Online advertising seeing handsome growth

Improving measuring tools for ad scalability and hosting proper internet infrastructure will drive growth in Vietnam's online advertising market, according to latest Ken Research analysis.

Online advertising seeing handsome growth

The online advertising market in Vietnam recorded progressive growth during the 2013-2018 period, according to Ken Research, when the advertising industry overall experienced a decline in revenues.

The market witnessed a slight slowdown in spending during 2016 owing to the financial crisis and the fall of the Vietnam Dong (VND) against the USD. This resulted in several brands opting to cut-down on their advertising costs to maintain net revenues.

The development of internet and digital infrastructure has begun to outstrip traditional advertising in terms of better customer penetration and conversion, as a result of better monetization and availability of developed ad reach measurement tools.

Internet penetration has advanced, with the number of users reaching 64 million in 2018. Vietnam’s 4G connection (averaging 21.49 Mbps) has been recognized as being faster than in the US (averaging 16.31 Mbps) and most of Southeast Asia.

The exponential increase in social media usage has also contributed, with approximately 50 million users accessing social media content in 2018.

Research observed that Vietnamese people spend maximum time on travel and tourism websites, apparel and accessories shopping, banking and finance services, food delivery apps, healthcare services, and apps offering leisure activities.

Social media advertising is one of the most preferred online advertising techniques in the country.

The major social media apps used in Vietnam include Facebook, Facebook Messenger, Zalo, Skype, Instagram, Whatsapp, and Viber, for text messaging, video calling, online shopping, and making online payments.

FMCG is the one of fastest-growing sectors in the country in terms of ad spend, with growth tightly connected to rising disposable incomes and a booming e-commerce industry.

Vinamilk, Tan Hiep Phat (Dr Thanh), Nutri Food, Pepsi Co, and Coca Cola are some of the brands spending highly on online advertising in Vietnam.

The second-largest sector in digital advertising is healthcare, which held a market share of almost 15 per cent in 2018.

The industry primarily focuses on creating customer awareness about medical services and devices with low switching costs and for customer retention.

CVI Pharma, Pfizer, Cipla, FV Hospital, and Pharmedi are some of the brands spending highly on online advertising in Vietnam in the healthcare segment.

Moreover, advertisers are interested in paying for advertisement campaigns based on actual results, hence pricing models, Cost per Click (CPC), and Cost per Action (CPA) becoming more popular in recent years.

The Cost per Mille (CPM) model allows the publisher to know the expected revenue per impression and had catered to the rise in demand for the CPM model in Vietnam for brands looking to increase customer awareness of their products and services.

CPM accounted for a little less than half of the market share in 2018 primarily because of the low financial risk offered.

 

In this model, the advertiser needs to pay the publisher each time the advertisement is displayed, irrespective of whether the customer has noticed it or not.

Major advertising agencies in the country include big names such as GroupM, Publicis, DMV, FPT Online, Dentsu, CleverAds, Adtima, Mirum Agencies, and many more.

Agencies are in a continuous process of developing new strategies and identifying creative ways to present an ad before users.

The launch of new advertising technologies including programmatic advertisements, improved targeting strategies, involving tools to increase the reach of advertisements by various publishers, and the better use of ad inventory will aid the online advertisement market.

The use of geo-targeting will facilitate higher conversion rates for advertisers.

The development of data management platforms for collection and better analyzing big data and the use of newer and efficient technologies for better customer targeting would lead to substantial growth in the coming five years.

According to a study by Ken Research, one of the biggest challenges faced by entities is to gain clarity on circulars guiding tax regulations on how expenses spent on online advertising across various platforms need to be claimed as tax deductibles.

Various businesses may not be able to claim the same advertising expense owing to lack of supporting documents such as contracts signed with Facebook or invoices issued from the social networking service company.

As a result, tax authorities may view this as a personal expense, as the bank statement of the credit card is issued under the name of the employee.

Moreover, efforts need to be taken towards improving Cyber Security and Data Privacy.

The prime reason for the dominance of traditional modes of advertising is because people are skeptical about their personal data being used.

Hence, internet service providers must use proper equipment and software to protect systems from being hacked.

All of these measures would together boost growth in the market over the next 5-10 years.

VN Economic Times

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