Advertisers wary of economy

Q1 spending figures below expectations

The Thai advertising industry saw signs of a slowdown in advertising spending in the first quarter due mainly to an uncertain economic outlook and media fragmentation.

Total ad spending in all media outlets grew by only 1.3% to 2.6 billion baht.

Wannee Ruttanaphon, president of the Media Agency Association of Thailand, said the ad industry in the first three months was down from a 10% projection because the economic outlook was so uncertain.

This prompted a delay to some ad campaigns as Nielsen (Thailand), the media research and ratings firm, revised its measurement to calculate expenditure.

‘‘It’s quite doubtful for media agencies as to whether purchasing power of con- sumers is increasing, but advertisers cut their ad budgets. Nobody knows why the industry is very down from expectations,’’ Ms Wannee said.

Nielsen reported fast-moving multinational consumer companies such as Unilever Thai Holdings and Procter & Gamble (Thailand) have slashed their ad budgets between 1.8% and 8%.

On the other hand, local brands have increased their ad budgets, including the Charoen Pokphand Group (up 56%), Dutch Mill (62%), Osotspa (14%) and True Move H (35%). Non-alcoholic beverage firms were the top ad spenders, with an 18% increase to 2.2 billion baht led by Coca-Cola (Thailand), while the automobile sector saw ad spending increase by 20% to 2 billion baht.

Government agencies, which were last year’s top ad spenders, cut their budgets by 21.8% and skincare product makers by 12.4%.

Rathakorn Surbsuk, a trading partner at GroupM, the global media ad company, said advertisers are cautious about Thailand’s economic outlook and currency exchange fluctuations.

Moreover, media fragmentation and some activities that Nielsen cannot monitor are the cause of the slowdown.

Many brands, particularly in the men’s product, telecommunications and beverage sectors, are shifting their focus to customer engagement.

‘‘Although the value of the ad industry measured by Nielsen declined in the first quarter, we remain confident real ad spending will grow in the rest of the year,’’ Mr Rathakorn said.

Prakit Holdings, a leading local advertising firm, reported that media prices are tending to increase by 10% this year.

TV has had the highest price increase of 11%. BEC World, the operator of Channel 3, hiked its rates by 15%, followed by Channel 9 (12%), Channel 5 (9%) and Channel 7 (7%).

Cinema and out-of-home media also raised their ad rates by 10-12% in the first quarter.