Digital marketing: The future

In spite of the current low spend, Chinese marketers are likely to increase investment in the fiscal year ahead, the report predicted.

Nearly a quarter of the advertisers surveyed said they will increase allocation to digital marketing to more than half of their total advertising budget, the highest in the Asia-Pacific region.

The majority of Asia-Pacific marketers spend less than 25 percent of their total budget on digital, according to Mark Phibbs, senior director of marketing at Adobe Asia-Pacific.

"Although the investment levels across Asia-Pacific are still low, the number of the Asia-Pacific region's marketers who expect to allocate more than half of their budget to digital marketing is set to double in the fiscal year ahead. The commitment to digital is clearly happening," said Phibbs.

In 2011, the turnover of China's advertising industry exceeded 300 billion yuan ($48 billion), 21st Century Business Herald reported earlier this year, citing Gan Lin, vice-minister of the State Administration for Industry and Commerce.

Some analysts argue that Gan's estimation is too conservative, saying the industry could easily double this amount.

Advertisers spent 669 billion yuan in the nation in 2011, a year-on-year surge of 14.5 percent, said a report released by Charm Communications Inc, a Beijing-based advertising agency group.

TV and radio remain the biggest platforms for Chinese advertisers - and their shares continue to grow. Advertisers' spending on TV increased by about 14 percent year-on-year in 2011. Spending on radio channels surged by more than 30 percent during the same period, data from Charm shows.

Online advertising spending in the nation hit 20.4 billion yuan in the third quarter of this year, a jump of 16 percent quarter-on-quarter, data from Analysys International shows.

Seeing booming advertising expenditure in TV and radio is not a bad thing for online media because the collaboration among platforms will offer advertisers more choice and encourage them to spend more, analysts suggest.

"Advertisers in China are showing more willingness to invest in solutions that could make the most of the advantages of different platforms," said Dong Xu, a researcher at Analysys International.

"They started to realize the importance of advertising effectiveness evaluation after they put advertisements to market because the sluggish economic environment forced advertisers to consider whether the huge campaign expenses they spent were worth it," said Dong.

Yet industry insiders said current analytic reports are not used sufficiently, a fact that may hinder the development of the industry.

Chinese marketers understand the urgent need to demonstrate return on investment on digital marketing spending but are hampered by a lack of systems and skills to get the data they need, said the report.

Only 33 percent of the respondents are using analytic and reporting technologies and of those actively measuring digital marketing programs, more than 85 percent admitted they are not good at measuring investment and return.

"Asia-Pacific marketers are struggling to move beyond surface-level indicators that simply report clicks, views and baseline consumption," said Phibbs. "Leveraging data to generate analytical insights is critical to helping the marketers move ahead of the curve in terms of tracking and mapping customer insights and behavior."

The assessment of marketing data is not only important for reaching and engaging in the domestic market. It is also a key for companies who intend to enjoin global competition.

"Digital marketing is a critical factor in identifying and quantifying new markets, reaching out to new customers, building brands and maintaining strong business opportunities internationally," Phibbs said.

However, lack of trained analytical talents was another significant issue for the sector - especially in China, where skills shortages are obvious.

More than 75 percent of Chinese marketers said their current marketing teams didn't have the right skills, experience or talents needed to take on a digital marketing strategy and 38 percent said they had an insufficient budget to bring on the right level of senior talent, the report showed.

The right candidates were also not easily found. One in five of the marketers said they were unable to find the right staff with the right skills. Outsourcing was not a solution, with 40 percent saying their agencies' capabilities were limiting their ability to execute business sufficiently effectively.

"The region does not lack bright minds looking to advance their knowledge and skill base but training on advancements in technologies, strategies and analytics will be a requirement," said the report.

The critical next steps for global advertisers are to find a qualified industry leader, to adopt analytical resources and continued investment, which, according to Phibbs, all need great improvement in China.

gaoyuan@chinadaily.com.cn