An article in The Nation last week looked at the rise of digital in Thailand’s advertising industry. Last year I blogged that the Thai online advertising market was tipped to be one of the world’s biggest growing in 2010 – due to its low starting base – and the piece follows this lead in reinforcing the increasing influence of the internet and consumer habits and, in turn, advertising spend, whilst emphasising that established media remains the biggest influence by a large margin.

The article initially explains that advertisers are beginning to reallocate funds diverted to traditional media, in the wake of 2010′s political protests, back to digital initiatives.

Kitti Chambundabongse, chairman of the Spa-Hakuhodo ad agency, said that despite the major disruption caused by the unrest, the advertising industry had grown on a par with or slightly higher in real terms than the country’s economic growth last year.

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“The media landscape is being shaped towards the worldwide trend where we have been seeing the consistent increase of spending in the social media, in-store trade, touch-point and transit portions. We will witness more of these alongside traditional media in the years to come,” said Kitti.

“There is evidence that digital and social network channels are increasingly becoming necessary as the driving tools for creating stronger relations between brands and consumers in many product categories,” he added.

However, as I stated last year, Thailand’s digital divide – born out of the country’s 26.3% internet penetration rate – means traditional media such as TV, print and radio are hugely more effective channels for reaching the country’s  mass market audience.

Kitti said that the major proportion of media spending was, however, still among the major and prime traditional media like television , cinema, newspapers, magazines, radio and billboards, which are still regarded as major touch-points for major brands with mass distribution and mass target groups.

However, the online and digital audience is a very defined one which, based on the associated cost of hardware, subscriptions and access to technology, limits many Thai citizens from using the internet regularly, for example at home. This divide and the financial commitment necessary to own a home-based internet access point, means those on are likely to be of a more affluent, urban-based demographic which plays positively for businesses targeting shoppers likely to spend in higher volumes, or purchase aspirational/luxury goods.

The article summarises:

Kitti added that media consumption among the upper middle class had been shifting towards digital media and cable channels, and of course mobile smart-phone content and applications.

“Consumer touch-point media and creativity are most important in prompting action for purchasing my brands relative to the target groups,” he said.

The article includes research data from the Initiative agency whose findings suggest that online advertising increased by 30% in 2010 year-by-year.

Thailand’s overall media expenditure is expected to have come in at about Bt90 billion last year. Television is still ranked first, with 95 per cent of consumers across all regions watching every day. About 93 per cent of consumers across all ages also watch television on a daily basis.

Meanwhile, online advertising spending increased by 30 per cent to about Bt1.9 billion last year, representing a huge rise from the 2007 level when expenditures reached only Bt800 million, according to the National Electronics and Computer Technology Centre and Kasikorn Research Centre.

Overall advertising spending on cable TV reached Bt800 million last year, according to estimates by the 54 leading cable-TV stations.

According to Initiative, ad spending on TV increased by 16 per cent last year, when inflation is taken into account. Excluding inflation, however, the rise was just 0.3 per cent to Bt70.4 billion. Television lost viewers and efficiency during the year, the agency said.

Meanwhile, the number of households installing cable or satellite TV increased by 52 per cent from 6.3 million in 2009 to 9.6 million last year. The number is forecast to increase by 49 per cent to 14.3 million this year.

Today, about 46 per cent of households across the country have cable TV, with some 31.2 million viewers. It is estimated that cable TV will replace all antenna-based TV by 2013.

So while Thailand boasts an impressive, growing social media audience – with Facebook enjoying more than 6.5 million users – as a channel it represents a mere a drop in the ocean compared to TV’s 93% consumer penetration daily and cable’s 30 million cable viewers, of which 9.6 million were new connections last year.

Using the estimates for overall spending, online works out at around 2.1% of the total advertising spend. While that is a big increase on previous years, it is nothing compared to some western markets where high levels of access to the internet, and matured consumer behaviour online have pushed advertisers to spend more online, with the sector representing more than 50% total advertising spend.

As I mentioned last year, and in almost any point referencing the internet in Asia, mobile is a critical part of the future. With fixed line internet access beyond the financial means of many, mobile is the potential catalyst to increase Thailand’s internet access as a nation and in turn develop consumer media consumption to include more consumption online.

However, advertising is hugely difference on a mobile phone than through a regular internet channel. From speaking to executives in the Asian mobile advertising community I get the impressive of a buoyant mood, perhaps down to the shortcomings of online advertising in its current state and the huge growth which smartphones and mobile internet usage in gaining across the region as a whole.

Either way, online ad spending in Thailand will continue to rise, driven by social media and an increasingly influential online media landscape, though the prospect of it crossing any like 10% is unlikely for now.