Online advertising takes up lion’s share of business budget

Beauty salons, dentist’s, and food stores, among others, spend 25-30 per cent of their revenue, while certain clothing and footwear stores spend 100 per cent of their its revenue on Facebook ads to receive orders, which shows that online advertising is the largest expenditure category for businesses.

Pham Thi Hue, chief accountant of A.O Smith Vietnam Co., Ltd., revealed, “We spend about VND1 billion ($43,500) per month on advertising on Facebook.”

According to the data from ANTS company, in 2018 Vietnam has spent $550 million on online advertising. The two giants Google and Facebook account for nearly 70 per cent of this.

Especially, people spent $235 million on advertising on Facebook, and $152.1 million on Google. Other domestic businesses/online advertising networks like VCCorp/Ad-micro, VNExpress/Eclick, Zing/Adtima only account for about $150 million.

Nguyen Thi Thanh Mai, general director of TNS Media Vietnam, said that the budget for advertising in recent years has strongly shifted from traditional to online forms.

Sheryl Sandberg, chief operating officer (COO) of Facebook, also affirmed that “In the Asia-Pacific, 74 per cent of small businesses said that using Facebook helped to increase their sales revenue and nearly 70 per cent use Facebook to search for new staff.”

Connect to compete 

Facebook and Google is the uncontested leaders in the segment and earn the highest online advertising revenue. This is predicted to last longer as Vietnam is ranked seventh in the world in terms of advertisers on Facebook with 59 million users, according to Appota.

The Vietnam E-commerce Association (VECOM) also highlighted that the two most popular advertising forms among businesses are social networks and search tools. Specifically, 64 per cent of businesses responded in VECOM’s survey that social media was the most effective method of advertisement, while 39 per cent of businesses chose search tools.

To break Facebook and Google’s dominance, Vietnamese advertisers have teamed up to create Mobile Ad Network.

Vuong Vu Thang, general director of VCCorp and the owner of the Admicro network, said that Admicro co-operated with 210 websites and online newspapers to compete with Google. The total revenue of Admicro is currently about VND500 billion ($21.7 million) per year.

However, in online advertising, technology determines the results. “Competition in online advertising relies greatly on technology,” Le Van Thanh, co-founder of Coc Coc, expressed.

Accordingly, enterprises that have a large number of users, a convenient ecosystem connecting the needs of entertainment, transportation, shopping, and payment can compete with the giant technology companies.

On September 12, the European Parliament has adopted a Copyright Reform Act, forcing Facebook and Google to prevent users from posting copyright-protected content and to share revenue with writers and musicians.

If applicable, this is a chance for Vietnamese content producers to raise their voice and for Vietnamese online advertisers can also take advantage of this.

On the other hand, in the draft Law on Tax Administration (amended), the Ministry of Finance (MoF) proposed several solutions, suggesting co-operation with the Ministry of Information and Communication to ask foreign suppliers (like Facebook, Google) to declare and pay contractor tax after the services supplied for Vietnamese organisations or individuals.

If this proposal is legalized, the competition in online advertising in Vietnam will be more balanced.