VNBusinessNews – The current economic slowdown has put a damper on growth in Vietnam’s advertising industry, which an expert has estimated at 15% or higher this year.

Do Kim Dung, vice chairman of the Viet Nam Advertising Association (VAA), said the advertising industry was likely to grow slower this year than last year when growth was put at 17-20%.

More economic challenges will force businesses to scale down or shelve their advertising plans, Dung told the Daily on the phone on Tuesday in response to a question about how much that firms would cut for advertising this year.

Dung projected a fall would happen to consumer goods such as cosmetics and beer and industrial products including building materials. However, he said advertising revenue for necessities like food, soap and toothpaste would not be much affected.

“People can stop drinking beer in tough times but they cannot stop eating or brushing their teeth,” Dung said, adding that producers found it hard to sell their products if they did not spend money on advertising.

Dung predicted television stations and print publications, including newspapers and magazines, would see advertising revenue grow slower or go down this year because of high advertising fees for these media, which often absorb a lion’s share of the corporate sector’s annual spending on advertisements.

He said producers now had to choose effective media to maximize the efficiency of their advertisements and promotions. “Instead of spending much on commercials, companies will increase their advertisements where their products are sold, and boost road shows.”

Companies will spend more on advertisements on radio as well as the OOH (out-of-home) screens at supermarkets and places where their products are introduced to potential buyers, he said. “So, it is likely that many companies will not cut their budget for advertising but relocate it to the more effective media under the current circumstances,” he said.

Asked about the job cuts, Dung said the industry had had to cope with more challenges but their business would not be so difficult that they would lay off employees. He said advertising companies would likely lower salaries and bonuses but still ensure basic monthly salaries for them.

Advertising companies will be careful with hiring new employment and looking for the qualified employees whom they really needed as a way to deal with the worsening business conditions.

According to VAA, more than 7,000 advertising companies currently employ nearly 100,000 people, but many of them should take refresher and advanced courses to meet the professional requirements.

Dung said he was confident that the advertising industry would be back to strong growth after 2009 given the higher demand for advertising in the face of fiercer competition.

VAA said Vietnam’s advertising industry had posted average annual growth of 25-30% over the past years and would continue this momentum after troubled times were over.

Foreign advertising companies now dominate up to 70% of the advertising market in Vietnam. The industry’s revenue is projected to reach some US$3 billion by 2020, with local firms accounting for 50-60%. (SGT)