrastructure, and a parade of companies, government and state agencies promoting online transactions such as tax payments.

According to the ACNielsen Media Index, the number of Thai Internet users in 2004 was 5.4 million, up from 4.2 million in 2002. Growth was highest among 12- to 14-year-olds (see table). However, the largest group of users was aged between 15 and 19 _ about 1.58 million people and a 5.2% increase from 2003.

From 2002-04, the number of Internet users started to grow significantly in the provinces and rural areas. In 2004, the number of rural users grew 38.8%, to about 1.86 million people, while the number of users who lived in towns and cities upcountry rose 22.8% to about 1.88 million people.

Rangsan Pamtimanmas, an executive at Prakit Holdings Plc, a listed advertising agency, said the outlook for online advertising remained good, but it was still seen as a supportive medium, similar to the way tuk-tuk and taxi ads are used.

"Television remains popular among advertisers because it reaches 80-90% of consumers," Mr Rangsan said.

He said Internet usage patterns also were limited in Thailand, with e-mail the most prevalent online activity by far (see table). Users are mainly college students and not likely to be big-spending shoppers, making advertisers consider carefully before pouring money into campaigns to reach such consumers.

Even as many new web sites open, Mr Rangsan said many are information sites and state agencies, rather than commercial web sites.