The broadcast begins with oil platforms ablaze in the Strait of Hormuz, and the threat of U.S. trade sanctions against Asia's "four dragons, " Hong Kong, Singapore, South Korea, and Taiwan. Suddenly, the screen flashes to a new four-door compact hurtling down a winding road, miraculously manuevering through intricate curves without the aid of a driver.
Shih leaps up and dashes to the refrigerator. Moments later, he returns with a handful of fruit just in time to see electronic images of 20-year-old blond males, banging on bongo drums, displaying the latest bikini underwear shorts.
TV commercials—Shih and Chen never watch them, they say. In their opinion, advertising seldom influences their purchase decisions. But Taiwan marketers disagree. In 1987, they spent US$750 million, roughly US$35 per person, on advertising targeting local consumers.
The 1980s is the decade of the consumer. The Shihs, and families like them, live amid forces that are changing Taiwan's prudent savers into eager spenders. And, with the liberalization of the economy, they are buying more and more of the imported products that now sit beside domestic goods on store shelves.
Today, the Shih kids breakfast on Kellogg's Frosties as dad leaves for the office in his Ford Sierra. At noon, mom lunches at Kentucky Fried Chicken. Later, on the way home, dad buys Heineken beer to serve weekend guests.
A new day is dawning on Taiwan, and advertising is playing a key role m ensuring that is a day full of consumer activity.
The internationalization of Taiwan's advertising industry began in 1984 when the government first allowed foreign agencies to form joint ventures on the island. Now, only four years later, Taipei hosts the offices of Ogilvy &Mather, Leo Burnett, J. Walter Thompson, McCann-Ericson, Lintas, and, of course, the giant Saatchi & Saatchi.
Founded by two brothers in 1970, the UK agency is now the world's largest with branches in 50-odd countries and billings last year of US$3.9 billion. In 1987, Saatchi & Saatchi bought a Taipei agency launched in 1982 by John Gaynor. The new company, Saatchi & Saatchi Gaynor, represents prominent clients such as Ford, IBM, Johnson & Johnson, and Kodak.
"In the last 20 years the consumer society has really taken hold in countries outside the US," Gaynor says. "And in Asia—with the exception of Japan—it has occurred mainly during the past 10 years. "
When Gaynor came to Taiwan in 1982, there were few imported consumer goods to advertise, but recent reductions of import tariffs have changed that. The automobile market is an "astonishing" example, Gaynor says. Sales of imported cars have increased seven-fold from 16,000 units in 1985 to a predicted 100,000, or 40-percent marketshare, for 1988. Of course, lower prices are a factor in this change, but ads have played a significant role in deciding which cars took large market shares.
Sales of the Ford Sierra provide a good example. Four years ago, the vehicle was promoted by an agency that emphasized the Sierra's fuel economy, aero-dynamic design, and other technical features. Only 120 were sold. Then Gaynor won the account, and immediately switched the campaign's focus. No more dry commentaries on mileage figures. The emphasis moved from the product to the buyer: the "person-lucky-enough-to-own-it" approach, which introduced a whole different spin to the advertising.
"You are the cutting edge," coo TV commercials, "and this car belongs to you." Today, sales average 800 monthly, and the Ford Sierra is the leading import in its class. "It would be wrong to conclude that we are the prime movers," Gaynor says, referring to advertising as only a marketing service. But he is not reluctant to emphasize the importance of his work, giving a concise answer to what an ad agency's main function is supposed to be: "Our job is to give a product a brand."
A brand is considerably more than a symbol used on product packaging, and brand recognition is the quality that links the product with its buyers, distinguishing it from its competitors. To determine these relationships, the agency must devote considerable time and money to extensive research.
At Brain Advertising Co., an affiliate of Foote, Cone and Belding, such research has been the key to its successful promotions for Bristol-Meyers, Sony, Vespa, Kentucky Fried Chicken, and 7-Eleven, which recently opened its 200th outlet in Taiwan.
At the outset of any ad plan, Brain strategists ask themselves two questions: Does the consumer relate to the product in a rational or emotional way? And does the product require a high or low level of involvement? Sounds simple enough, but the answers come only after long hours of field research, telephone surveys, and analysis.
Taiwan studies show that the purchase of insecticide, for example, is based on rational thinking with little emotional involvement. Decisions to make long-distance phone calls, on the other hand, are prompted by strong emotions. This knowledge helps marketers plan their campaigns. According to Edwin W.K. Lo, Brain's vice president, Brain and nine other local agencies all contribute data to the Consumer Assessment System, a reference resource that details the who, what, when, where, and why of consumer perceptions toward 25 types of products.
Why would competing agencies pool data? After all, says one Chinese proverb, information is gold. True. Yet partial, inadequate information can be nearly as devastating as no information at all, and the Taiwan market is not yet well understood. Moreover, it is in the process of extremely rapid transformation.
"Several years ago," Lo says, "there was no cooperation between agencies, but this has changed." Reduced cost is a major factor, as are the industry's new international outlook and the demand of foreign clients for concrete information when launching a product. For local firms, sharing resources now makes this service possible.
Yet, for entirely alien products like American-style breakfast cereals, there is no information to be shared. Foreign companies must collect their own data as they attempt to persuade consumers to try something new. "For the most part, it is hard to get people to change what they eat," says Cole Jones, assistant account executive of the Leo Burnett agency, whose client list includes United Airlines, Hewlett-Packard, and Kellogg. "But the success of McDonald's here shows that with kids it is another story."
And kids became the cornerstone of Leo Burnett's campaign for Kellogg, maker of Frosties, Coco Pops, Corn Flakes, and other breakfast foods. Available in the past through traders who imported them in U.S.-made packages, they were purchased primarily by Taipei's expatriate community. It was not until late 1986 that Kellogg started taking the Taiwan market seriously, and decided to woo the Chinese population.
Experience elsewhere taught Kellogg executives that mankind lacks an innate ability to decide what to do with a box of cereal. When introduced in Spain and Korea, their breakfast foods were confused with snacks, and put on the market shelves with crackers. Later, the company had to re-educate consumers with ads explaining the basics. To prevent similar problems on Taiwan, Kellogg designed a Chinese-language box showing milk being poured into a bowl of cereal. Next it began a modest campaign of store promotions, direct mailings, and advertisements in children's magazines.
"In May, we went on TV," says Jones, who calls it the island's most effective medium. "The selling concept is that Frosties gives more energy because it is balanced and nutritious." The commercial depicts a tug-of-war in an elementary school gym. When the contest ends, Tony the Tiger—"not a clown, but a well-liked authority figure" —consoles the defeated team. "You want energy?" he asks in Mandarin. "Try my Frosties." You guessed it, the losers win the rematch.
Another well-known agency to open its doors in Taipei is Ogilvy & Mather. Its philosophy, according to its brochure, states" ... the creative department is, and should always be, the heart of any advertising agency." Maybe that is why it ranked "Tops for Creativity" in surveys in 1986 and 1987 by "Media & Marketing," a regional trade magazine.
According to T.B. Soong, Ogilvy & Mather's General Manager in Taipei, the firm is able to attract top artists and copywriters because "We try to make it a nice place to work." That does not just mean a pleasant office and good pay, although these are important. It means smoothing frictions between a creative staff proud of their work and the AEs, the hard-driving account executives, who must present it to clients.
"Most Taiwan agencies coddle their AEs," Soong says. "It makes sense—they are the people who bring in the money." But O&M demands they try to "sell" concepts to sometimes recalcitrant advertisers. "If we think the creative work is good for the client," says Soong, "we will fight hard for it." Still, top-rate ads require more than imagination. "A business can lose market share with ads that win awards," said Chris Lapsley, executive creative director. "Just getting noticed is simple, anybody can do it. The creative ad must communicate a message rather than offer artistry for its own sake."
Lapsley adds that when advertising a product, it is not the product's features that are most important, but the results that the consumer hopes to attain from the features. The person who buys a drill, for example, actually wants a hole in a piece of wood. Advertising must emphasize this point, and it must tell the truth. "Consumers are very smart cookies," he says. "You can persuade them with lies one time, but they will never buy your product again, and they will probably hate your company forever."
One of Ogilvy & Mather's local clients is Heineken, the Dutch brewer whose current global promotion centers around the line: "If you make a great beer, you don't have to make a big fuss." For the Taiwan market, Heineken asked the agency to launch a campaign targeting customers in the higher socio-economic levels.
The agency used an unusual approach, devising a simple print advertisement with "replaceable" headlines intended for one-time use. Since April 1987, 59 versions have run in Taiwan magazines. "We sweat and strain over those lines," Lapsley says, describing the efforts of his Chinese copywriters. "We might go through 50 before picking one. "
When the brewer representatives visit Taipei, Lapsley explains the headlines selected for the campaign. "They don't have to sound brilliant in English," he said, "but they do have to sound brilliant in Mandarin."
Lapsley confirms what the pundits say: "In advertising, an agency is only as good as its last campaign."
Nearly four years have passed since foreign agencies first established joint-ventures in Taipei. What impact has this had on the local scene? How big is their total market share? And how much of it comes from imports? Do these foreign firms differ from their Taiwan cousins?
According to Simon T.K. Hsu, chairman of the Taipei Advertising Association, only "12 to 14 percent of the advertising placed by the island's agencies is handled by Ogilvy & Mather, Saatchi & Saatchi Gaynor, Leo Burnett, and other firms operated by home offices overseas." And only 15 percent of the earnings of these multinational agencies comes from the promotion of Western goods. A 1987 survey of Taiwan's top-10 advertisers supports Hsu's claim. Only Nestle was listed with local behemoths like China Airlines, President Enterprises, Wei-Chuan, and Hey-Song, and with Japanese conglomerates like National, Sanyo, and Sharp.
But this may change. The Taiwan advertising industry expects an annual 15 percent increase in billings for the next five years, spurred by the ROC's economic growth of 7 percent. Some ad men think the percentage of foreign business will rise sharply. "Within three years, half of the agencies' business will be with foreign clients," Soong predicts.
But will cultural differences hinder the performance of international firms in the Taiwan market? After all, in business circles, horror stories of marketing mix-ups abound. Ad men remember the promotion of Nova cars in South America where "no va" means "no go," and confusion with Chinese is even easier. There would seem to be wonderful opportunity for expensive failures. Beyond language, China's complex culture further complicates the situation. Countless cultural details need to be recognized; for example, the fact that white calls up images of death and funerals.
But even cultural orientations can be flexible, Gaynor says. Traditional restrictions on the use of white "haven't stopped brides from marrying in white gowns instead of the traditional red." He, and the others interviewed, said that Chinese culture actually presents few barriers to Western advertising methods.
The question remains open, however, about how best to manipulate local customs to produce advertising advantages. The strongest elements of Chinese culture are moderation and the family, says one managing director of an ad firm, but how best to use these to sell products remains open to market testing and experimentation. "The psychology of advertising is not as complicated as one might think," Soong says. "Most concepts used overseas work here as well."
But ads must reflect the material values of the target audience. For example, to promote upscale jeans, an ad agency may have to decide whether the model in an advertisement is depicted as the owner of a Mercedes or a BMW. Which generates a stronger association with affluence is a question that locals can best answer. And in Taipei's international agencies, it is local people who provide the answers. By and large, ad staffs are Chinese, with the exception of a few representatives from the parent company. "We are able to sell foreign products here," says Soong, "because we are local. "
Advertising is a sensitive indicator of a nation's health. When times are good, agencies enjoy fat budgets, and the growth of advertising in Taiwan during the 1980s indicates an extraordinarily active economy. Parents are sensitive indicators as well, but of a different sort. "At one time, no one wanted their kids to enter the advertising field," says Lo of Brain Advertising. "The industry is becoming more respectable." Respectable and also lucrative—so that perhaps someday parents like Shih Hsiao-ku and Chen Li will hope their own children become ad men.