LONDON May 21 WPP has become the first
foreign advertising group to invest in Myanmar since Western
sanctions were lifted, betting on a flood of demand from
multinational companies wanting to market their goods and
New York-based Ogilvy & Mather, part of the global WPP
group, said on Monday it had agreed to buy a stake in Myanmar's
leading ad agency Today Advertising, staking out an early
position in one of Asia's last frontier markets.
The United States suspended sanctions on Friday in response
to political reforms in Myanmar, a poor southeastern Asian state
sandwiched between China and India that had been ruled by its
armed forces for 50 years.
Europe had suspended sanctions a month earlier. After years
of detention and house arrest, opposition leader and Nobel
laureate Aung San Suu Kyi took her seat in parliament on May 2,
ushering in a new political era.
Ogilvy & Mather was also the first international ad agency
to set up in Vietnam when U.S. sanctions were lifted there in
1994. Vietnam is now one of WPP's fastest-growing markets.
"It's not often that a market of this size opens up, with
this history and infrastructure and capability, so it's very,
very exciting," WPP Chief Executive Martin Sorrell told Reuters.
Myanmar has a population of about 60 million, who live on an
average income of about $4 a day - far less than that in rural
communities. It has an average age of 27 and is rich in
resources but has little provision for business or banking.
Myanmar's advertising market was worth just $33 million in
2011, according to leading media buyer ZenithOptimedia
, compared with $600 million for Vietnam.
John Goodman, who led the Myanmar negotiations for Ogilvy &
Mather, said current advertisers were mostly Japanese or Korean
companies selling electronics, and Chinese, Indian and
Vietnamese firms selling consumer goods or fast food.
"Who's taking an interest now? Everyone. We've just been
barraged," he told Reuters. "Initially it will be low entry
goods, small pack sizes... but we think there will be a fairly
rapidly developing middle class. People are well educated."
With 60 employees, Today Advertising is Myanmar's top ad
agency, according to Ogilvy & Mather, which has a long-standing
partnership with the company.
Singapore-based consultancy Vriens & Partners sees the first
areas ready for investment in Myanmar as hotels and tourism -
with just 25,000 rooms estimated to be available in the entire
country - manufacturing, because of low labour costs, oil and
gas, and real estate and construction.
Partner Hans Vriens, who works with multinationals preparing
to enter Myanmar, said the reputational risk that had prevented
many from investing in the country was fading, but substantial
practical problems remained.
"The government has declared it wants to have Western
investment. That doesn't mean that they really understand what
it takes to rejoin the world," he said. "The regulatory system
they have is so outdated."
A handful of Western firms including French oil company
Total, whose investments predated the sanctions, have
managed to stay in Myanmar through its decades of isolation.
Vriens said more substantial investments in agriculture,
financial services, power, mining and telecommunications would
"If you're an oil and gas company it takes a bit longer to
put together a deal than if you're a shampoo business and can
just export your products from Thailand," he said.
Advertising in Myanmar today is almost exclusively via
television and outdoor billboards, Goodman said.
Internet advertising is almost non-existent with only about
100,000 people or 0.2 percent of the population, online, while
Goodman said print quality was so poor it did not lend itself to
"The ink comes off on your fingers," he said. "It's not
going to win any awards at Cannes for a long time."