Tuesday, August 26, 2008

Advertising and the Effects of 26% Inflation

From http://www.thanhniennews.com/business/?catid=2&newsid=41212

Vietnam’s advertising sector facing hard sell

Newspaper and television advertising sales are down as businesses react to Vietnam’s high inflation and slower economic growth.

The director of a media planning and buying agency, who wished to be unnamed, said his company’s revenue from advertising had dropped 30 percent over the past few months because some clients had cut spending on advVietnam, inflation, advertising, sky rocket, ho chi minh city, hanoi, out of control, Notre Dame Vietnam, communistsertising. Some businesses that had signed long-term contracts with the agency had recently broken the deals, preferring to pay break fees rather than honoring the deals, she said. The director said her company had several pages of advertising space in newspapers but was not attracting enough ads to fill the space.

Not long ago, Vietnamese TV series were considered a fertile land for commercials. But now businesses, with their tightened advertising budgets, have become less interested in buying air time during TV series, especially after so many serials were panned by both critics and viewers. One advertising executive said a television series produced by his company was set to be aired soon but he cannot find enough clients to sell advertising spots. “We are allocated air time during each episode for commercials and if we cannot find clients we suffer losses,” said the executive, who wished to remain anonymous.

Some agencies have been offering discounted advertising rates so they have some money to pay the production costs of their series. “We have to try everything to attract clients because TV series have become less popular recently,” an advertising agency executive said.
Another agency said it was focusing on selling advertising spots and spaces to large companies first. After it reaches a certain level of sales, the TV channels and newspapers often offer discounted rates, which can then be offered to smaller companies.

Nicole Vooijs, chief executive officer of advertising agency GroupM Vietnam, said her clients used to increase their advertising budgets every year but now she expected some of them will cut this year’s budgets by 1 or 2 percent. Hoang Kim, director of another media planning agency, said his clients had become more demanding lately. They wanted to reduce the size of their advertisements in newspapers, reduce the frequency of television commercials and start promoting their products on radio, he said. Kim said the clients’ decision to cut their advertising budgets was taking a toll on his company’s bottom line.

At a recent seminar in Ho Chi Minh City, Professor John Quelch from Harvard Business School said when businesses cut spending on advertising it did not mean they no longer wanted to promote their products and services.

These businesses needed the help of advertising companies to promote their images in less expensive ways, for example through public relations and sponsorship activities. Vooijs said local businesses often had limited financial resources and didn’t allocate much money to advertising campaigns. She said during the first six to nine month phase of an advertising campaign these businesses could organize events and conferences to present themselves to the public. After assessing the results of the first phase, her advertising company selects the best media platform available to promote their products and services in the long term, Vooijs said.
Sabyasachi Mishra, managing director of LOWE Vietnam, said during a time of economic difficulty people tended to return to their families and so advertising campaigns were most effective when they focused on family values instead of individual heroism.

Also, as a result of price fluctuations, consumers now often choose to buy products that can be used for a long time. Therefore, commercials should highlight the high quality and durability of products, he said. Mishra said advertisements that promoted luxury and the gap between rich and poor may fail to win over the public when times were tough economically.

Source: TBKTS

My notes on this: Milk has gone from 12,000 to 21,000 vnd per carton in the last year. A litre and a half of Pepsi jumped from 10,500 to 14,000 overnight at my neighborhood convenience store and my favorite restaurant raised prices by a whopping 50% overnight. So far, the only price that has not gone up has been my fees.

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