zero growth expected for ad spending this year

Advertising expenditure is expected to experience zero growth this year, according to the Advertising Association of Thailand.

President Witawat Jayapani said that due to the current combination of negative factors, this year's expenditure would be at the same level as 2008. The projection is based on a number of external factors, not least the recession in the United States, which will affect Thai exports and therefore lead to higher unemployment. That will in turn impact the purchasing power of consumers.

Moreover, banks are increasingly hesitant to grant new loans to clients.

Witawat, who is also a chief of Creative Juice\G1, estimated overall ad expenditure in 2008 to drop by 3 per cent from the previous year's level.

"Advertising agencies should give good advice to their business clients at this time of difficulty. Customers want to be assured that all ad expenditure will be used with a good return on investment, and particularly in a measurable way," said Witawat.

He added that ad agencies should engage in fair competition and not cut prices to gain custom.

"Many agencies, particularly those based in the US, have been already ordered by their parent companies to tighten their belts and not invest in new business expansion. Those who have shareholders or partners which are in the financial business will be mostly impacted by the global downturn," said Witawat.

However, he said the Thai business sector had still had strong fundamentals and great potential.

Kitti Chambundabongse, chairman of Spa Advertising, said: "I'm projecting another growth year for us. We just have to be very competitive to get a bigger part of a smaller cake."

The advertising industry, if taking real growth into calculation, registered no growth during 2006 and 2007, and was even worse last year," he said.

Kitti said that the industry would contract even further in 2009, but opportunities are always open for those who think positively and play it smart and play it hard.

He said Spa has the capability and youth in its new-generation team that makes the agency bigger and better in "fast-forward speed" to assist clients' brands to grow their market share, plus a new business-drive strategy to make inroads into other segments that it is not yet handling.

"We never lay off any staff during a no-growth period. So my option is clear, that my new managing director and our existing and newly recruited young team of strategists and creatives can and will beat the odds," said Kitti.

"I just presented to my shareholders' board yesterday, and informed my board of directors, that Spa and FMC Group always maintain sustainable growth in profit. Last year we grew 10 per cent, so why not another 10 per cent at least for this year? Working life will never be the same in a period of downturn. Change the paradigm, then we can make it exciting and challenging," he added.

Meanwhile, the Mindshare marketing and media network predicts a tough 2009, with negative spending as global economic conditions start to bite and the travel and tourism sector struggles to recover.

Paul Gibbins, leader of Mindshare Thailand, said: "Overall, 2008 was a year of highs and lows. The year started out positively with a newly elected government and Thailand having strong economic fundamentals. The Beijing Olympics were also a positive force.

"However, since then advertising industry spending has been declining each month, with October being minus 1.4 per cent year on year. While we were expecting 2009 to be a slow year, the recent 'events' in terms of business and economic impact will have the effect of speeding up the anticipated economic downturn."

"As part of Mindshare's drive to constantly reinvent itself and offer the best and most relevant service to our clients and as part of the ongoing network-wide restructure, we took this opportunity to reinvigorate our company identity both internally and externally," he added.

 "This new identity heralds our next stage of growth as a new-model agency, one that acts as a marketing spine to our client's business, focusing on partnerships, consumer exchanges and collaborations."

Stephanie Bell, leader of Mindshare Indochina and Philippines, said: "2009 will be a tougher year. While Asia is expected to be less affected by the global economic downturn, Thailand will still find it tough and we will most certainly feel the global impact."

"The effect of the 2008 slowdown will make it a difficult year in 2009," she said. "In many categories market spending will decline or, at very best, be flat. Clients will be implementing more short-term tactics to drive sales and budgets will be reviewed quarterly and revised based on performance.

"Price-off or buy-one-get-one-free tactics are sure to be implemented, but they will not be the preferred choice for marketers, as profits will suffer too much.

"They will be looking for ways to build loyalty with their customers so that their product will be chosen above all other brands. The equity they have built up over the past years will hold many of them in good stead for the next 12 months of uncertain times."

Ogilvy & Mather Thailand has announced a zero growth target for its 2009 revenues.

Vice chairman Punnee Chaiyakul said the target had been based on the global strategy set by its parent company to project 2009 growth based on realistic circumstances.

"Overall advertising spending is expected to fall by about 10 per cent in 2009. We have set our target as zero growth in revenues for the year," said Punnee.