Belts tighten for luxury items

Manufacturers of electronic products, mobile phones and high-fashion apparel, along with fine-dining restaurants, will be more seriously affected by economic and political instability in the second half of the year than in the first, says Carat Media Services CEO Vichai Suphasomboon.

They may therefore delay their advertising plans, because these products are categorised as luxury goods, he said.

Meanwhile, other consumer-product companies will continue to see good demand and experience only a slightly adverse effect. Many companies will launch various marketing promotions to stimulate purchasing decisions and continue to garner revenue to run their businesses.

"Consumers will tighten their belts more than they did in the first half, because the situation then was not as dire as it is today. People then still seemed happy and thought things would get better, but it turns out today's economy is experiencing not only inflation, but also deflation at the same time," he said.

Inflation has risen steadily since early this year, reaching its highest point in 10 years last month at 8.9 per cent. Meanwhile, more consumers have less purchasing power, resulting in deflation.

However, Carat is lucky its luxury corporate customers are still maintaining their budgets and continuing with their advertising plans. Its clients in this group include Rayban, Prada and MNG. Meanwhile, its other clients in the more fast-moving consumer-goods group are also continuing advertising plans, while some are even increasing their budgets to add more marketing and advertising activities.

"In this kind of situation, many companies want to delay their marketing plans, while others are looking at this crisis as an opportunity. We're lucky we have the latter kind of companies as our clients," Vichai said.

Carat saw 18-per-cent growth in billings in the first half and is thus maintaining its full-year billings target of Bt15 billion, representing 12-per-cent growth.

It is also thinking of expanding its business. Vichai said the company was considering upgrading its Posterscope Department, which provides service-related out-of-home media planning and management. He said the department had shown an impressive performance since being launched early this year.

Carat also looking for an event company to take over, in order to expand its event-organising business. The plan should be implemented early next year. Vichai declined to reveal further details.

It also plans for Digithais Network, its subsidiary that oversees digital-marketing services, to add a "search marketing" service in the next few months. Search marketing is a strategy that supports advertiser listings being on top in search-engine websites.

The company is also working to attract corporate customers in real estate, telecommunications and retail. Vichai said Carat had never had these types of clients before.

Vichai foresees three major movements in the second half.