Advertising spending to fall 39% of target

Advertising spending to fall 39% of target

JAKARTA (JP): Total advertising spending in Indonesia is
estimated to reach only Rp 5.3 trillion (US$1.51 billion) next
year, or 39 percent below the expected target of Rp 8.80
trillion.

The reduced spending would be because of the impact of the
country's monetary problems, an industry executive said
yesterday.

Indra Abidin, a director of advertising firm PT Fortune
Indonesia said that total spending this year would be around Rp
4.8 trillion, or 27 percent lower than the initial estimate of
6.42 trillion.

"But the actual amount of total advertising spending in 1998
will be 5 percent higher than that in 1997," he said.

Spending on advertising in 1996 was Rp 3.5 trillion, slightly
above the 1995 figure of around Rp 3.3 trillion.

He attributed the decline in spending to most companies in
Indonesia cutting their advertising budgets, as they face both
declining sales and profit and increased operating costs because
of the sharp depreciation of the rupiah.

The rupiah has lost almost 35 percent of its value against the
American greenback since early July in the domino effect of the
Thai baht's devaluation.

Indra said that the property and financial sectors, which
accounted for around 25 percent of total advertising spending in
1996, would decline next year to around 10 percent due to the
currency crisis.

These two sectors, which were the hardest hit by the currency
crisis, have yet to consolidate due to a lack of liquidity in the
market.

"While they are in the consolidation process, the advertising
budget will be reduced," he said.

"The sectors which decline next year will be those which have
dollar-denominated debts, like the property and financial
sectors," he said.

"The share of the property sector, which accounted for 15
percent of total advertising spending in 1996, will decline to
just 5 percent in 1998," he said.

Quoting data projections from the Indonesian Association of
Advertising Agencies (PPPI), Abidin said that TV would account
for 51.6 percent of total advertising spending in 1998, with
newspapers accounting for 34.3 percent, billboards and banners
5.7 percent, magazines 5.6 percent, radio 2.6 percent and the
remaining 0.2 percent being spent in cinemas.

He said the distribution of advertising spending in 1997 would
be similar to the projection for 1998. (aly)