Advertising shows slight upturn in April amid crisis

Advertising shows slight upturn in April amid crisis

JAKARTA (JP): The battered advertising industry registered a
slight growth in business last month but long-term prospects
remain uncertain, an executive of an industry grouping said
yesterday.

The secretary-general of the Association of Indonesian
Advertising Companies (PPPI), Gunadi Sugiharso, said several
advertising companies picked up activities again after months of
suffering from dormant business.

"In quantity, there has been a decent rise, but value-wise, it
has not been very significant," Gunadi told media on the
sidelines of the association's routine working meeting.

PPPI estimated that advertising spending dropped by about 70
percent in the first three months of this year from the usual Rp
4 billion (US$500,000).

But the gradual strengthening of the rupiah against the U.S.
dollar in April prompted companies to begin advertising again, he
said.

The rupiah, which bottomed out at over 12,000 against the
U.S. dollar early this year, strengthened to about 7,500 against
the greenback in the first three weeks of April. But it declined
to about 8,000 this week.

Gunadi also attributed the slight growth in April to discounts
of between 50 percent and 60 percent offered by the media.

However, advertising companies are unable to foresee the
prospects of the advertising industry, he said, as uncertainty
regarding the country's economy persisted.

The rupiah had yet to stabilize fully, and the level of
domestic and foreign confidence in the government continued to
hamper further growth of advertising, he said.

"Until certainty returns, companies cannot begin with their
future plans."

Gunadi said consumer demand was still present even though
people's purchasing power had sharply declined with the slumping
rupiah.

Advertising companies must determine their direction, he said,
an action which would involve changing their mental paradigm by
analyzing opportunities.

Some might have to cease their business temporarily, and
others would probably chose to "float" around while trying to
survive by cutting costs sharply and restructuring their
companies for more efficiency, he said.

There would also be those who would use any opportunities they
could during the crisis to retain a cash flow, he said.

The director of PT Coca-Cola Indonesia, Bambang Bhakti, said
in the meeting that the demand for advertisements continued, but
these were more practical and functional than centered on
imagery.

"There is a light at the end of the tunnel," he said.

Advertisers had all resources they needed: financial,
physical, human capital resources, as well as business
infrastructures and committed customers.

But they should provide a cash environment by accepting mostly
orders that are paid in cash to prevent a situation of having to
cover unpaid accounts of their clients.

They also should concentrate on core and volume-driven
business by moving from a few big customers to many small ones,
he said. (das)