Major advertising agencies said this week that their clients have scaled back advertising expenditures by an average of 25 percent in the past year.
They cited political uncertainties lingering since factional fighting erupted in the capital in July 1997 and the economic crisis plaguing Southeast Asia for more than a year as hurting business.
The largest advertising agencies in Cambodia serve primarily foreign-owned businesses. Despite the nation’s poor economic health, advertisers say that large agencies are surviving.
Sabine Joukes, general manager of Bates Cambodia, painted a grim picture of the state of her agency and of the industry as a whole, particularly as a result of the political disturbances since July 1997.
“Before the coup, business was increasing,” she said Tuesday. “Before the elections things were again looking up, though for sure not as much [as in 1997], but it was shattered by the demonstrations. Everybody is now occupied with just surviving.”
Joukes said that Bates has not reduced staff, but noted that neither is the company increasing its profits or acquiring new clients.
She said Bates is able to retain clients who have large investments in Cambodia, and is established enough to absorb losses while waiting for better days.
John Raeside, general manager of gasoline company Caltex, a Bates client, also said his commitment to Cambodia is still strong.
“We’re serious investors,” Raeside said. “We’re here for good.” He added that the US multinational had increased spending on advertising.
Sam Ji Cheng, country manager of Japan Tobacco International, the company owning Mild Seven, said that with the regional currency crisis the company has reduced its advertising. However, he said it’s still organizing publicity events such as motorcycle racing at Olympic Stadium in October.
In general, advertisers report that foreign businesses with investments in Cambodia are taking a wait-and-see approach to the country rather than pulling out altogether. At the same time, with their longtime clients holding back orders, and few new investors coming in, agencies such as Grey Cambodia are attempting, with mixed success, to attract local businesses to make up for the decrease in revenue, according to General Manager Michael Deberdt.
“I don’t expect [improvement] until December, [or] until the government stabilizes the situation. [But] if all goes well, I think we can regain the 20 to 30 percent of business we’d lost since the coup…I know many companies who are just waiting.”
In the meantime, Grey Cambodia, which had only foreign accounts when it was established in 1995, is trying to find clients from within Cambodia. Deberdt said that locally based clients comprise 30 percent of total billings.
But the interest level of most Cambodian companies toward advertising is at “the introductory stage,” said Calvin Pereira, the manager of Phnom Penh Media Co Ltd, a major outdoor advertising company.
In response to the economic slowdown, Phnom Penh Media has been getting out clients’ messages in cheaper ways than the billboard, such as with promotional events.
Pereira also said the geographical potential of Cambodia as “the entrepot of Indochina,” and the fact that investors fleeing places like Thailand and Indonesia need new markets, makes him optimistic.
“[Businesses] spend more or spend less, but do always spend [on advertising],” he said. “We make do with what we have and try to make it better.”
The Mirror, which provides an overview of Khmer-language print media in Cambodia, published statistics in its Sept 13-19 issue showing that only two of the top 10 advertisers in Khmer-language papers in terms of appearance were foreign companies.
“I have no idea why international companies aren’t advertising more,” said editor Norbert Klein.
Still, there have been encouraging signs. According to Klein, the number of advertisements in Khmer-language newspapers has increased despite a dramatic drop in the number of such papers publishing since July’s elections.
