Prospects bright for Indonesia's advertising industry

Prospects bright for Indonesia's advertising industry

JAKARTA (JP): Alan Fairnington, President of J. Walter
Thompson, one of the world's biggest advertising agencies, sees
the prospects of the advertising industry in Indonesia as very
positive with good growth potential.

"But the industry still lags far behind some other key markets
such as China, India and Thailand," noted Fairnington who was
here last week on a tightly-scheduled two-day visit.

Fairnington is responsible for overseeing the J. Walter
Thompson (JWT) offices and affiliates in the Asia Pacific region
from his Hong Kong office. Among his multinational clients are
such famous names as De Beers, Citibank, Ford, Unilever and
Warner Lambert.

J. Walter Thompson is represented in Indonesia by JWT Ad
Force, which last year ranked the third largest advertising
company in the country with a total ad billing of Rp 66.3 billion
(US$29.86 million).

Fairnington talked to The Jakarta Post about the broad outlook
of the advertising industry in the country. Below are excerpts
from the conversation:

Q: Advertising is an engine of economic growth which in turn
fuels the ad industry. How do you see the general outlook of that
industry in Indonesia?.

A: The prospect is very positive. There has been good growth
but it lags far behind some other key markets like China, India
and Thailand. The main reason is not many of the big
multinational advertisers are really serious about putting a lot
of money here. The recent (May) liberalization package is very
good. But most companies would be much happier if the rules of
the game were more transparent. My clients see Indonesia as one
of the four key markets but it is always the last on their list
after China, Thailand and India. When I look at the levels of
their investments, they seem still a little bit nervous about
putting a great deal of money here. Once they do that, the ad
industry will go like a rocket. It will happen but I am not sure
when. That depends on the level of confidence on the part of the
companies.

Q: As advertising is very much the art of talking directly to
the heart of the people and is thus tied up to the local culture,
what is then such international agencies as JWT can contribute to
increasing the professionalism of ad practitioners in Indonesia?.

A: Our biggest contribution is training. For example, last
year we spent US$50,000, or $700 per person, for training JWT Ad
Force employees. We train them in the philosophy of how
advertising works, the universal human values that influence. We
provide them with the main framework and teach them the basic
disciplines of how to do it. Obviously, they should tailor them
to the local culture. Moreover, business rationale forces us to
invest in training because our multinational clients expect our
service to be the same quality everywhere in the world. They are
not interested in local agencies. So we must teach them the
Thompson way of creating advertising.

Q: But the ad industry in Indonesia is still closed to foreign
investors.

A: Most international ad agencies would be much happier if we
were here with our own equity. Many of our international
competitors are not very happy about the restriction. Our
multinational clients too often feel they can't get all the ad
support they want. I think there should be a much broader
liberalization in the service industry. Many may be afraid of the
negative influence of ads on the local culture. But the fact is
ads mostly reflect the culture. We rarely lead the trend but we
follow the trends and capitalize on them. After all, most
countries in Asia have opened their ad industries to foreign
investors.

Q: What do you see the impact of the globalized communications
on the advertising industry?.

A: The overall trend worldwide is to develop global
advertising campaigns. There are enormous pressures for us to
produce one commercial and run it worldwide. In reality, though,
that is almost impossible. What we try to find is a single global
advertising idea that we can then adapt to each local market.
Take, the Lux soap, for example. The advertising idea is the soap
is for stars. We use the same idea around the world but with
local stars. But there is another impact of the globalized
communications in that the consumer behavior of the same class of
peoples in different countries is very much alike. So we often
have target groups in different countries which are actually very
similar.

Q: Given the increasing complexity of marketing, what do you
see the challenge for ad agencies to sustain growth in the
future?.

A: Advertising in Indonesia is still very much in the primary
growth situation. As the economy continues to expand and matures
and a large portion of the people enters the consumer class, ad
agencies should diversify its services. For example, JWT now
derives 25 percent of its revenues in Hong Kong and Singapore
from direct marketing services. We conduct more what we call
loyalty and retention programs for existing customers. So I think
agencies should eventually change the way they operate and
develop skills and hardware for manning loyalty and retention
programs.

Q: How do you see the competition between the various media in
getting ads.

A: I think there is more than enough money for all the media.
Moreover, there is a direct relationship between the amount of
media that is available and the growth of the ad industry. The
more media are available, the higher is the industry's growth. In
fact, as long as Indonesia is concerned there is much more demand
than supply. The most effective thing is a complete mix of media
to put together a total, comprehensive campaign. The messages
conveyed by ads on the various media tend to reinforce each
other.

Q: The tieups between international and Indonesian agencies
have often been stormy ones with a high rate of splits. How can
JWT manage a marriage with Ad Force for so long a time, now
exceeding 10 years?.

A: First of all, I think, we at JWT and Ad Force have the same
understanding and aspirations to do good advertising. Secondly,
we have a local partner in the personality of Sjahrial Djalil
(Chairman of JWT AdForce) who is a decent, honest man to do
business with. Djalil is strongly committed to creating great
ads. He really is very happy with the Thompson way and culture of
doing advertising and so we have terrific relationships.(vin)