ANALYSIS: Media - Terror strikes dim recovery hopes. A bounce-back was tipped for the first quarter of 2002. A sharp recession is now feared. Alfred Hille reports

<p>The beleaguered Asia-Pacific advertising industry is bracing itself </p><p>for a longer spell out in the cold as the aftershocks of the horrific </p><p>terrorist attacks on New York and Washington ripple through the </p><p>region. </p><p><BR><BR> </p><p>While the US is still counting the loss of lives from the atrocity, </p><p>businesses are calculating how to move forward to ensure that more </p><p>people don't suffer. </p><p><BR><BR> </p><p>But key advertising categories are clearly reeling in the aftermath, </p><p>some more than others, and the impact is particularly devastating on the </p><p>aviation sector. </p><p><BR><BR> </p><p>Following on the heels of the hard-hit US aviation industry, other </p><p>airlines have indefinitely stopped all marketing communications </p><p>campaigns, while a number of major hotel chains have selectively reined </p><p>in their exposure in the marketplace. </p><p><BR><BR> </p><p>The prognosis is grim for regional economies, which have been struggling </p><p>to stay afloat in the past half year. It's now feared that any upturn </p><p>will come later than the predicted second quarter of next year. </p><p><BR><BR> </p><p>While the move by airlines to suspend advertising is standard procedure </p><p>following an air tragedy, media agencies say the reaction from hotels to </p><p>the unprecedented attacks has been equally swift. </p><p><BR><BR> </p><p>Leading chains such as The Peninsula Group and Shangri-La Hotels and </p><p>Resorts are among a number of major hotels groups which pulled their ads </p><p>as a mark of respect to victims of the tragedy. The Peninsula's manager </p><p>of communications May Wong said: "It wasn't a decision based on the </p><p>effect on our business, but we don't think this was an appropriate time </p><p>to be advertising." </p><p><BR><BR> </p><p>Shangri-La's image campaign was halted because the 'Paradise Found' </p><p>strapline was deemed "insensitive", according to the hotel's group </p><p>director of public relations, Julia Record. However, she adds: "We will </p><p>continue with tactical advertising such as special promotions as these </p><p>don't have the 'Paradise Found' strapline." </p><p><BR><BR> </p><p>But, while some have taken a pessimistic stance, others are nurturing </p><p>the hope that the impact - provided the US avoids an all-out war - won't </p><p>be as devastating as has been forecast. </p><p><BR><BR> </p><p>A ZenithMedia report published in July forecast Asia-Pacific adspend to </p><p>grow by 1.5 per cent year-on-year this year. However, Zenith </p><p>Asia-Pacific chief executive officer Antony Young said that while the </p><p>outlook is looking somewhat bleak at the moment, it's not as bad as it </p><p>seems. </p><p><BR><BR> </p><p>"The airline and hotel sectors aren't the biggest spenders. The big </p><p>spenders are the telecommunication, financial retail and packaged goods </p><p>sectors. </p><p><BR><BR> </p><p>The impact will still be there, but I think growth will still be near </p><p>where we have been projecting, barring any more major shocks to the </p><p>system," Young said. </p><p><BR><BR> </p><p>DY&R Asia chairman and CEO Peter Steigrad agreed, saying the recent </p><p>tragedies in America only served to amplify the economic negativities. </p><p>"Nothing really has changed. The fundamentals are the same and I believe </p><p>that we'll come out of this economic downturn whenever we were </p><p>originally supposed to come out of it." </p><p><BR><BR> </p><p>But the big question on everyone's minds, especially for the airlines, </p><p>is when to start advertising again. </p><p><BR><BR> </p><p>With the more pressing issue of survival, slumping stock prices and a </p><p>ratings downgrade occupying them, it may take the once big-spending US </p><p>carriers some time before they return to the advertising scene. </p><p><BR><BR> </p><p>For the others, the answer will depend on how political and military </p><p>developments unfold over the next few weeks. Few expect airlines to </p><p>resume advertising before November at the earliest. </p><p><BR><BR> </p><p>If this happens, it will put a further dent on adspend figures this year </p><p>because autumn is traditionally the peak spending period for the travel </p><p>industry. </p><p><BR><BR> </p><p>The Economist advertisement manager, Rupert Harrow, said: "Should there </p><p>be an air crash, airlines normally stop advertising for at least a week. </p><p>But this is an unprecedented situation which will require weekly, if </p><p>not, daily attention." </p><p><BR><BR> </p><p>M&C Saatchi Hong Kong chief executive, Ian Thubron, said British Airways </p><p>had suspended its campaigns. Its other major airline client Qantas has </p><p>followed suit, although it is still running a limited outdoor promotion </p><p>for its Hong Kong to Sydney route. </p><p><BR><BR> </p><p>"We had been approaching this year with cautious optimism. We're now </p><p>approaching it with caution and we're keeping a close watch on the </p><p>industry and developments around the world," Thubron said. </p><p><BR><BR> </p><p>CIA Hong Kong managing director, Charles Brian-Boys, added: "In general, </p><p>it's not advisable to be advertising at the moment because people's </p><p>attentions are elsewhere." </p><p><BR><BR> </p><p>However, the slowdown in adspend in the airline and hotel categories are </p><p>likely to hit regional publications and broadcasters the hardest. </p><p><BR><BR> </p><p>A source at one magazine said the two sectors make up about 30 per cent </p><p>of its total advertising revenue. The longer the current state of </p><p>affairs lasts, the worse it's going to be, the source warned. </p><p><BR><BR> </p><p>According to Competitive Media Reporting, adspend for regional </p><p>publications totalled US$159.6 million in the first six months of </p><p>the year, down five per cent from the same period in 2000. When the last </p><p>CMR report was released in July, the worst-case scenario was for an </p><p>industry decline of up to eight per cent for the full year. It's now </p><p>feared the drop could go into double digit figures. </p><p><BR><BR> </p><p>However, both publications and broadcasters are taking the hit in their </p><p>stride; they have given advertisers the opportunity to opt out without </p><p>penalty. </p><p><BR><BR> </p><p>Newsweek International Asia-Pacific advertising director, Theresa Yeung, </p><p>said: "This is not the right time to promote products and services. </p><p>Within a day of the attacks in America, we asked the airlines if they </p><p>wanted to pull out of the upcoming issue and then we made the </p><p>last-minute changes." </p><p><BR><BR> </p><p>Newsweek and Time also published advertising-free special reports on the </p><p>tragedy, which were distributed with their regular issues. Said Time and </p><p>Fortune president Andrew Butcher: "We chose not to sell advertising into </p><p>that issue as we did not think it was appropriate. We resumed our normal </p><p>publishing cycle this week and the issue did feature more on the effects </p><p>and consequences of terrorism as well as all of the regular components </p><p>of the magazine." </p><p><BR><BR> </p><p>News channels like CNBC, BBC and CNN also dropped advertisements when </p><p>they moved into a rolling broadcast format to report on the attacks. The </p><p>networks resumed carrying advertising six days after the </p><p>devastation. </p><p><BR><BR> </p><p>CNBC Asia general manager of marketing and communications, Miguel </p><p>Bernas, said: "Dropping the ads was done in the interest of viewers and </p><p>advertisers. No one would have benefited from airing or seeing ads </p><p>during a time like that." </p><p><BR><BR> </p><p>Nic van Zwanenberg, BBC World Asia head of network development, </p><p>concurred, saying that because of the devastation "we had to be careful </p><p>and sensitive". </p><p><BR><BR> </p><p>However, Hong Kong's Cable TV decided to throw sensitivity out the </p><p>window after it ran a subscription ad with a visual of the twin towers </p><p>of the World Trade Centre on fire. </p><p><BR><BR> </p><p>Creatives generally described the ad as being in bad taste. Ron Cheung, </p><p>head of creative at Hotdog Workshop, said: "The picture behind the ad is </p><p>full of sadness and tragedy. As a consumer, I feel bad for Cable </p><p>TV." </p><p><BR><BR> </p><p>The current pessimistic climate, meanwhile, has resulted in the </p><p>postponement of some media projects. South China Media, which was due to </p><p>launch Jessica Girl a title aimed at female teens and twentysomething </p><p>readers in Hong Kong, will delay the project by about six months amid </p><p>fears of a lack of advertising support. </p><p><BR><BR> </p><p>In another development, Getty Images says that its stock of more than </p><p>1,000 photographs of New York city's skyline will have to be </p><p>replaced. </p><p><BR><BR> </p><p>Hong Kong business development manager Rosa Cheung said: "The old </p><p>pictures will go into an archive. And we'll be commissioning new </p><p>pictures soon." </p><p><BR><BR> </p><p>ASIA-PACIFIC ADSPEND (USdollars million) </p><p>Year Newspaper & TV Radio Other Total </p><p> Magazine (incl cinema </p><p> and outdoor) </p><p>2000 24,829.3 27,547.7 2,742.0 7,679.2 62,801.2 </p><p>2001* 24,966.3 28,305.6 2,816.0 7,640.2 63,724.1 </p><p>2002no. 3126,553.3 29,641.6 2,934.0 8,475.2 67,601.2 </p><p>2003no. 27,706.9 30,816.5 3,017.1 8,990.4 70,529.8 </p><p>*Estimated </p><p>no. Forecast. </p><p>Source: Zenith Media. </p><p><BR><BR> </p>