Between Competition and Creativity in Ads Industry

That’s why many companies now prefer to organize special events, the visitors of which are prospective customers. This method is believed to be more effective and more measurable than standard methods. “Make no mistake, we’re talking measurable results, not hypothetical findings, projections or ‘smoke and mirrors’. We believe in accountable solutions and we put them in writing,” Menon said.

Expressing a similar idea, Iim Fahima Jachja, account director of Virus Communications, said that part of the strategy should include daring, new breakthroughs, such as using alternative media that are yet to be tapped to the maximum. She suggested what he called high-integrity non-traditional media such as “guerrilla” media, public relations, the Internet, viral marketing and word of mouth. Television, she said as an example, is said to be the most effective advertising medium while in fact many people have begun to doubt its effectiveness.

“The Internet, for example, has a unique advantage, namely mass customization, for the advertisement of premium products,” she added.

The obvious is that competition involving advertising agencies is becoming increasingly tougher. However, one thing that causes concern, according to Narga, is that about 60 advertising companies in Jakarta will be forced to close down because of unhealthy competition. This condition will only worsen if rules of the advertising game are not quickly introduced. An advertising price war, in which advertisers are offered the lowest agency fees possible, is a strong indication of unhealthy competition.

“At the end of the day, small companies will have increasingly fewer business opportunities because big companies can waiver their fees,” he said.  

It is also a concern that this advertising price war has led to some advertising companies laying off employees. Having lost an advertising bid, these companies have been forced to lay off employees. It is an open secret that even some major advertising companies with 200 to 300 employers have laid off about 40 to 75 of their employees.

It is also owing to this price war that 80 percent of the advertising business is now controlled by major companies that are affiliated with foreign corporations. In fact, these major companies only make up about 2 percent of the 450 companies registered with the PPPI. “So, the reality is that the minority enjoys a bigger portion of the business,” said Narga.  

In Indonesia, advertising companies are not the masters in their own country, according to A. Baihaqi, president director of Tactic Communications. In the past five years, there has been a tendency for an advertising company (a brand agency) to be no more than just a creative boutique because the execution or placement of the advertisement will be handled by media specialists, which are generally controlled by major companies affiliated with foreign corporations.

This has therefore given rise to another problem because creative ideas and concepts are yet to be properly appreciated in Indonesia. The biggest income comes from agency fees, which, lately, have in fact become the real problem. Unlike Baihaqi, Koes Pudjianto, CEO of PT Binamarka Citra Utama, believes that there is a need for advertising companies to anticipate these changes and move in the right direction instead of making a fuss about this global trend.

“To be a brand agency should not be construed as a failure if this business is managed well and properly. The protection that must become the concern of the advertising industry is a ruling on split agency, which is ‘fair’ for brand agency,” he noted.

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