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)