Nine years since it got here, Thompson Nepal handles some of the country's largest commercial accounts, and a major chunk of government advertising. We talked to Managing Director Joydeb Chakravarty about his take on the state of the industry in Nepal.
Nepali Times: How has Nepali advertising changed in the past ten years?
Joydeb Chakravarty: Things have changed drastically. Obviously, the change has not kept pace with other countries in the region, and the economic and business situation isn't what it is in India, Bangladesh, Pakistan or Sri Lanka. But communications and media have changed. Education has changed; now we have a cross-section of Nepalis out of school and college aware of what is going on outside.
What is the role of advertising given this growing, aware educated class?
I won't say the educated look at advertising to get information. Advertising is just one, quite different, communication vehicle. Advertising is more about brand building. To that extent, even local companies have changed the way they look at their brands.
How fast has Nepal's advertising pie grown?
It didn't grow very fast until about 1996/97. After 1997/98 to about 2000 it grew at about 20-25 percent. It has slackened of late owing to local and global factors. When your GDP growth plummets to less than one percent, you can imagine what happens to advertising, which is related to the business and economic situation. The overall situation today is not very good.
How is it doing business in Nepal?
When Thompson was set up in 1998, advertising was not listed as an industry where you needed a licence to invest. We made a presentation at the Ministry of Industry saying foreign investors will be looking at the infrastructure-insurance, solicitors, auditors and advertising companies of international quality. They took the point, and we became the first advertising joint venture. As far as dealing with the government is concerned, it is one of our largest clients.
You say advertising has flattened, but at least three new TV companies plan to begin broadcasting in the next six months. How will that change the market?
It would sort of increase. If you look at the spread of the market, Kathmandu contributes 60-70 percent of the business. Look at what FM did to Kathmandu. After the FMs came, you had a host of new advertisers and that was when retail advertising came in. That may be the same for metro TV stations. As far as national TV is concerned, they would have to compete with Nepal TV, and they can be in business with better programming.
To a certain extent TV would expand the pie, but not as much as some say, and not overnight. It will be tough for the new channels, radios, newspapers and magazines unless the market expands, and with that the purchasing capacity. Unless people can buy, there is a limit about how much advertising can do.
How has the arrival of other multinationals been?
The Advertising Agencies Association of Nepal has been saying that we have a huge market. Obviously many multinational companies see this as a country where you can set up a presence and take a chunk of that business. But this is a very difficult place to survive. Advertising is not seen as an investment, but as a cost. Very few people understand the value of brand building. We've been very lucky and had clients who know what marketing is all about. We've helped companies with small budgets build their brands. Manpower is a very, very serious issue. You don't get art directors, visualisers and writers. People who go out to study and come back like to set up their own little shops. They are happy doing letterheads, visiting cards, brochures, a few ads sometimes.
How have multinationals helped build Nepali capacity?
I can speak for Thompson. We have regular training programmes and have sent many people for training, seminars and advertising award functions in India as well as South East Asia. We also have regular in-house training. J Walter Thomson has always been called the university of advertising. Working here is a very big learning experience for people. When they leave, they take that knowledge and experience and spread it. We help local colleges and universities for conducting communication programmes, and I have been associated with Kathmandu University for three years now.
You handle some of the largest commercial accounts, and say that the government is one of your largest clients. Are you number one?
There are no official listings here as no one wants to disclose the size of their operations. We know that, as far as the advertising industry is concerned, we are the largest taxpayer in this country. The amount of tax we pay is more than the revenues of most agencies in Nepal. Another basis would be the annual billings of organised media, which agencies disclose. If you add them up, Thompson is number one. There are other fees and incomes that agencies can earn through as events, promotions, etc, but in terms of, say billings or taxes, we are the largest.
How would you say firms can have the maximum reach to enable them to do serious brand building?
Radio. It has the widest reach, followed by TV and print. Radio is the most cost-effective medium. We have data that indicates that it has been growing, especially after FM. Television will hopefully grow with the new stations that are coming, NTV will grow with its satellite, especially if it expands its low power transmitters. This must go together with electrification.
Today newspapers offer colour, which wasn't there 10 years ago. The newspapers and magazines survive, which means people read them. Kathmandu has the highest reach across media, so this is the only place people are consolidating. If the media were to consolidate in the 15 other urban areas, the advertising situation would change. We've advised media houses to increase distribution. The moment they do that, their readership will increase. There's a limit on how much Kathmandu can absorb, media has to go out.