In the summer of 1997, Thailand’s currency, the baht, came under attack. The government lacked foreign currency reserves to fend off speculative traders and the baht collapsed, triggering a devastating financial crisis that rippled across Asia.
Economies left vulnerable due to excessive lending like Indonesia and South Korea were stung severely while the Philippines, Malaysia and Hong Kong were also hit.
Mike Amour, in a global role for Wieden + Kennedy at the time, remembers being on a recruiting trip in Thailand just as the crisis
“At that time, places like Thailand were just starting to open their doors [to brands] as a larger consumer market. It was a really difficult time for this region.”
As capital grew scarce and lending dried up, so did big investments and infrastructure projects as jobs evaporated. Fewer jobs meant household spending was slashed — by as much as a third in markets like Indonesia — knocking down sales of consumer goods. Brand marketers’ budgets were reined in, and ad agencies quickly felt the pinch.
In Hong Kong, where Stephen Li was working his way up the agency ladder, and where long lunches with clients based on personal relationships were still the norm “you could really feel the golden era was over”, he says.
“In some ways the financial crisis was a good thing for the advertising industry in Hong Kong because it really gave it a kick in the backside.
It made people realise that money doesn’t grow on trees, that client spending isn’t just predicated on whether that client likes you as a person, that there’s real need to demonstrate intelligence and leadership.”
Reinvention and revolution
Li also suggests that the ’97 crisis better-prepared the region for the global financial crisis in 2008-09 when the overextended Wall Street banks led investors to reverse the flow of money they had been pouring into Asia’s emerging markets.
In 2008, Amour was running Grey Asia-Pacific and remembers WPP acting “really fast and very aggressively” to pull back on cost controls and minimise the fallout that hit hardest in 2009-10 once he had left the business to consult.
“I was quite glad to be looking at the industry from the outside rather the inside because the industry was looking pretty ugly at that point,” he says. On his return to the fold in 2010, Amour says “you could really see that the agency business had taken a pounding.”
But as Amour points out, necessity proved to be the mother of reinvention, as industry downsizing spawned many startups that eventually became successful.
It was also the quiet revolution in online and mobile advertising, notes Li, that combined with the financial crisis pressured traditional ad channels the most.
Intolerance for wastage became an even sharper reality with clients, says Li, which forced agencies to think that much more sharply about their channels and how to use the new digital data more effectively.
“As an industry, both in 1998-99 and in 2008-09, I truly believe we came out better and stronger as a result,” Li says.
By Robert Sawatzky