Online advertising shines in sputtering Thai economy

By Khettiya Jittapong

BANGKOK, (Reuters) - Unfazed by Thailand's faltering economy, businesses are penciling in bigger budgets for digital advertising as they target Thai consumers via smartphone apps, social networking forums and video-sharing websites.

Digital advertising spending this year is forecast to jump by two-thirds to a record 9.9 billion baht ($277.47 million) in Southeast Asia's second-largest economy, according to the Digital Advertising Association (Thailand) (DAAT). While that lags the 44 percent and 53 percent growth in 2014 and 2013, respectively, the near-term outlook for online advertising looks sharp as advertisers increasingly target Thai consumers in the virtual world. (GRAPHIC: Advertising spending: http://link.reuters.com/ran55w)

DAAT, which gathers data from 17 agencies that represent 80 percent of spending in the market, has recently upgraded its growth forecast for digital ad spending to 62 percent from its previous estimate of 33 percent. Social media like Facebook and video ads on Google's YouTube account for the biggest share of online advertising spending.

Stocks in Thailand's new media companies have soared. Diversified media firm Plan B Media PCL has more than doubled since its February debut, and analysts expect earnings growth to top 50 percent this year. In contrast, the overall media and publishing sector index has slumped. It is one of the worst performers on the Thai stock market this year.

Overall advertising spending dropped 2 percent in the first seven months, dragged down by a decrease in ad spending in newspapers and magazines, Thakol Banjongruck, analyst at KK Trade Securities, wrote in a note to investors. "Advertising spending is expected to rise 3 percent this year based on the country's GDP growth forecast of 2.5 percent. However, there is some risk that growth may be weaker, because slower-than-expected economic growth and political uncertainty could prompt advertisers to hold off their advertising budget," Thakol said.

(Editing by Ryan Woo)