Ad spending drops drastically
 

by Lalin Fernandopulle

Spending on advertisements has dropped drastically due to the haphazard and irresponsible manner of decision making by the government to control the advertising industry. Rules and regulations imposed overnight have caused immense damage to the local advertising industry, said Four A's President Kenneth Honter at a media conference on Wednesday.

He said the advertising industry is on the verge of crumbling in the aftermath of the iron fist ruling by the government on foreign ads, imported entertainment items and ban on milk powder advertising. The bulk of the revenue comes from television advertising. Tax on television programs is affecting the entire advertising agency.

The advertising and business community has been badly hit by the recent levy imposed by the government on all television stations that telecast programs after 10 p.m., Honter said. The decision to levy Rs. 1 million for the breach of the rule is totally irrational, unrealistic and unfair on the part of the local and western viewers, he said.

Every citizen of this country has a right to entertainment and purchase a brand product of his choice. Citizens could live and grow to full stature only in a free and responsible environment. It is the rulers who should create such an environment for people to live in dignity. Rules and regulations to curtail rights is an injustice to the citizens, he said.

The Four A's called for a media briefing because of the continuous threats made on the advertising industry. The policy makers have forgotten that the role played by the advertising industry is tremendous and makes a major contribution to the national economy.

The advertising industry is a key component of the economy. In the developed world advertising is a vital sector in the growth of the economy.

The advertising industry in Sri Lanka contributed Rs. 14 billion to the economy in 2005. The US advertising industry contributed 5.2 trillion US $ to the economy in 2005.To block the growth of such a potential industry will have an adverse impact on the country's growth.

The 50 percent tax on advertising revenue is a considerable blow to the industry. It is the poor consumer who will have to pay for the levy imposed on the industry which has to bear a huge burden by having to bear an excessive cost.

Local and foreign investors have shown displeasure and fear over the sudden rulings by the government. The negative signals coming from investors will have serious repercussions on the economy. With the investors showing fear the stock market will have a negative growth. Overall there would be a negative growth rate in the economy, Honter said.

The government should have consulted the advertising industry before taking up decisions. There should be a constructive and healthy dialogue between government officials and the personnel of the advertising industry so that decisions will be taken in the best interests of the country, Honter said.

In response to a question as to whether the advertising industry plays a responsible role in adhering to ethical standards in advertising, he said, the government has not questioned the ethics and morals of advertising.