Advertising income falls on discounts
Monday, February 11, 2002
LORETTA LEUNG
Real advertising revenues probably slumped by between 10 per cent and 15 per cent last year, according to industry analysts.
Although media monitor ACNielsen Media International found advertising revenues rose 7.5 per cent to HK$29.6 billion, its calculations were based on published tariffs and did not take discounting into account.
Maggie Choi, managing director of media specialist Optimum Media Direction, said: "We believe the actual advertising spending slipped by up to 15 per cent last year, even though the monitoring figures showed a slight growth."
Media companies engaged in heavy discounting last year as they fought for a slice of the shrinking advertising pie.
Ms Choi hoped for a rebound in advertising demand by the third quarter but said the full year's outcome was likely to show further declines.
Association of Accredited Advertising Agents of Hong Kong chairman Jeffrey Yu estimated a decline of at least 10 per cent in advertising revenue last year.
Another media specialist, Zenith Media, projected a year-on-year negative growth of 5.8 per cent in advertising expenditure across all mediums this year, which would represent a sharp turnaround on the strong growth shown over the past decade.
Steven Chang, vice-president of Zenith Media (China), said: "Overall, there is less demand for time and space this year."
He said advertisers were launching campaigns of smaller size and shorter duration. For example, Cathay Pacific Airways, which usually focuses on building corporate image over an extended period, has turned to the more immediate "pick me" sales campaign.
Industry experts said this type of target-oriented promotional message would become more common than corporate advertisements in times of economic downturn.
"Most of the clients have yet to finalise their budget plans for this year," Mr Chang said, adding the market was clouded with greater uncertainty. "The international clients will spend less money in the Asian region as a result of budget cuts in the global market."
As a result of the devastating blow to sentiment caused by the September 11 terrorist attacks, gross advertising revenues generated that month fell 9.5 per cent against the previous month and a marginal growth of 1.1 per cent against the previous corresponding period, according to ACNielsen Media International.
The advertising industry then braced itself for budget cuts from most advertisers.
Universal McCann-Erickson Hong Kong planning director Pauline Chu Lai-fan forecast marketing budgets in the banking sector were likely to show a fall this year - particularly for credit card products. But the big spenders in the fast-moving consumer goods category would continue to support the ad industry, she said.
Mr Chang said media companies might draw some comfort from the launch of third-generation telecommunication services, which could come to the rescue of revenues later this year.
"In our experience, telecoms carriers are the most proactive and aggressive advertisers when they compete with each other by launching new services as well as new products," he said.
The soccer World Cup could be another income contributor, as advertisers had become increasingly tuned in to the pulling power of major sports events.
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Published in the South China Morning Post. Copyright © 2002. All rights reserved.
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