Intense competition between local and niche brands against larger players on e-commerce and the rise of affiliate marketing are driving ad spending on digital channels, says Media Intelligence Group.
The company estimates spending on advertising and marketing communications this year will expand 3.3% to 87 billion baht. The total was 20.4 billion baht in the first quarter of this year, up 7.4% year-on-year.
Thai e-commerce value is expected to reach 1 trillion baht this year, up from 900 billion baht last year, according to the ad agency.
"Thailand is gearing up to fully enter the e-commerce era, increasing opportunities for small online merchants who have skill, creativity and can adapt to capitalise on such an environment," said Pawat Ruangdejworachai, president and chief executive of Media Intelligence Group.
"We see stiff online competition among local brands and niche brands owned by small merchants, eager to increase their market share against major brands," he said.
This is particularly evident in the categories of personal and beauty care, food, cafés and restaurants, and leisure, said Mr Pawat.
Some major or mass brands are agile and can adapt to safeguard their shares, while the challenges of the small brands is how to make consumers accept their brands. The small brands have the advantage of doing personalised marketing and using key opinion leaders and influencers to promote their products.
In Thailand, there are around 2 million key opinion leaders and influencers. The affiliate programme is the growth driver of the number of key opinion leaders and influencers.
The power of key opinion leaders and influencers and affiliate marketing in e-commerce channels are expected to drive digital advertising to 8% growth this year, according to the company.
Media Intelligence expects Thai media spending in 2024 to grow 3.3% to 87.6 billion baht, driven by the growth of digital channel media and out-of-home media.
The company's LEARNLAB research and customer insight unit expects traditional media from TV, print, radio and theatre to account for 35% of total ad spending this year, while digital media will account for 45% and out-of-home and transit media for 20%.
Mr Pawat said the challenge for both major and small brands are economic turmoil and lower consumption power, as well as the flood of Chinese products that have smaller costs.
Media Intelligence also cited Kasikorn Research Centre as saying that in 2023 the value of imported Chinese products in Thailand tallied 470 billion baht, out of the total Thai retail market value of 4 trillion baht.
The top five Chinese products in Thailand are electronic appliances with 43.3%, fresh fruit/vegetables at 10%, apparel/footwear with 9.3%, home decor at 9.1%, and kitchenware with 9%.
Mr Pawat added that Thai businesses need to increase their quality products and build efficient brands and marketing to enhance their competitiveness. Thai brands need to export to the Chinese market, which is nearly 20 times larger than the Thai market.
"We need to use WeChat and Douyin or collaborate with influencers in China to match with their culture, trust, and brand awareness," said Mr Pawat.
Thai brands need to export to the Chinese market, which is nearly 20 times larger than the Thai market.
According to Nielsen, in the first quarter of 2024 advertising spending increased 6% compared with the same period last year, worth 27.7 billion baht. TV still dominated the market with 50% of total spending, and out-of-home media had the highest growth of 16%.
Neilsen also found that 90% of Thai households have a TV, of which 45% are smart televisions that can provide online content. This is in line with its cross-platform ratings, which found that 45% of TV content was rated in the first quarter via streaming, while 55% was consumed offline. In streaming content, 16% use YouTube, 7% TikTok, 6% Facebook, 5% True ID, 11% other streaming services.