Le Bros boss Quoc Vinh Le on Vietnam’s troubled ad market, competing with MNCs and why he won’t sell out

Le Quoc VinhFormer Vietnam Investment Review editor Quoc Vinh Le is the chairman of Le Bros, one of Vietnam’s largest independent full-service agencies. He’s also chairman and CEO of Fansipan TV and magazine publisher Le Media JSC.

Mumbrella’s Asia editor Robin Hicks was in Hanoi to talk to one of the key players behind the AdAsia Congress.

The Vietnamese economy has had a rough ride since the economic crisis in 2008. How optimistic are you about the state of Vietnam’s ad industry now?

The total billing revenue of the ad industry is less than 1.5 per cent of GDP, which is pretty low compared to other countries in the region.

The industry struggles in two key areas. First, government policy, which limits the ad spend of international corporates to five per cent of total costs, which is very low. For some FMCGs like Coke, which spend a lot on advertising, this is a problem.

A new law has raised that figure to 10 per cent, which is a significant increase, and an important step forward. But in reality that doesn’t help much. In any case, many companies already spend more than what is allowed, otherwise they couldn’t survive.

Second, is the immaturity of the ad industry in general. Before 2008, although it was an exciting time with foreign investment pouring in, advertising methods were still very rudimentary. There weren’t many options, and TV was considered the only way to go. So now TV spend is more than 70 per cent of the total, which is very high compared to other countries.

But I still believe it’s a promising time, because Vietnam is moving very quickly into digital. Although we’re not pioneers in the technology, we’re fast adopters and I expect to see a big shift in the new few years. Because of the economic downturn, budgets have been cut – which is forcing marketers to think twice about how they structure their budgets. Digital has become a more viable option, as marketers come to realise that mobile, social and online gives them an effective way to reach new audiences.

How do you see Le Bros competing with international agencies in Vietnam?

I think our strength as a local agency, which holds appeal for international clients, is that we have a better understanding of the local market, the Vietnamese people, and where the opportunities are in this country for advertisers. And in my view local agencies are more flexible and responsive to new trends.

But you run a big agency – you have 236 staff – which is bigger than many international agencies in Vietnam. How can you be more flexible?

Yes, we’re big. But we’re split into different divisions parts. But it’s not a matter of size. It’s how flexible you are to adapt. We are a full service operation, offering media planning and buying as well as advertising. We even own some media too, although it’s managed independently.

Another area where local agencies can compete is on cost, which is crucial in the current market state. We can provide a very comprehensive integrated solution for a client without spending too much money on building the ecosystem.

So even though the economy remains in a difficult place, I see light at the end of the tunnel – particularly for local agencies.

You joined the owner-run agency network Worldwide Partners (WPI) not long ago. Does this mean you have regional ambitions?

The whole reason we joined WPI was that we needed to plug the gaps in our offering – we were short of international understanding of other markets. We needed a better understand of what our client, Canon, was doing in markets such as the UK and the US. And with those insights, and references from our partner agencies in other markets, we’re now much stronger going into pitches.

What about expanding the Le Bros brand into other markets in the region?

It’s not critical for us to have a physical presence in other countries, which would require a lot of investment. Our priority is to use partner agencies in key markets such as China and Japan, which we find to be a more effective way to service clients abroad, and our partners use us for campaigns in Vietnam.

But how does that work in practice? What if your partner agency, which have no ownership ties with your business, are too busy to work on the project you want them to?

It’s fairly simple. There’s a lot you can do with calls and emails. But at some stage in the future, there’s the possibility that we could set up a joint-venture around one client. That’s how it works, and it works well.

Have you thought of selling to one of the big networks, like WPP or Omnicom?

One of the problems with being independent is that you’ll always think about being part of a global network. But if you grow to a level where you have a strong name in the market, you come to think differently. In our case, if we merge with an international agency, there’s the danger that we lose our values and our culture will suffer. It’s happened to other local agencies, and it could happen to us.

Can you give an example of where that has happened?

T&A Communications, a PR firm. They sold a majority stake to Ogilvy PR [in 2009]. A deal like this is financially lucrative in the short term, but over time the new owner wants to control everything.

The big multinationals want to erase your name – to swallow you – so that it feels like you don’t exist anymore. And that’s not what I want.

That said, I would like to attract more investors in the business, but I’m not keen on selling out completely to a big group.

What are your predictions for the next 12 months, for your business and for Vietnam’s ad market?

The market faces another year of difficulty. We foresee a lot of obstacles. For the moment, local agencies have to look at ways to find new markets, instead of digging in and holding on to what they have.

The truth is, the market will in the future be dominated by private locally-owned companies – they’re growing quicker than international rivals. But we need to educate local clients and make them understand how advertising works and how it can benefit them. That will be tough, but that’s where the new market opportunities lie.

And for your business?

For us, the opportunity is moving quickly into digital. We will expand our digital division next year, and through this business we can help our regional partners within WPI grow their clients’ presence in this market. I also think that with our integrated offering, we can grow our revenue quicker than our rivals. Our revenue is stable currently, I’m optimistic that our company could, with an expanded digital presence, see dramatic growth in 2014.


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