US$3 billion in Vietnam ad revenue this year? 'Unrealistic', agency heads say

The report placed total ad revenue in 2010 at US$1 billion and predicted a broad range for the year-end figures for 2011 of between US$2 billion and US$3 billion.

Katryna Mojica, Ogilvy & Mather Vietnam's group managing director believes that while Vietnam is a growing and healthy market, the agency's own data indicates that ad spending in 2010 was around US$900 to US$950 million, and is forecast to grow by 15 to 20 per cent in 2011.

"This is a conservative forecast but it's still a long way off from the US$3 billion," Mojica emphasised.

Tarun Dhawan, Y&R Vietnam's managing director says it is impossible to accurately measure total spending in the Vietnam market. He explains that TV, print and radio are the only media that are monitored. Total ad expenditure for these media for the first half of 2011 stood at approximately US$345 million, he said, with the extrapolated figure for 2011 taking it to around US$690 million to US$700 million for the full year.

When digital and OOH spending are also included, Dhawan says the figure would reach to roughly US$800 million, a far cry from the report's estimates - with a drop predicted if the 2010 report is taken as accurate.

This could be possible, as Tue Nguyen, managing director of Bates 141 Vietnam, suggests. He says  that 2011 has been a particularly difficult year for the country as it deals with inflation and the devaluation of the Vietnamese dong.

According to Bloomberg, inflation in Vietnam grew for the 11th successive month in July, reaching an estimated 22 per cent per annum. Meanwhile, the country's rate of GDP growth has slowed somewhat, from 6.2 per cent over the first half of 2010, to 5.6 per cent over the same period this year.

If present economic conditions continue, this would certainly have an effect on advertisers' budgets which would carry over to the industry's bottom line. Dhawan warns that as inflation-related worries mount, consumers’ willingness to spend their disposable incomes will start changing.

"They will take into account the impact of inflation on their lives. To deal with an increase in prices for everyday goods, consumers may cut back on non-essential spending such as out-of-home entertainment and will be more value-driven," he notes, which could make advertisers reevaluate their plans for the second half of the year.

Bates' Nguyen concurs, saying that although clients are likely to spend more over the next six months as the Vietnam market continues to develop, they would be demanding more value for their money. Thus he warns that the industry will need to adjust to the demand and prevailing economic conditions.

But one key area that could boost the industry's bottom line is in the digital space. Online advertising is steadily gaining traction with clients, a recent report by research firm Nielsen has revealed. It says that consumers in Southeast Asia are highly influenced by online advertising, particularly if the content is specifically targeted. 

This was particularly true for Vietnam consumers, where 43 per cent admitted to being 'highly influenced' by online ads, more than any other market in the region. Vietnam also topped the list of consumers in the region that have 'liked' or followed a brand or company, with 79 per cent of respondents indicating they have done so. 

Amidst the current conditions, TBWA Vietnam's managing director George Nguyen sees clients reacting in different ways. "Some are going with tried and true avenues while others are trying new things. But I spoke with some clients recently who are breaking with their past model and making a significant investment in the digital space," he noted.

Although more traditional media continues to attract the bulk of budgets, according to Dhawan, Vietnam is seeing a slow but sure increase on new media spends. "Clients across every category are extremely keen to engage their audiences via the digital medium. In fact one of the latest reports suggests that internet has the best reach throughout the day, except during the four hours of prime time at night. Clients are recognising this fact and we see a shift in budget allocation towards this channel."