Vincent Lam’s Asiaray business looks to a broader canvas than selling advertising by the billboard and it’s enjoying great success by using every corner and pillar to “tickle the five senses”.
By James Ockenden
Lam Tak Hing, aka Vincent Lam FCPA, aka China’s “Billboard King”, is in an ebullient mood.
The company he founded and still owns almost 100 per cent of is celebrating its 21st birthday. But as Lam cuts the birthday cake with staff in his Hong Kong headquarters, a closer look at Asiaray Media Group reveals his moniker “Billboard King” to be something of a misnomer.
In fact, the company derives just 17 per cent of its revenues from actual billboards, with the bulk of sales coming from Lam’s “space management” strategy – an advertising concept that takes as its canvas the whole fabric of a city, airport or metro line.
“Most other operators in the industry adopt a policy of ‘buy wholesale, sell retail’,” says Lam, outlining the classic out-of-home (OOH) advertising strategy of building an inventory of billboard and light box sites and then selling them one-by-one or in lots to the highest bidder.
“This is distinctly different from space management, from what we do.”
To Lam, there are no dark corners, no unwanted pillars, no part of a property which cannot be used to “tickle the five senses”, as he says.
“We really look at the whole space itself, rather than how many units of light boxes or panels we subcontract from the landlord.”
Lam’s strategy has propelled Asiaray to phenomenal success – the firm has seen 20 per cent compound annual growth rate over its four Hong Kong metro lines over the past seven years, beating all other metro advertising firms in the city. And Asiaray has been responsible for some of Hong Kong’s most iconic advertising events in recent memory – two eye-catching building wraps of Hong Kong’s prestigious One Peking for Ermenegildo Zegna, H&M’s 126-metre LED Christmas greetings covering the CITIC Tower and BMW’s enormous Mini Cooper bursting out of a multi-storey car park near Hong Kong’s busy cross-harbour tunnel entrance.
Lam’s business began in 1993 as a railway advertising firm. But while China’s advertising market was rapidly opening up, trains and platforms proved to be the wrong move, as the passengers’ demographic wasn’t appealing to Western advertisers.
“Not big spenders,” is how Lam succinctly puts it. Within a month or two he shifted his focus to airports and worked at building a portfolio.
While airport advertising today is very much “mass market”, back in the early 1990s airports were considered niche, particularly in China, and that was perfect for the young Lam’s modest capital.
“I had no idea about advertising before. I just thought advertising would not be too capital intensive, and amongst the non-capital intensive business, airport would be even more a niche market. This was my accounting mind at work!”
Lam’s timing could not have been better. Before 1990, China remained a mystery to foreign advertisers. But Deng Xiaoping’s famous 1992 southern tour changed this, shining a spotlight into a Chinese hinterland not well-known in the West and implementing growth programs which had marketers salivating.
Hong Kong border town Shenzhen is an impressive example of just how successful Deng’s policies were: the city’s population grew from 880,000 in 1990 to around 3 million three years later, with most inhabitants under age 30. Here was the largest untapped consumer market in the world, and firms such as Nike, Toshiba, Volkswagen and General Motors rushed to gain a share.
Advertising across China grew 50 per cent in 1994 compared to 1993, and has grown at around 20 per cent year-on-year since.
"I'm a drop-out accountant. I only practised a very short time.” – Vincent Lam
With his airport strategy, Lam was in the right niche in the right place at the right time: “The foreign advertisers thought, ‘We need to target the rich and influential in China’, and those were the people who would be flying … so the airport in China was a new place for brand building.”
Starting with Guangzhou Baiyun International Airport, Lam spent many years steadily building the business and his relationships with other airports, including Beijing, Shanghai, Chengdu and Shenzhen. But Asiaray’s real breakthrough did not come until 2007, when the firm obtained something quite elusive in China – exclusive advertising rights to a whole property.
Exclusivity is the key to Lam’s entire space management strategy – without it, the media in a property simply becomes commoditised and disparate. “If you sublet the advertising rights to a few people in a few locations, the only way they can compete is on price. So it doesn’t enhance the value of the airport’s media inventory,” Lam observes.
By gaining exclusive rights, Asiaray’s space management strategy could really fly. But of course, selling the concept to Chinese state-owned enterprises (SOEs) was not easy.
“Back then, the airports were all SOEs, they were all very conservative, they wanted to control everything possible. They might [have given] some rights to some people like us, but giving one company exclusive rights was a very big deal. It required a lot of reasoning, a lot of courage,” he says.
Lam says he was fortunate that ongoing SOE reform has paved a way for more progressive airport management – but even today, he says, only a fraction of airports are willing to offer exclusivity. “For the top 30 airports, the busiest 30 airports in the whole of China, only 14 of them have given sole exclusive rights to any company,” he says. “And among these 14, nine belong to us!”
Perhaps “Airport King” would be a better moniker. But as interesting as airports are, Lam’s dream has shifted to a bigger canvas, to advertising on China’s metro lines.
“As far as outdoor is concerned, metro is probably the biggest you can get.” Asiaray has developed relationships and business, securing a total of ten metro lines where Asiaray has exclusive rights.
In metro advertising, especially in Hong Kong, Asiaray was a scrappy new kid on the block, and this worked to its advantage, says Lam.
“We didn’t have the ‘star’ stations like Admiralty or Central in Hong Kong, where people come to you. We had these lines. They are not star stations, we have to work. We have to be creative.”
So when Old Town Coffee came to Asiaray with a HK$200,000 light box budget for a second-tier metro station in Hong Kong, Lam and his creative team got to work.
“We proposed this little corner. There’s a lot of pillars, so not very desirable for advertising, not the most impactful location, but we made it fit their idea of a congested 19th-century old bazaar, and we could pipe in the coffee smell. They loved the idea. The budget went up to over a million because they liked it so much,” he says.
But this case also illustrates why not every advertising company adopts a space management strategy.
“Selling light boxes is easier!” says Lam.
“For Old Town Coffee, for example, it was very challenging to make sure the smell was right. Coffee people in particular are very particular about the smell! And especially since this is artificially created, it could be bad. We had to do a few rounds to get it right. So it is not like a light box package where the agency can do the design for you, go to the printing house and we install it, done, easy. Space management is not easy.”
While the timing of socio-political factors and Lam’s value-seeking strategy contributed to his success, technology played a huge part, too. While OOH advertising is, says Lam, one of the world’s oldest advertising concepts, it was the new technology revolutionising poster printing that really pushed its development.
“When I was younger, OOH advertising was painted on the walls, or companies would use silk screen printing to print small sheets which were stuck together on iron billboards,” he says.
The quality was patchy. “First, it was very easy for sheets to be misaligned. And second, a new advertisement was usually just stuck on top of the old one. It gets thicker and thicker, the surface is not smooth and it’s not very desirable.”
But in the early 1990s, the inkjet transformed the OOH advertising world. “With inkjet, you can print virtually any size, at photographic quality,” says Lam. Many factories sprang up providing this service, and costs tumbled.
“To give an example, in the early days, if we printed a 100sq m poster for Marlboro, it would cost over HK$100,000, just to print. And the advertiser would ask, ‘How many years is the colour guaranteed?’ How many years! Nowadays, it would cost around HK$20 per sq m, and they won’t ask how many years it is guaranteed because everything changes so fast!”
This inkjet revolution happened at just the right time for Asiaray. “China in a way is not lagging behind the rest of the world, because China’s advertising industry was born the same time as the whole industry,” Lam explains.
While Asiaray holds an impressive portfolio of digital OOH advertising, “digital as a business proposal is probably not the future,” says Lam. As he sees it, most digital advertising today adopts a timeshare model.
“If you use digital for one advertiser, it’s very good, excellent result. But usually people will now try to cram in 10, 20 advertisers on a timeshare basis. I just don’t think the market will go that way. In a few cases it will work, but in a lot of cases it does not.”
And when it comes to technology such as eyeball scanning, Lam is sceptical. “Does the technology work? Can it really tell me how many eyeballs looked at the advertising? Well, let’s say it can,” he says.
“But it still can’t tell me whether they liked it or not, whether they recall it. It’s too quantitative, not qualitative.”
Such a view doesn’t sound like an accountant’s mind at work.
“Well, I’m a drop-out accountant,” he says with delight. “I only practised a very short time.”
In fact, Lam has a very creative soul and believes too much quantitative thinking may be the death of a business in China.
“I think the formal business education that we have nowadays goes too far. It may do more harm than good in a way. For example, ‘optimisation of profits’ is probably rule number one, but I don’t think this is the way we can do business in a place like China. If you want to be in China for the long haul, it’s more important to be brothers to your neighbour.
“We are talking about non-optimisation of profits instead of optimisation of profits. Perhaps we shouldn’t say that when we are trying to attract new investors!” he says.
But Lam’s attitude of balance is unlikely to put off investors. Frost & Sullivan forecasts OOH will continue its two-decade boom, with a further 18.4 per cent growth forecast between 2013 and 2018.
“Official figures show 83 new airports in China by 2018, not to mention expansion of existing airports,” says Lam. “Metro line growth will be even more stunning: 95 new lines planned by 2018, more than double the existing number. If I can get a third, a fifth, of those, I will be on the world map,” he says. “It really is not exaggerating to say this is the opportunity of a lifetime.”
What I Learned
“It’s not easy doing the same thing for 21 years. I had many chances for other businesses during these 21 years, because you know China is opening up and it poses opportunities in many areas. But when I set my mind to doing this, I wanted to make it work. I’m persistent.”
“When I started, there were some investments I did which were not very profitable, even lost money. But I made no excuses, I just paid. If we have to pay, we pay, this is how I want to do business. There are three ‘core values’ at Asiaray and the first is integrity: you say something, you keep your promise, you mean it.”
Leave something for others
“I don’t think one should be too calculating as to how many dollars you win or lose. I don’t mean don’t count, don’t work hard, but just don’t be too calculating. Instead of squeezing your business partners to the last dollar and cent, leave something for others. If you make a dollar more or less here or there it is not going to make or break anything.”
This article is from the December 2014 issue of INTHEBLACK.