Online advertising application in Procter and Gamble Vietnam

2.2 Internet comparison with other media 2.3 Online advertising formats 2.4 Online advertising trends in the world 2.5 Vietnam online advertising market context 2.5.1 Internet penetratio

Le Thi Thanh Huyen

“ONLINE ADVERTISING APPLICATION IN PROCTER&GAMBLE VIETNAM”

FINAL PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT

Tutor: Dr Dang Ngoc Dai

Ho Chi Minh City

May I take this chance to thank many people for making this project possible

I would like to thank my tutor, Dr Dang Ngoc Dai for his guidance and support throughout the end-course project and to my mentor, Mr Dau Quang Phan for his encouragement advice and quick respond when I need technical assistance

My thanks also go to the professors who involving in lecturing for supporting me in understanding my academic endeavor

I would also like to thank Mr Serge and Ms Tran for strong coordination and support throughout the course

My special thanks are to Management Board of Vietnam and Belgium program, especially, Mr Bayen and Mr Tran Anh Tuan for their strong collaboration in developing this course

2.2 Internet comparison with other media

2.3 Online advertising formats

2.4 Online advertising trends in the world

2.5 Vietnam online advertising market context

2.5.1 Internet penetration 2.5.2 Online advertising trends in Vietnam

Chapter 3: Business Environment Analysis

3.1 Market analysis

3.1.1 Market context 3.1.2 Target audience 3.1.3 Advantages of online advertising 3.1.4 Competitor analysis

3.1.5 Case: Pepsi’s and Unilever’s online advertising campaigns

assessment

3.2.1 P&G overview 3.2.2 The current advertising strategy of P&G 3.2.3 SWOT analysis

Chapter 4: Online Advertising Application in P&G Vietnam

4.1 Objectives

4.2 Online strategy and tactics

4.3 Online advertising development

Conclusion

Reference materials

Appendix

ABBRIVIATION

TABLE AND CHART INDEX

Chart

Table

EXECUTIVE SUMMARY

Procter & Gamble (P&G) is one of leading FMCG companies in Vietnam market P&G is also the second player in Vietnam advertising market with total spending (based on TNS data) at USD 17 million in 2006 In Vietnam, P&G only uses traditional media that is TV, print and radio TV is still the king but there is

a fact that people nowadays have a tendency to spend less on TV, print and radio while spends more on internet In addition, TV, print and radio traditionally enable one way communication only while internet allows interactivity with consumers Internet seems to have more advantages than other current media However, Vietnam is just in the first stage of e-commerce and some companies still consider internet as a traditional channel Companies show their concern on using online advertising tools and there is no research company studies the effectiveness of online advertising

For above reasons, there is a need to find out whether internet works effectively and should and how P&G use internet as a new channel beside its current channels

To answer for above-mentioned questions, the project explores the following matters:

Vietnam Advantages of online advertising in terms of cost efficiency, convenience and target audience Online advertising effectiveness is also measured by the attitude of internet users towards advertisements

on internet

- Case study: success of online advertising campaign of Unilever who already aggressively use internet as a supporting tool in the last Lunar New Year and Pepsi who currently uses internet as a main channel to do promotion

- Online advertising application in P&G Vietnam situation

A research is carried out to support the project However, because of limitation

in time and resource, just a small sample size is recruited The data, therefore, do not ensure a high fidelity

Overall, internet has some advantages in comparison with other media which are i) penetration rate is quite high and increasing; ii) people whom internet reaches are young, well educated and have high income, iii) internet can convey more information and get feedback of consumers quickly; iv) there is no limitation in internet and the cost is relatively lower than other media In addition, the online advertising strategy of Unilever has a good result in terms of image, consumer’s recall and business

From that point, although current media such as TV, print and radio still show their effectiveness, P&G should use internet as an additional channels to support offline activities With condition of Vietnam market which is in the beginning period of e-commerce, P&G can use online advertising under the forms as follows: website, banner ads and email However, these forms should ensure the attractiveness and innovation to stand out from the cluttered advertising environment

Chapter 1

INTRODUCTION

Procter & Gamble (P&G) and Unilever are two market leaders in Vietnam FMCG market Unilever, therefore, becomes a big competitor of P&G Their products are in harsh competition in most of categories such as hair care, skin care and laundry

According to TNS, in 2006, Unilever spent USD 49 million on advertising of which USD 42 million was on television Beside key channel TV, Unilever also uses Print, Radio, Internet and Out-of-home (OOH) At the end of last year, on the occasion of Lunar new year (Tet holiday), the company launched a series of campaigns focusing on internet They use online communication as a backup to offline communications These activities are considered as a part of package to reduce marketing communication budgets and at the same time, reaching a wider audience

Meanwhile, most of marketing activities of P&G are advertising on TV, Print and OOH These advertising media have used for many years, but recently there

is a need to locate new advertising media that are less costly, less cluttered and potentially more effective than the established media

Objectives of the project

The project studies the effectiveness of online advertising and considers the possibilities of applying online advertising in P&G business

The project tries to explore the effectiveness of online advertising in Vietnam market towards FMCG products only

Methodology

Besides data get from government and market research companies, data also get from a research which is carried out to support the project However, because of limitation in time and resources, just a sample size is recruited which means the high deviation in data

Structure of the report

There are four main parts to this report

Part 1 gives the reason to choose this project, project’s objectives, scope and methodology used to support the project

Part 2 introduces some concepts, definition and overview of online advertising in the world and in Vietnam market context

Part 3 explores influential factors to online advertising application in P&G Vietnam

Part 4 examines the development of online communication in P&G business

Chapter 2

ONLINE ADVERTISING OVERVIEW

2.1 Internet characteristics - 2 I’s of internet

Individualization and interactivity is key features of internet and advertising on

internet Individualization refers to the fact that the internet users can control

over the flow of information Therefore, there is an ability to reach the consumer thanks to advertisements and promotions related to them Internet also enables a two way communication among its users based on the information they perceived

as relevant This allows marketers to establish and enhance relationship with

their customers This is another feature of internet - interactivity

2.2 Internet in comparison with other media

Each of major advertising media has a set of advantages and disadvantages It means no medium is perfect for all purposes and internet is not an exception

Advantages

Basically, internet is an interactive medium Millions of people around the world have access to the internet Thousands of marketers have used internet as a prospective medium besides traditional media to promote their brand, create brand awareness, influence attitudes and purchase intention, and driving sales One advantage of internet is while space and time within traditional media is limited and cost increases along with increases in demand for space and time; space in internet is unlimited, so advertisers can maintain at lower cost In

addition, internet is a medium which enables two-way communication with customers while traditional media just provide one-way

Disadvantages

However, internet’s interactive feature, on the other hand becomes disadvantages For traditional media, say, TV, they watch TV programs and advertisements in a relaxing mood Therefore, messages communicated by advertisement on TV are more absorbable While internet users are driven by their purpose of obtain information, internet advertisements such as pop-ups, banners represent an interruption and obstacles for them For this reason, internet advertisement lessens its effectiveness

2.3 Online advertising formats

Online advertising are use of internet as advertising medium There are many

types of online advertising as follows:

Website Website for a brand is an invaluable advertising medium for conveying

much more information about the brand, its character and its promotional offerings

Banner ads Banner ads are the dominant form of internet communication

Banner ads use a link through to an advertiser’s chosen destination and therefore, can act as a gateway to websites but also effective in their own right There are many kind of banners such as floating banner, trick banner, expanding banner and so on

separate window while a selected web page is loading Interstitials also appear in the time when pages are being downloaded However, unlike pop-ups,

interstitials do not interrupt the users and users have less control over interstitials because there is no exit option to stop or delete an interstitial

Email Advertising via email is extremely cost effective In addition, email

communications are easily customized for different segments

Besides, there are many types of online advertising such as video ad, search engine, micro site and so on

2.4 Online advertising trends in the world

Internet penetration

It’s estimated that about 15 billions of people get accesses to internet every day

It would be a favorable condition for online advertising explode and become the first in development trends in the current information technology world

Internet today is the third only after TV and Radio in usage A survey carried out

by SRI–Knowledge Networks in 2003 indicates that people now spend more time

Newspaper 4%

Internet 14%

Radio 27%

TV 52%

Magazine 3%

Chart 1: Internet consumption (Share of voice)

Source: SRI – Knowledge Networks, Media Scan Spring 2003

with internet than with newspaper and magazine Internet accounts for 14% of total media consumption compared to 52% to TV and 27% to radio (see chart 1)

Online advertising trends

Credit Suisse First Boston (CSFB) estimated that online advertising turnover in

2006 is USD 16.6 billion and will be reach 33.8 billion in 2010 Budget for online advertising just accounts for a small proportion in total spending (e.g 2.6% in Europe) However, the growth rate of online advertising is extremely high which always maintains at the first compared with other traditional adverting tools ZenithOptimedia Research Company estimates that online advertising’s growth rate is 21% in 2004 and tends to increase in the next coming years

Online advertising company also gains a high growth rate In the first quarter of

2005, Google gained a profit of USD 369 million out of USD 1.3 billion turnovers, up 93% from the same period last year This is the same for Yahoo with USD 205 million out of 1.2 billion turnovers, up 55% in comparison with this quarter in 2004

2.5.1 Internet penetration

After 10 years in Vietnam, internet gains some paces of development According to Vietnam Internet Centre (VNIC), there are currently 14 million of people, accounting for 16% Vietnam population usually access internet The Vietnamese government has announced plans to increase the country’s internet penetration to 35% by 2010, according to a report by news agency AFP

However, internet penetration rate in 4 key cities Hochiminh, Hanoi, Danang and Cantho, which are also main markets of P&G and Unilever, is higher The

average internet penetration of these 4 cities is 37% Especially, in the first priority city, HCM city, the proportion reaches over 45% (See chart 3 in Appendix 3)

About 12% of population in 4 cities gets access into internet almost every day The figure is higher in top two cities, say, about 15% for both HCM and Hanoi (See chart 4 in Appendix 3)

2.5.2 Online advertising trends in Vietnam

According to Vietnam Advertising Associates (VAA), Vietnam advertising turnovers in 2006 is VND 12,000 billion and is estimated to reach 24,000 billion

in the next 15 years The growth rate of advertising market is high, from 20% to 30% per year However, Vietnam’s online advertising turnover Vietnam is quite low Total turnover of leading websites is about 64 billion, equivalent to 0.5% total spending on advertising They forecast internet advertising in Vietnam can get a growth rate of 100% per year, and reach 600 billion of turnovers in 2010

In 2006, online advertising market is apparently quite quiet However, behind the quiet, there are undercurrents which preparing for a new leap when online advertising affirms its outstanding advantages efficiently supported by global internet Companies also include online advertising into their marketing strategy And some of e-commerce companies which formerly operated as head hunter now expands to online advertising and considers it as a long term development plan

3.1.2 Target audience

According to Media Habit Survey of TNS conducted at the beginning of 2006, about 54% internet surfer is male Internet penetration is 41% among male and 32% among female Especially, the youth makes up a major part in internet population with 56% from 15 to 24 years old (See chart 5 in Appendix 4) As per data of the self conducted survey, most of internet users gain high education and have high income About 60% internet users are high educated (university graduation and higher) and have high income (over USD 600 per month) (See chart 6 in Appendix 4) Internet is really a good channel to reach men, women with modern life style and teenage

In general, in 3 leading advertising tools, that is TV, newspaper and internet, TV holds the first position, next is newspaper and internet However, internet recently has a trend to overcome newspaper because most of internet users are high income, stable work, young, quite high education people who belongs to high frequent shopping consumer segment

3.1.3 Advantages of online advertising in Vietnam

Besides advantages of internet in general as mentioned in chapter one, online advertising in Vietnam market also has the followings advantages:

Cost efficiency

Internet offers companies a new tool of advertising to reach target customer more effectively Normally, it costs tens of millions VND to post an advertisement of full page in one issue of any newspaper But with the same amount of money, a logo linked to an advertising website will be hanged in websites in 1 month

It is relatively inexpensive to create a site Domain name registration can cost USD50, website design (50 pages) may cost USD3500 while hosting and registering cost average out at around USD400, although this can vary widely The attractiveness is that the entry cost for all participants is the same and no one website can gain a communication advantage over other as the share of voice remains the same In addition, a company, even with a high economic potential seldom runs an advertising campaign on TV or print continuously in a long time, but they can remain the campaign with the low cost for a long time on internet

Convenience

Online advertising is better than newspaper because it allows customers directly

go to websites by a click on logo or banner while with an advertisement on newspaper, they have to remember the information, make the phone call or type address to access to the company’s website to collect more information

Besides, global scope, high interactivity, variety of format, online advertising is a feasible choice for companies

Reach efficiency

Internet seems to surpass print in the number of audience ad cost efficiency The average circulation of a publication is 300,000 issues After deducting 50,000 issues unmarketable, there are 250,000 issues reaching the consumers Among these consumers, just a small percentage of consumers who read the publication can afford to buy products advertised on it

Meanwhile, it’s assured that about 1.5 million internet subscribers are of high income.1 million people with quite high income compared with 250,000 readers who belong to different income segment is really a big gap

High response

According to the self-conducted research, about 8% of Vietnamese internet users watch the internet advertisements as normal and 75% click to interesting ones The 17% remains’ attitudes are glancing at the advertisements briefly and moving on and do not pay attention (See chart 7 in appendix 5)

These figures seems to be less positive than consumers’ reactions against advertisements on print and TV (30% readers and 45% TV viewer watch/read advertisement as normal) However, internet advertising shows more attractive than others because of high response from internet users Advertisements on

internet under forms of banners, logo or popup not only act as normal advertisements, but also attract internet users to visit our websites

While P&G is famous for product’s quality, Unilever stands out for innovative and adapted in communication with Vietnam market

Unilever’s advertising strategy

Table 1: Unilever's spending proportion by media

2006, the proportion of TV decreases from 87% to 76% while investment on OOH increases Remarkably, the company starts to use internet as new channel

to reach consumers It’s estimated that spending on internet makes up 5% of total spending (See table 1)

The end of year when the biggest holiday – Tet (Lunar New Year) take places is the golden time for advertisers TV is the most popular channel to reach consumer However, when advertisers flock into TV, your message might be submerged in a mass of messages of the same of different products In addition, space and time of TV advertising is limited At that time, it is very difficult to reach the target customer in the cluttered TV environment

Out of home (OOH) ads is another choice But following trends of the world which traditional media goes interactive, internet is a smart choice

At the end of 2006, Unilever launched a series of internet campaign for almost of its products such as Laundry (OMO detergent, COMFORT fabric conditioner), Haircare products (SUNSILK, DOVE, CLEAR), FOOD (KNORR fish source) as the support to offline activities

3.1.5 Case: Pepsi’s and Unilever’s online advertising campaigns assessment 3.1.5.1 Pepsi’s campaign: promotion online

Concept

The campaign is promotion online Other media such as TV, print, OOH is to support online campaign

Consumers drink Pepsi, get the code under the crown and enter into the website

to get bank account From this account, they can accumulate points from Pepsi

consumption or from interactive programs/ contest in the site to get win prizes The prizes are granted every hour (8 hours per day)

Step 2: build traffic by communicating the main concept of campaign: drink Pepsi

or win contests on website to accumulate the points and emphasizing that winner list are updated every hour The website also offers

- Free music and pictures of football idols, music idols, free ringtone

downloading, game online

- Chat with Pepsi’s celebrities

Step 3: interact with consumers by some activation activities

composition contest

After 1 month from launched, about 1.2 million website accesses (website www.pepsiworld.com.vn) are counted Promotion joined from website is 25% compared with 75% of traditional development Besides saving cost, the campaign enables Pepsi a way to better communicate, be more interactive with consumers and especially, makes Pepsi differentiate from other beverage brands

3.1.5.2 Unilever’s campaign: online to support offline activities

Noticeably, banners of Unilever’s brand are designed under the same concept and theme with print ads, TVCs and billboards which helps internet users easily

recognize and attracts them to click in

Step 2: website traffic building

Most of Unilever’s brands have websites Websites which act as a support to offline activities are temporary The theme and leitmotif of websites are subject

to season and specific period

These websites offer

cookery introduction

Step 3: Interaction: these websites offer interactive activities with consumers such as

advertising video clips which also posted on TV

Result

In general, advertising campaign of Unilever gains good result which shows high brand awareness and increase in market share for most of brands Especially, as per a survey conducted by AC Nielsen in Mar, Omo and Comfort are in top 5 favorite brands This result also demonstrates the contribution of online advertising in the total campaign The high internet exposure partly makes brand awareness increase In addition, internet enables brands to communicate with consumer more effectively which builds TOM (Top of mind) and also drive