Between Competition and Creativity in Ads Industry

Bad Ideas are Dead. This was the theme of the ADOI Advertising Awards (AAA) 2006, which took place at the National Archives Building, Jakarta, on March 3.

That night visitors could not help but feel the contradictions in the air, from the dominance of black and the line of Halloween skeletons from the entrance to the hall up to the stage. This implied that only the creative would win, not only in the present competition but also in the real (advertising business) world. Indeed, marketing and advertising activities are flourishing. On the other hand, print and electronic media are also flourishing.

But choosing the right media with which to advertise is, of course, not always easy, especially if you want the media best suited to promote your product and take into account the effectiveness of your advertising effort with respect to your target market. There are 11 local television stations and 60 regional television stations and cable channels plus some 600 newspapers, magazines and tabloids.

Clearly, this reality poses a number of challenges to advertisers, advertising agencies and the media. A complex market, media fragmentation and the increasing number of advertisements are forcing advertising practitioners to be more observant and work in a more strategic manner. Under such conditions, the availability of data and information, an understanding of industry trends and developments as well as being able to anticipate changes have become very important factors.  

Advertisements are useful not only to build and create brands but also to increase market share, which is why some advertisers spend so much money on promoting their products.

Nielsen Media Research recorded that in 2005, advertising spending stood at Rp 23 trillion (US$ 2.4 billion), a 5 percent increase from the Rp 22.911 trillion spent on advertising in 2004. This increase was evident in all types of media, although the most (about 70 percent) went to television. Admittedly, the figure does not include discounts and incentives given by the media.

According to the Indonesian Association of Advertising Companies (PPPI), net advertising spending in 2005 was only about Rp 12 trillion. How will the business fare in 2006? According to the chairman of the PPPI, Narga Shakri Habib, advertising spending in 2006 will drop by 5 to 10 percent. The drop will be caused by an increase in production costs as a result of the hikes in fuel prices and by an increase in advertising rates. “The easiest thing to do is, of course, cut a company’s advertising budget as cutting other budgets would pose a bigger risk to the company, such as layoffs,” he said when meeting Minister of Information and Communications Sofyan A. Djalil some time ago.  

Concurring with Narga, Ricky Pesik, managing director of Satucitra Advertising, said, “Obviously there will be a drop in advertising budgets. At best, budgets will remain the same as before. However, it’s not that alarming. At least it won’t be as serious as when the advertising industry was hit by the 1997 economic crisis,” he noted.

Meanwhile, several quarters in the advertising industry have identified looming impacts of last year’s various financial upheavals on the industry. However, Ricky said, producers that have a long-term interest in keeping their products in the forefront and companies that are in tight competition with each other will not drastically cut their advertising budgets. In such a situation the challenge for advertising agencies is to demonstrate their smartness in providing a solution for their clients so that they can achieve maximum benefits from their advertising campaigns.  

This year, however, there will be a shift in advertising trends, Narga predicts. Advertisers will shift from standard advertising methods to less conventional methods, like organizing special events or exhibitions. “The promotion of premium products like property, vehicles and electronic goods will follow this trend.”    

This is also supported by the assumption that less conventional promotional activities, which cost relatively the same as standard methods, bring a company closer to consumers or its target market. Shalini Gopalan Menon, president director of Interact Carlson Marketing, is convinced that besides standard advertising methods, unconventional methods are good PR exercises that are part of brand strategy and are quite popular among advertisers.  

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