Spending for ads jumps significantly<\/p>\n
By Frits H. Pangemanan<\/p>\n
JAKARTA (JP): Total spending for advertisements in the country
\nis expected to jump to Rp 1.66 trillion (US$774.21 million) this
\nyear from Rp 1.38 trillion last year, with television commercials
\ntaking 49.1 percent worth Rp 816 billion.<\/p>\n
\"The high increase is supported by the significant growth of
\nfour business sectors which are the biggest advertisers in the
\ncountry,\" Koes Pudjianto, chairman of the Indonesian Association
\nof Advertising Agencies, told The Jakarta Post in an interview
\nhere on Friday.<\/p>\n
The four business sectors are automotives, pharmaceuticals,
\nhousehold goods and the property business, he said. \"The
\nadvertisement spending of the four sectors increased by 14.63
\npercent to Rp 1.17 trillion last year from Rp 1.02 trillion in
\n1992.\"<\/p>\n
Koes, who is also chairman of Binamark advertising and
\nmarketing services, said that his association's annual survey
\nindicated that the four sectors last year held a combined share
\nof around 50 percent of the advertisement spending, up from only
\n25 percent a year earlier.<\/p>\n
He said the details of the 1993 billings of all business
\nsectors are now being prepared for publications which will be
\nissued later this month.<\/p>\n
But he estimated that vehicle industry was the biggest
\nadvertiser in newspapers, spending around Rp 53.42 billion or
\n15.4 percent of total advertisement spending, followed by
\nproperty with Rp 34.80 billion or 10 percent.<\/p>\n
For television commercials, pharmaceutical producers, with
\nexpenditures of Rp 150 billion, topped the rank, dominating
\naround 25 percent of all spending for commercials, he said.<\/p>\n
\"I am of the strong opinion that the spending of
\npharmaceuticals and consumer goods producers will significantly
\ngrow in the next few years, as a result of the operations of some
\nnew television stations in the country,\" he said.<\/p>\n
Koes argued that Indonesians are basically more familiar with
\naudio-visual advertisements. \"And the presence of new stations
\nwill in turn prompt the growth in spending for commercials
\nbecause television has better access to people in various places
\nwithin a very short time,\" he said.<\/p>\n
Spending for television commercials will likely increase to Rp
\n816 billion this year from Rp 613 billion last year and Rp 390
\nbillion in 1992. The spending only reached Rp 51 billion in 1990.<\/p>\n
According to the association, spending for advertisements in
\nnewspaper is expected to rise sharply to Rp 553 billion this year
\nfrom Rp 484 billion last year and in magazines to Rp 114 billion
\nfrom Rp 108 billion.<\/p>\n
He said television's market share will dominate around 60
\npercent in the future.<\/p>\n
Capital<\/p>\n
Koes expressed concern that although commercial spending is
\nincreasing, advertisement agencies are not well prepared. \"Demand
\nfor advertisements grows faster than the development of
\ninfrastructures for their production,\" he said.<\/p>\n
He said advertisement production, which needs high technology,
\nhas become capital intensive in nature.<\/p>\n
\"An advertising agency should have at least Rp 2 billion or Rp
\n5 billion in capital for starting its business,\" he said.<\/p>\n
Advertising agencies have to invest a lot of money both for
\nprocuring working facilities, including computer and workshop,
\nand for hiring experts responsible for the planning of the
\nmarket.<\/p>\n
\"Over 50 percent of our capital is usually used for hiring
\nexperts,\" he said. \"We should use experts because the market is
\nvery complicated,\" he said.<\/p>\n
He said an advertising agency can no longer rely on a
\ntradition mechanism, in which anybody can offer advertising
\nservices for speculations.<\/p>\n
\"However, many agencies ignore the new trend,\" he cautioned.
\n\"They are not aware that advertising has now become an integrated
\nbusinesses.\"<\/p>\n
Furthermore, the trend of the advertising is currently
\nshifting to the segment-oriented market, he said, adding that
\nFemina, Gadis and Matra magazines, for example, showed the trend
\nwith their billings being forecast to increase to Rp 13.19
\nbillion, Rp 4.72 billion and Rp 3.53 billion, respectively, this
\nyear from Rp 11.85 billion, Rp 3.62 billion and 2.52 billion,
\nrespectively, last year.<\/p>\n
Experts<\/p>\n
Baty Subakti, managing director of B & B Communications, told
\nthe Post that the segment-oriented market requires more experts,
\nwhich in turn needs more investments.<\/p>\n
\"But, our industry is now facing not only a lack of investment
\nbut also human resources,\" he said.<\/p>\n
He expressed concern that Indonesia has yet to operate an
\neducational institute to produce experts in advertisements.<\/p>\n
\"Thus far, we have relied on natural instinct of business,
\ninstead of using professional skills,\" he said.<\/p>\n
Koes, meanwhile, said that his association this year started
\ninformal education programs in cooperation with the ministries of
\nworkforce, trade and information, with hopes to educate and train
\nits members and people interested in the business.<\/p>\n
He said many of the country's agencies still rely on
\nforeigners, including those from the Philippines and the United
\nStates.<\/p>\n
Paul Kamardi, director of the Matari Advertising company,
\nclaimed that In Indonesia, his company has acted as a training
\ncenter of the industry. \"The agency provides employees for other
\nagencies,\" he said.<\/p>\n
Many executives quit Matari due to dissatisfaction with the
\nremuneration. They were offered better pay by other agencies.<\/p>\n
Kamardy said around 500 former executives of Matari, billed to
\nbe the third biggest advertising company in the country, now work
\nfor other companies or have established their own businesses.<\/p>\n
Koes, who was last year appointed by the association as its
\nchairman, said that training and informal education are
\nconsidered priorities.<\/p>\n
New ruling<\/p>\n
In addition, the association is also now preparing a new
\nruling on the advertising industry, which is scheduled to be
\nproposed to the government in the near future, he said.<\/p>\n
\"The reason is simple. Thus far, we have no clear ruling on
\nthe business,\" he said. The government has given the green light
\nto us to prepare a kind of regulation in the advertising
\nindustry.<\/p>\n
\"All things related to the planned ruling are now under
\ndiscussions,\" he added. It is expected to include the taxation,
\ncapitalization and coverage of the business.<\/p>\n
He conceded that the industry is relatively new in the
\ncountry, thereby forcing the association to formulate details of
\nthe coverage of the business.<\/p>\n
In case of irregularities, for example, the association has no
\ncapability of taking administrative measures against offenders.<\/p>\n
\"We have a code of ethics, but it is only for members,\" he
\nsaid.<\/p>\n
Only 132 out of the 435 existing advertising agencies have
\njoined the association.<\/p>",
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"sponsor": "Okusi Associates",
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