Domestic ad firms get biggest pieces of the cake

Foreign advertisement firms can pocket 7-10 percent of the total turnover of the market, while the remaining big turnover belongs to Vietnamese ad firms and media owners, according to the Advertising Research and Training Institute ARTI.

Many experts and people believe that 80 percent of the total revenue of Vietnam’s advertisement industry has been attained by multi-national ad groups. However, the viewpoint has changed thanks to the appearance of many domestic redoubtable big names. In fact, it is domestic ad firms which can “get the biggest pieces of the cake”.

Ad – the fertile soil

According to the Vietnam Advertisement Association (VAA), the total revenue of the advertisement industry in 2010 was about one billion dollars. The ad market in Vietnam has been listed among the fastest growing markets in the world with the average growth rate of 20-30 percent per annum.

Commenting about the high growth rate, Tran Hung, Secretary General of VAA, said that Vietnamese enterprises have better realized the big role of the advertisement in their business. Therefore, enterprises still spend big money in ad campaigns even in difficult periods.

Not only foreign groups which can spend millions of dollars a year to popularize their brands, domestic companies, such as Vinamilk, Tan Hiep Phat or Nutifood once ran the ad campaigns worth millions of dollars.

Experts believe that with the rapid economic development, the revenue of the ad industry would reach 2-3 billion dollars a year, which explains why 10 foreign ad groups have been present in Vietnam.

ARTI’s experts have denied the fact that 80 percent of revenue from the ad industry goes to the pockets of foreign groups which have 20 representative offices or companies in Vietnam.

The experts believe that in fact, foreign groups can earn 7-10 percent of the total revenue, while the remaining falls into the hands of ad firms and media owners.

The announcement has really surprised many people. For a long time, they believe that foreign ad firms, with their powerful financial capability and experiences, have been dominating on the market.

In general, according to the experts, multinational groups like Saatchi & Saatchi, Dentsu, TBWA, Riverorchid, or Bates 141 only draw up the overall strategy, while they sign ad contracts via Vietnamese agents.

The owner of a Vietnamese firm, a satellite for foreign groups, has revealed that the actual profits that the enterprises can pocket, can reach 20 or 30 percent of revenue.

Outdoor ad remains the “hottest”

According to VAA, outdoor ad accounts for 20 percent of the total ad revenue of one billion dollars. This is considered the “hottest field” with the participation of thousands of domestic firms.

Outdoor ads can be understood as all types of advertisements which can have impacts on consumers when they step out of home. A survey conducted by TNS Media has pointed out that 80 percent of HCM City’s residents regularly travel on roads.

Outdoor ads are the field where domestic ad firms have bigger advantages than foreign ones. Ad firms regularly have to ask for permission from state management agencies to set up ad pieces or billboards. Meanwhile, it is clear that domestic firms can do this better than foreign ones.

Outdoor ads are the choice of many businesses, because it is cheap and convenient, while it can bring high efficiency. In Hanoi and HCM City, there are more than 4000 operational buses every day.

Nevertheless, Nguyen Thanh Tam, Director of MTN ad firm, complains that the profits of ad firms have been narrowed due to the input cost increases. Firms now have to pay 500-700 million dong per year to hang a billboard on an advantageous position in HCM City, instead of 100 million dong.

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Posted by VBN on Jul 8 2011. Filed under Industry. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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