Companies looking for free lunch on advertising

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Vietnam's economic woes have pushed local companies to rethink marketing. Many business owners have scaled back on ads while others are seeking creative solutions.


A laundry detergent advertisement at a bus stop in Ho Chi Minh City. Many advertising agencies say companies have cut back on ad spending amid tough economic conditions.

A slow economy has pushed businesses to cut advertising expenses and promote sales via low-cost discount catalogues, emails and text messages.

Tran Thi Hong, director of home appliance company Phuong Hong, said high inflation had sharply reduced local consumer purchasing power, resulting in major commodity stockpiles.

Hong said many companies were finding it hard to pay salaries and interest on loans, let alone find the money for advertising.

"Big advertisement spending will raise product prices, so at the moment it can't help firms lure more customers," she said.

"Thus, we have cut all our newspaper advertisements and only advertise for free on the Internet"¦ We won't dare to invest more in advertising until the economic recession blows over."

Duong Thi Quynh Trang, external affairs manager at Big C supermarket, said her company is looking for low-cost advertisement channels.

Big C is now focusing on advertising on-site at its stores and on printing inexpensive discount catalogues. Trang said the company has also taken to emailing customers and sending text messages to inform them of promotions.

Pham Van Sieng, manager of advertising agency Netmoon in the central city of Da Nang, said his firm's turnover dropped 50 percent in the first four months of 2012 compared to the same period last year.

"Companies now only advertise essential items," he said. "And they consider their spending on advertising very carefully."

He said this did not bode well for the traditional advertising industry.

"Customers now mainly use online advertisement services with low costs. There have not yet been any official statistics, but I think some advertising agencies will go bankrupt."

The director of an advertising agency in Hanoi said the company had lured few customers this year.

"We are considering ways to lower costs, and restructure our firm to improve our business. If the bad situation continues for a few months, we may think of cutting employees."

Tougher rules

Turnover in the Vietnamese advertising and communications industry reached US$783 million in 2011, much lower than the average figure of $4 billion in Southeast Asian countries, said Do Kim Dung, director of the Vietnam Advertising Research and Training Institute.

"Our advertising revenues now are higher than only Cambodia and Laos," Dung said.

A new draft advertising law, which was debated at a recent meeting of the National Assembly Standing Committee, could eliminate the current regulation that the space set aside for advertising by online newspapers is capped at 25 percent of the web page.

Lawmakers said users could actively open or close contents they need on online newspapers, thus it is unnecessary to keep the regulation.

However, to ensure the right of readers to choose what they read, the bill also regulates that advertisements are not mixed into news, and readers must be able to actively open or close advertisements within only 1.5 seconds after clicking the mouse button on them.

The bill also tightens regulations on advertising via text messages and email. Accordingly, advertisements can only be sent to customers who have already used the services advertised, or to those who register to receive such advertisements.

Telecommunication service providers are allowed to send, at maximum, three advertising messages to a phone number between the hours of 7 a.m. and 10 p.m., and three advertisement emails to an email address within 24 hours.

Many customers have complained about receiving too many advertisement emails and messages.

Consumers have also called for less commercial breaks on television and penalties for violations. They said advertisements should not be allowed on TV programs that customers have to pay to watch.

The draft law allows 5 percent of all air time to be dedicated to advertisements.

The head of an advertising company in Hanoi said he was fully in favor of stricter regulations on advertising. "I don't think the stricter regulations will hinder firms from boosting advertising. They have many ways to effectively advertise their products if they want."

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