Cutting ad costs 'incorrect for Asian firms'

Cutting ad costs 'incorrect for Asian firms'

By Jim Della-Giacoma

JAKARTA (Reuters): Asian brands are under threat from
international counterparts because domestic companies are cutting
advertising costs to try to survive the region's economic crisis,
a top advertising agency executive says.

But Miles Young, Ogilvy & Mather Worldwide Asia-Pacific
president, said Asian firms were shooting themselves in the foot
by trimming costs in this area.

He said depreciated currencies and cut-price rates meant the
advertising budgets of international firms were going further,
giving them greater exposure at the expense of local names.

He said nationalistic campaigns urging locals in the worst hit
countries of Indonesia, South Korea and Thailand to buy domestic
products were misplaced.

The best way to boost sales of local brands was to advertise
the brands themselves, Young said in a recent interview in
Jakarta.

"If you believe in your brand, then a recession is an
opportunity," Young said.

But if local firms opted out of advertising, the market might
skew too much towards multi-nationals, he said.

"The most effective way of supporting local brands is for
local brands to be attractive to consumers and if they go quiet
for two years multinational brands will take all the (market)
share. No amount of government campaigns to 'buy Indonesian' can
get over that problem," he said.

Indonesia has its "I love rupiah" and "I love Indonesia"
movements complete with pictures of President Soeharto saying "I
choose Indonesian products".

"Thais help Thais, eat Thai food, use Thai products, visit
Thailand, let's save together," the slogans out of Bangkok say.

Young said the strength of a brand depended on what he called
the "share of voice" that was not the amount of money spent but
the share of exposure an advertiser had compared to his
competitors.

"At a time when media rates are plunging for a client that is
prepared to be aggressive, you can quite cheaply buy share of
voice," Young said in a recent interview in Jakarta.

"Global clients such as Unilever and Nestle are very conscious
of this as an opportunity and this is one of the things
sustaining our business," he said.

But he said 50 percent of the company's business in the region
still came from local brands.

He believed Indonesian firms should look beyond the present
financial crisis.

"Indonesia is going to be one of the critical consumer markets
of the next century regardless of the current situation and the
fact that this next year is going to be extremely difficult."

"The great danger in a recession like this is that Indonesian
brands will neglect themselves and therefore disadvantage
themselves against foreign brands," he added.

Ogilvy & Mather's local affiliate Indo-Ad has estimated
Indonesia will see a 50 percent decline this year in billings
from the 1997 estimate of Rp 4.96 trillion (US$496 million).

The fall, combined with the soaring cost of U.S. dollar
dominated newsprint and paper, is expected to cause Indonesia's
media industry to shrink.

Indo-Ad expects the number of newspaper and magazine titles to
decrease about 20 percent and the number of radio stations to
fall to 550 from about 900.