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Advertising to be hit by economic woes next year, warns industry
A shopper’s attention is captured by instore advertising at a Ho Chi Minh City supermarket. Not all Vietnamese companies will be able to maintain their advertising spending next year, experts have warned.
Though the advertising industry has not yet felt the full effect of the economic downturn, the year ahead is likely to be tougher, industry insiders fear.
Tran Thi Thanh Mai, general director of market research company TNS Media Vietnam, said she expected total spending on advertisements this year to hit US$500 million, a 17 percent rise over last year.
Last year, the growth rate had been 18 percent, compared to 40 percent in 2006, according to TNS Media.
Mai said despite the decline in the growth rate, the situation has turned out to be better than expected considering the global economic downturn.
A recent survey by TNS Media found that in the first three quarters of this year, the biggest spenders were mobile phone service providers and producers of fast-moving consumer goods, beverages and dairy products.
The top 10 comprised Unilever Vietnam, P&G Vietnam, Vinamilk, Dutch Lady Vietnam, VMS-Mobifone, Tan Hiep Phat Beer Company, Nestle Vietnam and Vinaphone.
Nguyen Hoang Anh, managing director of Golden Advertising Company, said such companies cannot cut ad spending but have to continue promoting their products and services even during difficult times.
Besides, most companies had decided on their advertising budgets before the economy started slowing down and so did not have to change their plans, she explained.
But not all companies could afford to continue with their earlier plans. The TNS Media survey found that businesses in the banking and tourism sectors, the hardest hit by the economic downturn, have spent less money on advertising this year.
Mai said 2009 would be a tough year for the advertising industry though it is hard to say yet how much it would be affected by the economic crisis.
“The US and EU are now in recession. But in the Asia Pacific region, even experts cannot predict what will happen next.”
Mai said if the region does not fall into a deep recession, Vietnam would see an 8 percent increase in advertising expenditure.
But Nguyen Quy Cap, director of Youth Advertising Company, warned that when the economy slows down, businesses have to cut spending on advertisements.
Unilever, for instance, could slash its advertising budget by 40 percent, he said.
Anh said, however, companies with deep pockets can step up promotion even during a downturn to boost market share.
Advertising executives said at a time like this it is very important for businesses to carefully consider which medium would suit them best.
Vietnamese businesses tend to choose media arbitrarily instead of doing it on a rational basis.
According to the TNS Media survey, 76.9 percent of the total advertising revenue went to television. Print media ranked second with a 22.8 percent share. Radio ads accounted for 0.3 percent.
Although cable television and the Internet were not included in the survey, Mai said they are the two media that are attracting more ads.
Ong Xuan Minh, project manager of 24h Online Advertising Company, said from an admittedly small base, online advertising has been growing at an annual clip of 120-150 percent in the last few years.
Minh said he soon expects it to account for 2 percent of the total industry revenue.
Small businesses like fashion shops, restaurants and clinics favor online ads, he said, noting that some of them spend their entire advertising budgets on these.
Since advertising space on websites is cheap, it is suitable for small businesses, especially now.
But to attract more clients, online advertising companies need to bolster their reputation by providing statistics using reliable Web traffic counters, he said.
Online advertising companies now use different Web traffic tracking systems, making businesses hesitant about buying spots on websites, he added.
Many ad agencies also said they are worried that the draft Advertising Law would hurt the development of online advertising.
For instance, they said, a proposed provision banning ads on front pages of online newspapers should be scrapped.
TBKTSG, thanhnien
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