Marketing industry heats up

Competition in the outdoor and mass media advertising markets has heated up as thousands of firms vie with each other in order to gain a share of the small market pie, according to industry insiders.

Dinh Quang Ngu, chairman of the Viet Nam Advertising Association, said that the country currently had more than 5,000 advertising firms, with total revenues reaching around US$1 billion last year.

Ngu said that although outdoor advertising only represented 20 per cent of total industry revenue, a large number of firms took part in this sector.

As a result, advertising firms have to vie with each other for prime poster positions in order to win contracts. The cost for a poster situated at a cross-roads currently stands at VND700 million (US$33,654) to VND1 billion ($40,077) per year against the previous cost of only VND100-200 million a few years ago.

Because of high costs associated with prime positioning, advertising firms made very little profit, which inhibited their development, said Ngu.

Much like outdoor advertising, mass media advertising firms are currently locked in unhealthy competition.

Nguyen Minh Huong, general director of Golden Communications Group, said that according to international standards, service costs for mass media ads paid to advertising firms often accounted for more than 17 per cent of total contract values. Many domestic advertising firms competed unhealthily to attract customers, however, offering services at decreased costs or just 3 per cent of total contract values.

“With such decreased costs, advertising firms have to lower their standards regarding service quality, which has done excessive damage to their images, ” said Huong, adding that firms were killing themselves.

In order to survive and compete with foreign rivals, who hold most major advertising contracts, domestic advertising firms should unite and come to some sort of agreement regarding advertising prices and service fees. Most domestic advertising firms currently do outsourced work for foreign companies and are only marginally involved in advertising contracts.

“Unity amongst domestic advertising firms, especially the major players, is necessary to help the industry develop sustainability and regain its market share from foreign rivals,” said Trinh Bich Dung, director of Bac Dau Production Co. — VNS

Tags: Marketing industry, Vietnam Marketing industry