Foreign Firms Dominate Vietnam's Advertising Market

HCMC – Foreign advertising companies have taken control of the Vietnamese market, reaping millions of dollars in revenue every year. According to statistics, over 90 percent of advertising revenue in Vietnam is now in the hands of foreign advertising firms. These firms have been on a buying spree of local companies and now own around 80 percent of Vietnam’s advertising firms.

Foreign firms began snapping up local firms in 2008, and now, the ten largest Vietnamese advertising firms have all been acquired.  Local firms often have little choice but to sell since they struggle to compete against the foreign firms, which have much more experience and deeper cash reserves.

The Omnicom Group, from the United States, has taken over three of the top ten Vietnamese companies. In 2008, they bought BCI Brandcare, followed by the purchase of Biz Solutions by Omnicom’s subsidiary, TBWA Group – this established the Biz Tequila joint venture. TBWA also bought XPR Campaigns and established Campaign Solutions, which has emerged as one of the top international agencies in Vietnam.

Around the same time in 2008, GroupM, a subsidiary of the U.S. firm WPP, bought 30 percent of the Dat Viet Group VAC. WPP is also the largest partner of Smart Media JSC, a company founded by CNPT, Vietnam Television, Mobifone, VNPost and Goldsun.

In 2012, the world’s largest PR firm Edelman bought the Vietnamese AVC Communication and created the Vietnamese firm AVC Edelman. Richard Edelman, the president and CEO of Edelman, was quoted in the media as saying that multinational corporations operating in Vietnam had sought their services and a merger with a local firm had proved to be the quickest way to enter the market.

The Vietnamese PR industry continues to have roughly 200 wholly Vietnamese-owned companies, all of which are struggling to remain financially sound in the face of foreign competition.

Nguyen Quoc Bao, director of the Ho Chi Minh City-based Awareness ID Public Relations, says that his company receives offers to sell shares to foreign companies almost every year.

While the status of local firms tends to go up when they are acquired by foreign companies, Nguyen says that “We want to maintain an independent Vietnamese PR firm that survives without relying on foreign resources… There are many ways to raise our status, such as by making use of our deep understanding of the local market, constantly training our staff and specializing our services.”

However, other Vietnamese working in the local advertising industry feel that mergers are good for business since they can raise the profile of local brands and help bring them up to international standards.

There is much work to be done if Vietnam’s local advertising firms wish to seriously compete with the foreign firms. According to Do Kim Dung, director of the Vietnam Advertising Research and Training Institute, Vietnamese advertising firms need to become more professional and improve their attitudes towards customer service so that they can compete with the international firms. He added that advertisers must put gaining the trust of their customers in front of everything else, including market share.
 
This article was first published on Vietnam Briefing.
 
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