Advertising agencies are predicting another gloomy year in line with the economic and political situation, expecting lower ad spending by public and private organisations as well as consumers.

Thailand's advertising industry, worth more than Bt80 billion last year, is expected to be stagnant or grow only 5 per cent at best this year, affected by various uncertainties.

"I think the overall industry will not witness any real growth this year. The growth, if any, will be only from media inflation," said Kitti Chambundabongse, chairman and CEO of Spa Advertising, a leading Thai agency.

Kitti said consumers were reluctant to spend money, because they were very cautious in the face of economic and political uncertainties.

For instance, the current government has tried to promote social order by trying to launch a series of regulations, such as a ban on alcohol advertising.

Kitti said the real-estate sector, one of the big advertising spenders over the past three or four years, was reducing their ad budgets this year. Government agencies and state enterprises will also spend less on advertising.

Kitti said Spa Advertising's total billings amounted to more than Bt1 billion last year, about 10 per cent lower than in 2005. Major business clients like Singha, Osotspa and PTT spent less on advertising.

"I'm still optimistic we can start catching up again," said Kitti.

Advertising Association of Thailand president Witawat Jayapani predicted the overall industry would not show any large growth this year.

"I don't think the local ad industry will grow more than 5 per cent this year," he said. "Many worries from last year still exist, including political uncertainty and a sluggish economy. Many business players don't want to launch products at this time."

He said the sufficiency-economy concept championed by the current government has had a negative impact on personal-loan and credit-card operations, which normally boost spending. Consumers are reluctant to spend money, particularly for big-ticket items like houses, cars or luxury products.

Witawat said demand for housing had switched from high-value homes priced at more than Bt3 million to cheaper ones costing less than Bt1 million.

Witawat, who is also CEO of leading ad agency Creative Juice\G1, said the company reached its target last year in total billings, growing 15 per cent to Bt2.7 billion. "However, we expect this year's billings to be the same as last year's. It will be okay for me if our billings are not more sluggish than last year," said Witawat, adding that some customers had not committed to spending advertising money, while others had started cutting expenditures.

Prasert Eamrungroj, founding partner of Brand Connections, a local leading media-planning and -buying agency, said the amount of ad spending by business firms in the first quarter would be reduced significantly from last year.

He said some business clients had declined to make any decisions on significant issues. They were willing to suspend media spending and wait for the next four or five months to see some settlement in the economic and political uncertainties.

"What we, as the business sector, want to see is the speed of the interim government in handling the crisis, as well as their concrete measures to manage the problems," said Prasert.

Celebrating its 10th anniversary this year, Brand Connections recorded total billings of Bt1.4 billion last year, carrying 40 brands from 25 business customers in its portfolio.

Prasert said some television stations and program producers decided to increase the rates for commercial spots on popular and highly rated programs, in order to compensate for other programming that brought in no money during this time of shrinking demand in the market.

Channel 3 this month increased the ad rate for its "Rueng Den Yen Nee", the evening news talk programme, by almost 30 per cent to about Bt170,000 per minute. The price increase was after a programme reshuffle and the introduction of Sorrayuth Suthassanachinda as the new co-host on the programme. Thai Rath also increased the price for some sections of its new newspaper.

"With existing customers suspending media spending, the only way for media agencies to survive is to look for and recruit new potential clients," said Prasert, adding that some media agencies had started introducing a price-dumping strategy to gain new customers.

Kwanchai Rungfapaisarn

The Nation