Advertisement Market Seeking more Market Shares

The Vietnamese advertising market took shape and began developing quickly over the last 10 years. According to the Vietnam Advertising Association, Vietnam is now home to more than 1,000 advertising companies, and advertising revenues generated by mass media are forecast at US$1 billion a year. However, most of those earnings belong to foreign ad firms, though the Vietnamese advertisement market has not yet technically opened up for foreign investors.

 

The Vietnamese law still bars the establishment of wholly foreign-invested advertisement companies. But many giant foreign advertisement groups know how to operate effectively via joint ventures with Vietnamese firms. For example, Thailand-based Pra Keep SCB Group has operated its representative office in Vietnam for more than 10 years and employed 20 workers. This giant creates advertisements for big companies like Samsung and Thai Airways in Vietnam. By its financial strength and reputation, J.W. Thompson takes 40 per cent of the Vietnamese advertising market, followed by other giants like Densu, Sattchi&Sattchi and Mc Cann.

 

These companies have regular clients and gain most value of advertisement contracts because they carry the idea from build-up through communication strategy development. Meanwhile, although Vietnamese ad firms undersign the contracts, they only do outsourcing for foreign partners. In other words, the main activities of Vietnamese advertising companies are to rebuild ideas of foreign partners and put them into the preset places.

 

More and more advertising companies are being set up, but they have to compete with other companies for a piece of the action, a difficult job for many companies. Mr Nguyen Quy Cap, Chairman of Ho Chi Minh City Advertising Association, said Dat Viet, one of the largest Vietnamese ad firms, has annual turnover of US$10-15 million but this amount is small in comparison with J.W. Thompson’s US$6-billion revenues a year.

 

Hana Dang, Executive Director of Goldsun Advertisement Company, said when Vietnam joined the WTO Vietnamese ad firms are forced to compete with foreign rivals to have a piece of the advertising pie.

 

Annually, companies in Vietnam spend a lot of money advertising their trademarks. The thousands of billions of Vietnamese dong disbursed for trademark publicity is a big source of income for advertising firms. Of course, most of them belong to foreign firms

 

The Vietnam Advertising Association calculates that Vietnamese advertisement companies carry out up to 90 per cent of the final stages of advertisement programme, but foreign rivals keep up to 90 per cent of the advertisement value. Or in short, revenues earned by domestic companies are about 10-20 per cent of Vietnam’s total advertisement turnover. The story of the garment-textile and leather-footwear sectors is repeated in the advertising industry.

 

Vietnamese ad firms rarely win big contracts from giant foreign firms in Vietnam. Mr Tran Nguyen Dan, Vice Chairman cum General Secretary of the Vietnam Advertising Association, said: “The things we lack most are professional knowledge, techniques and creativeness. The trademarks of domestic ad firms cannot be compared with foreign ones.” Furthermore, domestic ad firms have limited financial capacity and the Government put a cap on advertisement spending by local companies.

 

WTO admission means the Vietnamese market will admit more foreign advertising companies. WTO induced competition is indispensable, and there is an added advantage for domestic companies. WTO entry brings more companies of other sectors to Vietnam and widens the advertising market. As a result, domestic advertising firms will have more opportunities.

 

Many experts say the future of Vietnamese advertising is in the hands of domestic companies. In the coming time, major clients of domestic advertising companies are small and medium enterprises. This is an untapped segment. In the near future, when small and medium companies in Vietnam encounter stiffer competition due to the penetration of foreign commodities, demand for advertisements will increase. Many will try to firmly establish their trademarks as Biti’s, Thai Tuan and Vinamilk have done.