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Ad spending on the wane

Sayeda Akter
Advertising spending of different multinational companies (MNCs) operating in Bangladesh may decline next year in the face of the ongoing global financial crisis, feared experts.
Meanwhile, uncertainty over the country’s general elections also cast a gloomy shadow on advertising industry in the last three months.
Industry experts said many MNCs would cut their advertising costs mainly due to the global financial meltdown that would eventually reduce the expenditure in Bangladesh.
Zulfikar Ahmed, CEO of Unitrend Ltd that is affiliated with international advertising firm McCann Erickson, said the impact of global financial crisis has not yet affected the local advertising spending, but by the early 2009 the scenario might change.
"As the primary yearly budget of MNCs has been curtailed globally, the expenditure in the local agencies would decline ultimately," he said.
"Although the spending in Bangladesh has not come down yet, the market situation and future spending will easily be forecast by February," Ahmed said.
He however said the advertising spending for fast moving consumer goods (FMCG) would face less difficulty, as most of such goods as shampoo, lotion and toothpaste are now essential in daily life.
He said McCann Erickson has already cut a good number of jobs in the US due to the financial meltdown.
"But this is not likely to happen in Bangladesh as we have a very few skilled people working here,” he added.
The country's advertising industry has grown much in the last ten years being affiliated with big global advertising firms, who mainly promote
international brands in the local market.
Industry people estimate the total market size of the local advertising business at Tk 1,200 crore per year.
However the advertising industry has witnessed a boom in the first six months of 2008 due to an increase in real estate sector's spending in advertisement on the hope that political stability has been restored at that time.
Ahmed said many big advertising spenders such as telecom companies, real estate and banking sectors have already reduced their advertising costs in the last two months.
According to a research conducted by Ryans Archive, a media monitoring company, telecom companies reduced their spending in television advertisement from around Tk 37 crore to Tk 35 crore in the last three months.
In the last few years the power of competition in driving the advertising market has been best demonstrated by the country's mobile phone operators who are now by far the country's largest advertising spenders.
According to a research published in the magazine of Bangladesh Brand Forum, last year five of the top six advertisers were mobile operators with Grameenphone the country's largest spender.
But Grameenphone, the country's largest cellphone operator, cut its advertising costs on television from Tk 18 crore toTk 16 crore in the last three months.
A Grameenphone official seeking anonymity admitted the reduction on TV ad spending and said "But it's not for the global financial meltdown.”
"The spending reduced in the last couple of months, as we are observing the election situation, and may be after the polls spending would rise again.” he said.
He also said another reason for less spending on advertisement is that the company has reduced
Subsidy on SIM card, as when a huge subsidy was given to attract more customers the company needed to spend more on advertisement.
However Nazim Farhan Choudhury, deputy managing director of advertising firm Adcomm, said the decline in advertising spending is not connected only with the global financial crisis.
“It's not only because of global financial meltdown, uncertainty over the national general elections is also playing a role in declining ad spending,” said Farhan of Adcomm, affiliated agency of
Lowe Worldwide.
He said many new investments are awaiting the upcoming election.
I Ie also said every year ad spending grows during Eids, two major festivals of the country, but it is completely missing this year, as election schedule isvcrycloseto Eid-ul-Azha.
Aly Zaker, advertising expert and CEO of Asiatic JWT, an advertising firm that manages Unilever brand, also said global financial crisis is not going to hurt the country's advertising industry.
He said the spending of FMCGs would not be affected by the global financial crisis, as it will not widely affect Bangladesh economy.
“The global financial meltdown will not affect readymade garment industry and remittance earning, so people will have enough disposable income in hand to spend on shampoo and toothpaste,” he said.
"We make low-cost essential garments that have less substitute, and Middle East, the main destination of our migrant labourers has a dearth of skilled labour, who can work in low wages,” he said, adding: "These indicators show that the global meltdown won't affect our economy.”
He said the MNCs have not cut their advertising spending yet, but if they do so, it will affect advertisingindustry.
He however admitted that the ad spending of FMCGs declined much in the last two years.
"The spending has declined as a result of the brands' changing strategy, surely not for the global meltdown," he said.
The MNCs are now considering more profit with less spending, such as an ad that was produced in Thailand can be telecast in Bangladesh by only dubbing in Bangla language, Zaker added.
sayeda@thedailystar.net