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)