More Consumer Confidence - But later

March 1, 2008

Thai consumers were likely to appreciate the government's tax-exemption package, but it did not mean they would immediately go out and shop. Because in the past consumers has learned to be very careful about spending. The key point is the government must be able to convince consumers to change their shopping behavior, back to their normal spending.

The 42-billion baht tax-exemption package which recently launched will boost consumer and business confidence after a long period of gloom, yet any positive results will be seen for three to six months, says a leading advertiser.
CEO of Creative Juice/G1, Thailand’s leading advertising agency, believes the government's plan will boost advertising 5 percent this year after experiencing the lowest growth in eight years. Growth registered a negative 7 percent year on year in January and February.
Thai consumers were likely to appreciate the government's tax-exemption package, but it did not mean they would immediately go out and shop. Because in the past consumers has learned to be very careful about spending. The key point is the government must be able to convince consumers to change their shopping behavior, back to their normal spending.
Advertising Association of Thailand (AAT) chairman agreed that the tax exemptions combined with the government's mega-projects would indirectly boost consumer spending. This is because enormous jobs will be started, and they do not have to pay tax at the same high level as before. That will leave more money in their pockets.
"We hope the measures will help boost consumer spending in the retail sector. Thus, competition within the industry among retail operators will be very intense, due to more advertisement and marketing activities, which in the end will have a positive effect on the advertising industry," the chairman said.
G1 CEO was even more optimistic that consumers would start to spend more. Thus, advertisers will beef up their advertising and marketing budgets as early as this month or next. "The high-season shopping period and hot season are coming in which beverages, sun-protection cream and the air-conditioning market will become fiercely competitive" he said but he also felt consumers will still want to keep money in their pockets and wait to see the government's stability and performance for a while before deciding to start spending normally again.
However, even without the economic-stimulus package, the advertising leaders have witnessed many advertisers being more active in planning their advertising and marketing strategies with advertising agencies. Both G1 CEO and ATT chairman said companies in the consumer-products sector continued to be major spenders, because they had the main products for daily life. Telecommunications is another expected top spender this year. Media channels that will certainly promise high returns will continue to be popular among advertisers. Most are still traditional media, because advertisers hesitate to use new media channels. As a result, new media channels like digital media would experience slow growth. ATT chairman saw more possibilities for advertisers to spread their spending to marketing activities instead of normal advertising, in order to ensure more impressive returns. Thus, spending will not go into the advertising industry in a normal manner.