T.B. Song is known in China’s ad industry as one of its most experienced veterans. Having worked in the communications field for over 40 years, Song helped to establish the first foreign invested ad agency in Taiwan in 1985, Ogilvy & Mather Taiwan. In 1991, he helped to set up Ogilvy & Mather China and was named the new joint venture’s Chairman. The agency has since become a communications giant, with arms in advertising, marketing, and public relations, among others. We invited Mr. Song for this exclusive Business Now interview to discuss the history of China’s ad industry and the role multinational agencies like Ogilvy have played in its development.
Could you talk about Ogilvy & Mather’s official entrance into the Chinese mainland, and what the advertising industry was like at that time?
When China’s economic reform and opening up began in the late 1970s, the government owned the ad industry. There were two kinds of Chinese ad agencies: one for domestic audiences and the other for exports targeting international audiences. Beijing, Shanghai, and Guangzhou all had agencies doing export advertising because many manufacturers of exported goods were based in these cities.
Was Ogilvy & Mather working on export advertising at that time?
Yes, we had representative offices in Beijing and Shanghai in 1985. It was quite interesting at the time. If manufacturers wanted to advertise overseas they had to write up a plan and get a budget approved by the government, and then hand over that budget to their ad agency. So the process was quite different. But because advertisers dealt with the foreign press their standards were more international.
In 1991, Ogilvy established a joint venture with Shanghai Advertising Group to serve our client Unilever, which had recently moved their headquarters from Hong Kong to Shanghai.
That must have been an interesting year to found an office in China because of the political crisis. How were you able to establish a foothold?
We focused on domestic advertising because manufacturers wanted to promote their brands in China. Meanwhile, our Chinese partners handled the export side.
What changes have you seen as the Chinese advertising industry evolved?
When we started out, we were bringing many international clients to China. At that time we really depended on expatriates from Taiwan, Hong Kong, the US, and Europe to make those connections. Then we would train the local staff. The biggest challenge was identifying the right staff. Over the last few decades the talent pool in China has grown dramatically. Today approximately 95 percent of our staff in China is local.
The quality of advertising is also definitely improving, but the real change has been the shift from simple advertising to its segmentation. The media environment used to be very simple. There was only CCTV, provincial TV stations and newspapers. Media prices were reasonable and you had good channels for marketing as people placed a lot of trust in CCTV. Even today, when we conduct research in the US and China we find that Chinese people trust ads on CCTV twice as much as they trust those in foreign media. So once you had a reasonable product and price, coupled with awareness advertising, the product sold. That was the situation in the 1990s, but competition is much fiercer going into the 21st century.
More competition between advertising agencies or between TV channels?
Competition between clients. You can no longer only do awareness advertising, spend money and get results. It’s more difficult now
The good news is that today there are many more channels to choose from. If we only had CCTV then only one type of advertising would need to exist. But today, other forms of media like mobile and the Internet can actually become quite complex, so clients have become more dependent on the expertise and services of agencies.
First appeared on: The American Chamber of Commerce China “Business Now” magazine
To view full article, click here.