Asian Ad Spending Seen Surviving Economic Crisis

Author:
Publish date:

Hong Kong -- Asian pay TV advertising's underlying
growth is likely to continue through the region's current economic downturn,
according to recently released data from media researchers Zenith Media, but the recession
has affected short- to medium-term expectations.

In its "Worldwide Expenditure Forecast," using
1996 exchange rates, the agency estimated that 1998 Asian ad spending will fall by about
$US2 billion from levels forecast in December, when Zenith said it would total $US78.9
billion. Its new forecast put Asian ad spending for the year at $US77.2 billion.

But the downturn was more pronounced when the currencies
were measured against the U.S. dollar at mid-February-1998 exchange rates. These showed
about a 20 percent decline in Asian ad spending this year, to some $US62 billion.

Judged by these new rates, Asia's share of worldwide
advertising expenditure will fall from 25 percent -- as forecast in December 1996 -- to 22
percent.

The markdowns were based mainly on the countries hit
hardest by the Asian economic slump, including the Philippines, Thailand, Indonesia and
South Korea. In Indonesia, for example, government figures released in April estimated
that advertising is likely to fall 46 percent in the 1997 through 1998 period, compared
with 1996 through 1997 levels.

However, Zenith added, these countries account for only 14
percent of the region's economic output and 19 percent of the region's ad
spending.

China remained the locomotive for media directors'
forecasts, but Denis Wong, managing director of the Hong Kong-based greater China
operation of advertising agency Leo Burnett, commented that across-the-board redundancies
among ad-agency staff were needed to deal with the "uncertain needs of the industry
in the coming 12 months."

Zenith is a 50-50 joint venture between Cordiant
Communications Group and Saatchi and Saatchi plc. Like many advertising agencies with Hong
Kong offices, Zenith cautioned that the impact of the economic downswing has yet to be
felt in mainland China, the region's largest economy.

Zenith's CEO for Asia, Antony Young, said it's
important to note changes in the Chinese government's bureaucracy, which would allow
increasing liberalization of media rules within the country. Under the changes, the
Ministry of Radio, Film and Television (MRFTV) has become the State Administration for
Radio Film and Television (SARFT).

"The [MRFTV] previously limited advertising-rate
increases to keep inflation down. Without this control, the market may be driven by
commercial forces. If demand exceeds supply, prices could rise," Young said, adding
that China's economy was looking more vulnerable now than it had in December.

Related