At the moment, the fashionable formula is for agencies to be jointly run by one local and one expat. But the next generation is likely to be dominated by farang, as there just isn’t the local talent to succeed the current crop. As Songkran notes, the industry is entering a “difficult transition period”.
The issue has numerous causes. Many Thais have left the industry for more financially-rewarding sectors. “Thais are particularly entrepreneurial people. They want to get out there and be their own boss, so many well-educated, bright, charismatic leaders the industry used to attract have gone,” says Charuvarn Vanasin, chairman of Lowe Bangkok.
Others were pushed out in the wake of the financial crisis a decade ago. Charuvarn remembers: “People were laid off and the belief in job security evaporated. It shocked our people with the realisation that nothing lasts forever.”
Efforts to win people back from other sectors have had mixed results. “On the client side, you get used to making your own decisions,” says Charuvarn. “But in advertising, you have to be service-minded and take orders. That role reversal isn’t easy.”
Neither is the job itself. “Running an ad agency has never been more difficult,” says Songkran. “We’ve moved into a hugely complicated media landscape and understanding consumers is ever tougher.”
There’s also more work for less money. “Clients are more demanding, but pay us less. Changes to the fee structure has effected the salary base of the whole industry,” says Witawat Jayapani, CEO of Creative Juice\G1 and president of the Advertising Association of Thailand.
A dearth of Thai managers shouldn’t matter in an increasingly international business. But a lack of locals could leave domestic business exposed. “In Thailand, nationality matters,” says one expat agency boss.
“The cultural differences are monumental, and Thais often feel uncomfortable dealing with foreigners.”
This is also often down to language problems, which mean locals have trouble communicating with international clients — and the opposite is also true. “Most expats are not culturally proficient. Very few learn beyond basic Thai, so it’s critical to have a good number two or three Thai running an agency.”
The problem with expats, even of the Thai-speaking variety, is that they cost more. “Since the financial crisis, strong foreign currencies have made expats very expensive,” says Charuvarn. “Add benefits such as school fees and housing, and the cost of maintaining an expat manager is difficult to offset with static revenues.”
The Thai ad market is expected to grow by just four per cent this year, the lowest in Southeast Asia.
In the history of Thai advertising, nearly all agency staff, including at senior management level, have been local — with good reason — notes Witawat. “Nobody understands Thai consumers better than Thais. They are unique in how they consume advertising. They expect to be entertained, not fed product information. Ads have to be very Thai to work,” he says.
But a more immediate problem for agency heads is that their clients have stopped spending as the political situation unravels. “The Government doesn’t understand politics or business,” says a source.
“This is starting to affect clients, who, frankly, couldn’t care less about whether their agency is run by locals or foreigners at the moment. All they want now is a certain future.”
