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Published on March 10, 2008

The Bt42-billion tax-exemption package will likely boost consumer and business confidence after a long period of gloom, yet it is unlikely any positive results will be seen for three to six months, says a leading advertiser.

Creative Juice/G1 CEO Witawat Jayapani believes the government's plan will boost advertising 5 per cent this year after experiencing the lowest growth in eight years last year at 3 per cent to Bt93 billion. Growth registered a negative 7 per cent year on year in January and February.

TBWA\Thailand managing director Chaipranin Visudhipol, Advertising Association of Thailand chairman emeritus and Adman Organising Committee chairman Parames Rachjaibun and Witawat agreed that the tax exemptions combined with the government's mega-projects would indirectly boost consumer spending. This is because enormous jobs will be started, and they do not have to pay tax at the same high level as before. That will leave more money in their pockets.

"We hope the measures will help boost consumer spending in the retail sector. Thus, competition within the industry among retail operators will be very intense, due to more advertisement and marketing activities, which in the end will have a positive effect on the advertising industry," Chaipranin said.

Witawat was even more optimistic that consumers would start to spend more. Thus, advertisers will beef up their advertising and marketing budgets as early as this month or next.

"The high-season shopping period and hot season are coming in which beverages, sun-protection cream and the air-conditioning market will become fiercely competitive" he said.

Chaipranin felt although consumers were likely to appreciate the government's economic-stimulus policy, it did not mean they would immediately go out and shop for all of their desired goods. Many will still want to keep money in their pockets and wait to see the government's stability and performance for a while before deciding to start spending normally again, he said.

It will also take another year for consumers really to feel they are paying less tax.

Similarly, Parames said consumers were already convinced to be very careful about spending. Their spending priority had already changed to renovating their current homes instead of buying new ones, as well as buying second-hand vehicles instead of entirely new ones or even delaying their plans.

"The point is the government must be able to convince people really to change their shopping behaviour, to follow their shopping plans," said Parames.

Nevertheless, even without the economic-stimulus package, the advertising leaders have witnessed many advertisers being more active in planning their advertising and marketing strategies with advertising agencies.

Both Parames and Chaipranin said companies in the consumer-products sector continued to be major spenders, because they had the main products for daily life. Telecommunications is another expected top spender this year.

Media channels that will certainly promise high returns will continue to be popular among advertisers. Most are traditional media, because Chaipranin said they were less willing to use other new media channels. Thus, new media channels like digital media would experience slow growth.

Parames saw more possibilities for advertisers to spread their spending to marketing activities and some new media channels, in order to ensure more impressive returns. Thus, spending will not go into the advertising industry in a normal manner.

Nitida Asawanipont

The Nation