ANALYSIS: Advertising - Can Hong Kong's 4As change its spots? The Hong Kong 4As wants to overhaul itself to remain relevant as clients' needs change, reports Alicia Kan

<p>The Hong Kong 4As has quietly abolished its controversial pitch fee </p><p>policy, which was ostensibly created last year to protect agencies' </p><p>intellectual property. </p><p><BR><BR> </p><p>But critics - both advertising industry professionals and clients - </p><p>labelled the requirement that companies pay HK$20,000 (US$2,564) for every 4As agency participating in a pitch as </p><p>counter-productive and detrimental to business. Various means were </p><p>reportedly employed to sneak around paying the fee, including </p><p>reimbursing clients after a pitch. </p><p><BR><BR> </p><p>But the 4As insists the axing of the rule had less to do with the </p><p>perceived loss of business than its relevance to the times. "It is not </p><p>part of our bigger scope of things," says 4As chairman Jeffrey Yu. </p><p><BR><BR> </p><p>The association is reluctantly finding out that its scope of things has </p><p>expanded dramatically in the past few months, necessitating </p><p>unprecedented introspection and some uncharacteristic eating of humble </p><p>pie. </p><p><BR><BR> </p><p>Slowing adspend, fears of a global recession, a shrinking pool of talent </p><p>from which to recruit, a nagging sense that Hong Kong had lost its </p><p>laurels as the region's centre of advertising excellence - all these </p><p>were happening even before the events of September 11 compounded what </p><p>was already a very tough year for advertising. </p><p><BR><BR> </p><p>"The good thing about (what's happening) is that it brings a sense of </p><p>reality to us," says Yu. "Hong Kong has always been living on a lot of </p><p>inflated egos and misperceptions about our superior capabilities - </p><p>simply because the city is growing so quickly that everyone thinks he's </p><p>invincible. But are we really invincible? I don't think so." </p><p><BR><BR> </p><p>Before the events of September 11, Zenith Media predicted a modest 5.5 </p><p>per cent increase in Hong Kong advertising expenditure in 2001 - modest </p><p>in comparison to the 14.3 per cent leap in 2000 based on current </p><p>prices. </p><p><BR><BR> </p><p>Zenith says this year's performance was bound to be "less spectacular" </p><p>coming from the pumped-up 2000 base, and slowing world demand is making </p><p>sure of this. "We expect consumer spending virtually to stop growing in </p><p>2001/2 and GDP rates to slow to two to three per cent," says the </p><p>report. </p><p><BR><BR> </p><p>"This and uncertainty over property are dampening ad budgets and </p><p>encouraging spend to shift from above to below-the-line. This is making </p><p>media pricing softer and more negotiable." </p><p><BR><BR> </p><p>The shift from above to below-the-line spending is just one of the </p><p>issues the 4As is addressing in its new charter. Yu says advertising has </p><p>changed. </p><p><BR><BR> </p><p>"It's above, below-the-line, internet marketing, CRM, all sorts of </p><p>things." </p><p><BR><BR> </p><p>The 4As, he says, will encourage member agencies to develop these </p><p>communications skills because "these are more recession-proof than </p><p>advertising. Come recession, they cut advertising by significant </p><p>percentages. But clients still have to sell the products by other means </p><p>so we must make sure we have other skills in place to help our clients </p><p>sell." </p><p><BR><BR> </p><p>Clients like Douglas Brown, marketing director of supermarket chain </p><p>Wellcome, says advertisers are increasingly moving money below-the-line </p><p>as retailers consolidate and use their clout to demand better and more </p><p>frequent deals. </p><p><BR><BR> </p><p>"Agencies have to evolve their above-the-line definition to include </p><p>media opportunities in the store. If the term below-the-line persists, </p><p>it should be redefined to describe short-term, tactical sales promotions </p><p>and exclude in-store branded advertising." </p><p><BR><BR> </p><p>Brown says he echoes former Coca-Cola marketing guru Sergio Zyman's </p><p>belief that marketing is all about selling. </p><p><BR><BR> </p><p>"A marketer's job is to bank sales and profits, and with the industry </p><p>and consumers responding more and more to sales tactics, finding that </p><p>balance between above and below-the-line is all important." </p><p><BR><BR> </p><p>Within the advertising industry itself there is a growing consensus that </p><p>the line needs to be blurred. </p><p><BR><BR> </p><p>DraftWorldwide regional director for Asia-Pacific, Greg Paull, says: "In </p><p>a down economy, services like demand generation marketing and CRM tend </p><p>to rise above branding since they offer far more measurability and </p><p>efficiency. </p><p><BR><BR> </p><p>"Let's face it: a leaner market is a smarter market and clients are also </p><p>being forced to justify their budgets. If they want to increase - or </p><p>keep - their dollars, they need to prove campaign performance." </p><p><BR><BR> </p><p>There are some, however, who think the most important needs of the new </p><p>marketing environment as defined by the 4As will not relate to </p><p>advertising agencies' ability to move into below-the-line services. </p><p><BR><BR> </p><p>UK-based Bigthinking Consultancy's Chris Jaques, who headed the BBDO </p><p>network in the region in the late 90s, argues that agencies have </p><p>traditionally derived their income from idea implementation: they give </p><p>strategy and creative ideas away for free, and make their money on </p><p>production, project management and media. </p><p><BR><BR> </p><p>In an environment where brand differentiation is critical, Jaques says </p><p>the ideas become infinitely more important and valuable than their </p><p>implementation. </p><p><BR><BR> </p><p>"Agencies will not be competitive implementers - their cost base is too </p><p>high, their processes too bureaucratic. Agencies and their clients will </p><p>increasingly need to outsource implementation to lower-cost specialists. </p><p>This has already happened in media and will increasingly happen in every </p><p>discipline," says Jaques. </p><p><BR><BR> </p><p>Yu adds: "People with soft skills like ourselves, unless they add value </p><p>to themselves, they will find this period very tough. But on the other </p><p>hand, those people who have constantly been improving themselves and </p><p>regenerating themselves will have no problem going through this </p><p>period." </p><p><BR><BR> </p><p>He could be talking about the 4As which, in its early stages, he likened </p><p>to being "always about putting out fires." </p><p><BR><BR> </p><p>The solutions now need to be long-term, if the industry is to weather a </p><p>growing frequency of slumps. These measures range from lifetime career </p><p>programmes to greater interaction with other professional bodies to </p><p>assisting China in setting up its advertising industry. </p><p><BR><BR> </p><p>Yu, who joined the industry 20 years ago, laments that raising the </p><p>professional bar and investing in people was never really the priority </p><p>when Hong Kong had it good. </p><p><BR><BR> </p><p>"We were so caught up with our own success that we forgot about all of </p><p>this. We would just say, 'hey, look, now who is going to get how many </p><p>million dollar sales?'" </p><p><BR><BR> </p><p>From now on, Yu swears, it will be different. "We're not going to be the </p><p>policeman," he says, referring to the 4As early days of in-fighting and </p><p>finger-pointing. "We're going to be the value-added organisation." </p><p><BR><BR> </p><p>THE 4AS CHARTER - AMBITIOUS BUT DO-ABLE, SAYS THE AGENCY ASSOCIATION </p><p><BR><BR> </p><p>It's an ambitious set of goals but the Hong Kong 4As believes its new </p><p>charter to "uphold Hong Kong's position as the pre-eminent advertising </p><p>centre of excellence in Asia" is do-able. The eight-point charter </p><p>pledges to fill noticeable gaps in the industry, from flagging creative </p><p>standards to providing much-needed training and career opportunities in </p><p>order to draw the best and brightest into the industry. It pledges </p><p>to: </p><p><BR><BR> </p><p>- Provide high-quality lifetime learning programmes, working with </p><p>recognised professionals and educational institutions, and starting with </p><p>entry-level training. </p><p><BR><BR> </p><p>- Recruiting the best talent to the industry, starting with university </p><p>graduates. </p><p><BR><BR> </p><p>- Promoting the highest creative standard </p><p><BR><BR> </p><p>- Promoting new and associated marketing and communication skills that </p><p>meet the changing needs of the new marketing environment. </p><p><BR><BR> </p><p>- Issuing compensation guidelines to help the industry grow at a </p><p>sustainable pace. </p><p><BR><BR> </p><p>- Assist in the growth and development of China's advertising industry </p><p>and participate in the professional development of member agencies </p><p>across the border. </p><p><BR><BR> </p><p>- Cooperation with related associations and institutions, including </p><p>advertisers, marketing services, media, research and education bodies, </p><p>which will help the 4As achieve its objectives. </p><p><BR><BR> </p><p>- To raise the association's profile both locally and internationally. </p><p><BR><BR> </p>