Ad spending to grow by 20%, says expert

Debbie A. Lubis, The Jakarta Post, Jakarta

The advertising industry will continue to grow robustly this year despite the country's economic hardships with spending on advertising projected to grow by around 20 percent, according to an expert.

Technical advisor of advertising firm LOWE, Eleanor Modesto, said on Friday that strong domestic consumption would continue to drive ad spending, particularly in consumer goods.

"This is a very robust industry," she said, adding that the ad business volume had already returned to pre-crisis levels.

"Crisis or not, people have to brush their teeth, wash their hair...Life goes on. This is part of everybody's everyday life," Eleanor said.

She said that Indonesia was the fourth largest consumer market in the world.

Domestic consumption was the main driver of the country's 3.32 percent economic growth last year. The government still expects consumption to be the main engine of this year's growth target of 4 percent as exports and investment will remain weak.

LOWE expected that 75 percent of the advertising budget in 2002 would go to television, 25 percent to the print media, followed by around 5 percent to the radio and a small fraction to the Internet.

However, the company admitted that Internet advertising would grow fast in the future as people would get more accustomed to services like Internet banking.

Meanwhile, ACNielsen reported that advertising spending in Indonesia grew by 27.5 percent to US$919.6 million last year from $721.2 million in 2000.

"The main factor contributing to this was the unexpected resilience of consumer-spending power, particularly in terms of sales of grocery products and the highly competitive TV market with the entry of several new television stations," said ACNielsen Indonesia managing director Farquhar Stirling.

He said it was quite surprising that, despite the economic slowdown, the sales of fast-moving consumer goods have held up very well.

AC Nielsen said that Indonesia showed the strongest growth in Asia Pacific region in terms of advertising spending in 2001.

It said that China, Asia's largest consumer market, defied any effects of a global recession by posting stronger-than-expected advertising spending in 2001.

China attracted the highest advertising spend in the region of $11.2 billion, up 16 percent from 2000.

"The global slowdown took its toll on other markets in Asia Pacific, however, with 2001 proving a particularly tough year for Australia and Taiwan," AC Nielsen said.