"Hong Kong has traditionally serviced a bigger market being the gateway to China, but that's not the case anymore. It's kind of running the US from Hawaii,
he says.
Government data showed that in March 2001, there were 4,089 advertising and related services establishments employing over 19,000 staff for a geographical area of seven million people. Admittedly the category includes public relations agencies, market research companies and what is termed 'other services'. Still, it's an awful lot of companies competing for a shrinking pie. "Across the world consolidation is going on,
argues Pinder. "You have to be a certain size to compete."
Joseph Wang, group managing director for Hong Kong and Southern China for Ogilvy & Mather, is of the opinion that "at the end of the day, you have to be either very big or very small". The obvious reference in being big is to parent company the WPP Group, the global heavyweight, which owns agencies O&M, J. Walter Thompson and Young & Rubicam in addition to PR, market research and brandingcompanies.
Being big, says Wang, ensures economies of scale, a combination of back-room efficiencies and consolidation of resources for multinational clients who, increasingly, are making decisions on a global scale. Small, says Wang, is fine too: "We're talking specialities and personalised service."
He, however, doesn't believe Hong Kong has too many agencies. Any attrition would be due to market forces: "Hong Kong is a market economy characterised by fair competition and survival of the fittest."
Wang says the city's financial institutions, telecommunications infrastructure, rule of law, it being an Asian hub "will take some time to replace. Hong Kong still provides a lot of regional expertise. The reason it has survived is because it has not just depended on local business". Wang says the advertising industry has to accept that Hong Kong is now a developed market and should not expect double-digit growth as experienced in past years.
"A lot of people run around saying the sky is falling,
says Wang. "But when we're up there, we think we'll never come down."
As far as clients are concerned, the more agencies there are the better it is for them. "I have no issues with the number of agencies,
says Rolf Heidrich, brand manager of The Peninsula Group, whose account has been lusted after for the past few months before it was awarded to DDB. "In fact, I would say it works for us. Choice is never a bad thing."
One head of an advertising agency, who spoke on condition of anonymity, says it's still a fair argument that there are too many agencies in Hong Kong. "It's a small market, the revenues are small, and after they (the 4As) withdrew the pitching fees, it was a total free-for-all,
he admits.
Stories of 12 agencies lunging for an account are not rare.
"A couple of the smaller ones (agencies) will disappear while the bigger ones are unlikely to fold,
predicts the ad agency executive. "But the irony is if you're good, you'll still be there. It's not the cream of the crop that would have lost their jobs - remember that there is absolutely not enough talent to go around. This time we'll have downsized deliberately, picked the clients we want to talk to and broken out of mediocrity."
Only then, he says, would figuring out if there's enough business for everyone prove irrelevant. "If you're good enough, you don't have to get into that bun fight."
