VietNamNet Bridge - Mr. Tarun Dhawan-Managing Director from Riverorchid Notch shares opinions about the development of digital advertising in Viet Nam and the region.

Mr. Tarun Dhawan-Managing Director from Riverorchid Notch.

1. What do you think about marketing mergers and acquisitions, and why are they happening more these days?

Regarding M&A in communication agencies worldwide, the most active discipline was Digital - with deals being double than any other (such as traditional advertising, PR, activation, research, media etc.). While large communication groups are keen on acquisitions, ’traditional advertising agencies’ do not feature in most of their considerations. Holding companies are interested in independent outfits that operate in the technology or new media space.

2. Why are digital agencies attractive acquisition targets, and can you give us an example of a successful M&A in the Indochina region?

Globally there are 2.5 billion people logging into the Internet each day, this is massive for clients and their brands to connect with their consumers. Clients expect more than this. Digital media is integral and has to be woven into marketing strategies and the way brands engage with their consumers; not just interrupt them with TV commercials.

Digital is the new mass media. Consumers increasingly spend more time online be that via their desktops, laptops or mobile devices. Some big marketing communications agencies have recognised this big shift. To guarantee that they continue being relevant in the future, they are investing in acquiring digital agencies, which is the fastest way for them to build the missing capabilities. This is what makes digital agencies attractive targets.

Interestingly our recent merger between Notch - one of Vietnam's longest established independent digital agencies, and Riverorchid Digital - part of the Riverorchid Group- Indochina's leading independent communications network was concluded with full due diligence in under 12 weeks from first meeting to formal incorporation of the new entity. This is against a backdrop of other M&A discussions currently underway in the market, which have mired in paperwork since years.

3. Why did you choose Vietnam to expand and enhance your digital services across the Indochina region?

Vietnam is part of the Next-11 (N-11) markets that are identified as having a high potential in becoming the world’s largest economies.  Despite short-term challenges in Vietnam, the long-term potential of this market still remains strong.

It is also worth reminding ourselves that ASEAN (of which Cambodia, Laos, Myanmar, Vietnam and Thailand are a part of) is the single largest regional emerging market in the world. Jointly in Indochina you are talking of a population of more than 236 million, which is 2/3 of USA or 3.5 UKs or almost as big as Indonesia, which explains why the Indochina opportunity is attractive for us.

We chose Vietnam as our hub because there is a good talent pool available in Vietnam and this is also where our digital teams were first formed and based out of. The maturity of the market is the highest vis-a-vis other markets. This also is in line with some of our clients’ business, where in Indochina is managed out of Vietnam.

4. You called the merger of Riverorchid and Notch a “match made in heaven”. What are their strengths and how will you combine them together?

We both have similar visions and aspirations for our business. Riverorchid Digital was keen to partner with an established digital agency to scale up their digital operations and as Notch we were keen to expand our business to cover other regional markets and Riverorchid gave us that opportunity.

With this merger we aspire to become Indochina’s premier digital agency network that is embedded within Indochina’s premier communications network.

What this does is also allows us to offer integrates services to our clients. Often clients are looking for a ‘complete’ solution covering a combination of PR, Events, ATL and Digital. With this merger we can confidently integrate all these areas and offer a seamless solution to clients.  

5. What does digital advertising cover and what are the major trends at the moment? Please give us your comments on the developments of digital advertising, and what are its advantages?

The Internet, mobile, social media and gaming have forced us to change the way we think about running our business and at the heart of these things is a new wave of consumers that are changing the foundations of businesses. Consumers have created a new digital culture and there has been a shift in the whole business landscape. Steve Ballmer, the CEO of Microsoft, once said “All the media would eventually go digital. It wasn’t a matter of if, it was a matter of when”.

And look what’s happening now. You don’t use an Encyclopaedia anymore. You visit Wikipedia. You don’t rent out DVDs anymore. You go to Torrents. In fact for brands or Agencies that want to stay ahead of the curve, they have to change faster than the industry.

Mobile phones are a huge opportunity. Today a smartphone can be bought at $150, with Internet access. For us this is of particular great interest as we now have a way to engage with ‘mass’ audiences in the Mekong or Myanmar through digital.

The biggest advantage of digital advertising is the ability to target messages specifically to certain audiences and the ability to measure what the consumer did upon seeing the message. At times TV can often result in excessive wastage and offers no ability in measuring the behaviour of viewers right after they saw a spot or a magazine ad.

6. Could you give us your projections for the market?

In Vietnam, the digital advertising accounts for about 3-5% of total media expenses, and we project it will double in the next three years. That will happen. Digital has to grow.

Within Indochina, Vietnam is the number one market in terms of population, market readiness and mobile penetration.  Then is Cambodia followed by Myanmar. Myanmar actually has a larger population than Cambodia, but it lags in Internet development, and mobile penetration. Once the market develops I believe Myanmar will surpass Cambodia.